Businessmirror october 03, 2017

Judicial Issues and Corruption

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uring the very well attended Arangkada Forum on September 14, there was much focus on sectors with substantial growth potential—including agriculture, creative industries, information and communications technology, manufacturing, mining, logistics and tourism. But—not surprisingly—the cost of doing business, judicial issues and corruption were raised in many panel »continued on A14 discussions.

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Tuesday, October 3, 2017 Vol. 12 No. 355

Retail, construction set for further liberalization

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By Cai U. Ordinario

@cuo_bm

ocioeconomic Planning Secretary Ernesto M. Pernia confirmed moves to revise the country’s procurement law to allow more foreign contractors to participate in key state projects, with the changes to be reflected immediately in the new Regular Foreign Investment Negative List (RFINL).

PERNIA: ”It will make them more competitive; they’ll be pressured to be internationally competitive.”

Also to be liberalized further via the RFINL that is now being finalized by the National Economic and Development Authority (Neda), according to Pernia, is the retail sector. “It will make them [local construction and retail firms] more See “Retail,” A2

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Changes Manny Villar

THE ENTREPRENEUR

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ears ago I wrote on this column the changes that were happening around us, which were affecting the way we do things, even our lifestyle. Nowhere is this more evident than in the way people shop—from the traditional public markets, including the smaller talipapa (flea market) in the villages, to department stores and groceries, then to supermarkets and, now, the giant shopping malls. The modern malls even introduced a new lifestyle, as the shopping centers integrated with service (including government), entertainment and dining facilities. In many urban areas, malls also serve as public parks, which are more comfortable and with more offerings than public plazas. Continued on A10

WEAKER PESO GIVING BMReports PHL MANUFACTURERS HEADACHE THESE DAYS A surge in housing demand noted By Bianca Cuaresma

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@BcuaresmaBM

he Philippine manufacturing sector has less reason to be optimistic these days, as the weakening of the peso not only failed to boost the export sector, but also made imported inputs more expensive. IHS Markit principal economist Bernard Aw said the weak peso, compounded by sluggish output growth, slowed the country’s manufacturing sector in September, with the Purchasing Managers’ Index (PMI) indicating a subdued growth during the month. Despite the modest PMI number in September, however, confidence remains in the manufacturing sector, as the country still has the second-highest PMI in the region during the month, after Vietnam. In a repor t released by Nikkei and IHS Markit on Monday, data showed that the country’s PMI stood at 50.8 in September, slightly up from the record-low 50.6 in August. The report said the improvement in the sector is “marginal” and the September result is the second-weakest PMI print of the country since the survey started in January 2016.

50.8 The country’s Purchasing Managers’ Index in September, the secondweakest print since January 2016

The PMI is a composite index, calculated as a weighted average of five individual subcomponents. Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show deterioration. V ie t n a m’s m a nu f a c t u r i n g sector cont inues to lead t he region’s industrial ex pansion during the month, registering a PMI of 53.3. The Philippines came in second with its 50.8, followed by Indonesia’s 50.4 and Thailand ’s 50.3. Meanwhile, the three countries in the region whose manufacturing sectors were in contraction mode were Malaysia, with its PMI at 49.9, See “Weaker peso,” A2

PESO exchange rates n US 50.8300

in Mindanao despite Marawi siege Projects

By Manuel T. Cayon @awimailbox Mindanao Bureau Chief

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Part Two

AVAO City—The violence in Marawi City impacts on the economy and security of Mindanao. But the need for housing appeared to be more pressing for the rest of the island as to conspicuously post a spike in the application and takeout of housing loans even in cities next to Marawi in the northern Mindanao area. Overall figures for Mindanao may be affected though by the conflict, according to Home Development Mutual Fund (HDMF) CEO Acmad Rizaldy P. Moti. Moti sa id t here are 9,500 members of the HDMF, more popularly known as the Pag-IBIG Fund, in Marawi City. However, the main responsibility in ensuring mass housing and urban resettlement in the city was assigned to the National Housing Authority, he added.

A Maranawan and her children walk outside tents the government built as one of the evacuation centers for people affected by the four-month-old armed violence between government forces and the terrorist group Maute, in Balo-i, Lanao del Norte. Despite the conflict, the Pag-IBIG Fund notes an upswing in demand for housing in Mindanao. NONIE REYES

The surge in the housing demand, despite the armed conflict in Marawi City, has offered a quick and likely indication there is, indeed, a potential housing demand in more areas outside of cities and capital towns in Mindanao.

The move toward countryside housing development, crafted three years ago, was a step on that direction, Moti said. However, he explained, the inroads going outside the main cities and capital towns were still on a trailblazing path.

MARIE Antoniette D. Diaz, Pag-IBIG vice president for home lending operation in the Visayas and Mindanao areas, said the early phase of the program has brought more housing construction activities to General Santos City and, lately, to its adjacent pineapple plantation town of Polomolok, South Cotabato. Diaz, who is also a lawyer, added that the offer of the pineapple company management to provide the land for the housing community of its workers contributed largely to the entry of a housing development project in the rural town. One leading housing developer, 8990 Housing Development Corp., is nearly finishing its Deca Homes project in General Santos City with 2,772 units. Its general manager for Mindanao, Mary Ann Chua, said the project is just one of their ventures into other areas in Mindanao other than Davao City and Cagayan de Oro City. Chua said that, while the firm’s General Santos City project Continued on A2

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Source: BSP (2 October 2017 )

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A2 Tuesday, October 3, 2017

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A surge in housing demand noted in Mindanao despite Marawi siege Continued from A1

happens to be in a workers’ community, 8990 still put in place amenities similar to what the company builds higher middle-class subdivisions. Doing so, she said, increased the uptake in units of which more than half were already taken out or sold. In the next five years, we hope we could be present in as many areas in Mindanao, she said. Diaz said there are also housing projects u nder Pag-IBIG a mor t i z at ion i n Da ngc aga n, Bukidnon, and in Gingoog City in

Weaker peso. . . Continued from A1

Myanmar at 49.4 and Singapore at the bottom with 48.6. The report said output volumes were partly to blame, as they rose with the weakest rate since the survey started last year amid modest sales. Employment also shrank for the sector for the second straight

Lower tax. . .

Continued from A14

(3Bs) program. According to the government’s web site, the 3Bs consist of a mixed bag of projects ranging from roads, bridges, railways, bus-rapid transits, to the Philippines’s first subway, among others. Ba sed on t he gover n ment ’s launch of the 3Bs in November 2016, the list included unfinished

Misamis Oriental.

MOTI, himself a native of Marawi City, said the Pag-IBIG Fund has lowered the cost estimates for the takeout of units built in the countryside. He cited Gingoog as example where the housing units could be taken out at values between P300,000 to P350,000 each. The units at low-cost or subsidized units are sold P50,000 higher in existing subdivisions in the cities. “There is also an invitation to us from Compostela Valley

and Siargao Island in Surigao del Norte,” Moti said. The invitation was also as far as the southwestern most province of Tawi-Tawi, he added. Just like in Marawi City, Moti said the “Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno” (Cooperation for the future: You, Bank, Industry and Government) Fund has already asked local government units (LGUs) “to provide the land for our housing developers to undertake construction projects”. Davao City Mayor Sara Duterte reported in her State of the City

month, and rising cost for raw materials was also said to have affected production plans during the period. Aw also made mention of the peso’s weak performance during the month as one of the issues faced by local manufacturers. “The weak peso continued to pose a problem for manufacturers. Not only did the cheaper currency fail to provide a boost to exports, it raised the costs of imports. Cou-

pled with supply shortages due to bad weather, costs for manufacturing inputs, especially in industrial metal and paper, increased further. There were also reports of rising cost inflation affecting production levels,” Aw said. The economist, however, pointed out that optimism regarding output remained high during the period, encouraging firms, in turn, to increase their purchases of inputs. “Survey data indicated that a

Negotiations

pro j e c t s t h at w e re b e g a n b y previous administrations. Around 20 projects included in the 3Bs are also included in the flagship projects. These include the Mindanao Rail Project Phase 1, or the P35.26billion Tagum Davao Digos Segment; P2.8-billion MRT-LRT Common Station Project; and the two Bus Rapid Transit projects in Metro Manila, the P37.76-billion Line 2, or the Edsa/ Central line, and P4.79-billion Line 1, or the Quezon Avenue line.

Govt. . .

Continued from A14

Although critical of the Duterte administration’s “war on drugs”, the AER is supporting the tax reforms being pushed by the DOF. According to the group, tax reforms started much earlier and one of their most effective campaigns was with taxing tobacco, which led to the enactment of the “sin” tax law in 2012. The group has been trying to convince

Address in mid-September the city government has already accepted the partnership offer of San Miguel Corp. (SMC). The Pilipinong May Puso (Filipino With a Heart) Foundation of SMC offered to build tenement houses in the relocation area in Barangay Los Amigos in Tugbok District, some 20 kilometers northwest of downtown.

DUTERTE, daughter of the Philippine president, said the housing project would be funded by the National Housing Authority. She explained the partnership

project with SMC was named Biyaya ng Pagbabago (Benefits of Change) and would “showcase what we want to do for relocation in urban areas: multistory residential buildings”. The mayor said the contractor already started its “prebuilding construction on the site and we are waiting for the final survey result”. Moti said Duterte is just one of many officials the Pag-IBIG is talking to. “We are talking with mayors and governors in Mindanao, to explore the possibility of us going into their areas and see how we can help provide the

majority of surveyed companies still expect output to rise in the next 12 months on the back of new product launches, an improving economic climate, marketing activity and business expansions. That optimism, in turn, led firms to step up input buying at the end of the third quarter,” the report read. In a separate commentar y, ING Ban k Mani l a economist Joey Cuyegkeng said indicators

are strong in recent months, ref lecting strong economy and would likely support the thirdquarter GDP. Cuyegkeng added that the reversal of the country’s PMI downtrend in September could validate a strong GDP print for the country in the third quarter of the year. The ING economist sees the country GDP growing by 6.5 percent to 6.6 percent in the July-toSeptember period.

Showcase

the senators to take on the tobacco tax and include it in the current tax-reform deliberations. This and the excise tax on fuel would finance the government’s ambitious universal health care and free tertiary education. Angara nixed the tobacco tax, tinkered on the fuel tax as proposed by the DOF, and introduced excise tax on coal and cosmetic products. “Angara has to explain how he can ignore the clamor of relief from the unjust tax burden of workers and income

earners. This is injustice and he has to be answerable to the workers sector,” Geron said. PSLink is composed of 403 publicsector unions and sector federation from national government agencies, state universities and colleges, local government units; government-owned and -controlled corporations, barangay workers and the Government Union for the Integration of Differently Abled Employees in Metro Manila, Luzon, the Visayas and Mindanao.

housing requirement of their respective constituents,” he said. The only requirement was for the LGUs to provide the location for the construction of the units, he said. The Pag-IBIG has already an offering of collecting only a 3-percent interest in loans of its clients whose monthly salary or wage is under P12,000. “Basically, it’s lower priced for still quality units and lower interest on loans,” he added. The countryside housing program “is our foray to reach the unserved and underserved areas across the country”. To be concluded

Retail. . .

Continued from A1

competitive; they’ll be pressured to be internationally competitive,” Pernia told reporters on the sidelines of the launch of the 28th National Statistics Month on Monday. Pernia said the government’s efforts to open up the construction sector is linked to the ongoing revisions in the procurement law. The Neda secretary said the government wants to allow more international construction companies and contractors to operate in the country. This is one of the issues on the procurement act that were raised by the Asian Development Bank (ADB) and World Bank, which are currently working with the government in revising the law. The ADB said allowing foreign companies and contractors through international competitive bidding (ICB) can speed up and improve the implementation of the government’s massive infrastructure program. NCBs are particularly used for contracts for small projects, such as farm-to-market roads, school buildings, community hospitals and health centers. The World Bank explained that while ICB and NCB are both open and transparent procurement processes, ICB requires advertising the procurements internationally and nationally, whereas NCB requires national advertising only. Meanwhile, Pernia said the government is looking at bringing down the capitalization needed by foreign retailers in setting up shop in the Philippines. Pernia said the level will be brought down to $200,000 under the revised RFINL. “In general, we’re trying to liberalize the [R]FINL,” Pernia told reporters. “The purpose is to make the consumers happier. The Neda is tasked to review and revise the country’s RFINL, which contains restrictions on foreign investments and the practice of professions based on the Constitution and Philippine laws. The RFINL contains investment areas/activities where foreign equity participation is limited by mandate of the Constitution and specific laws. It also consists of investment areas/activities where foreign equity participation is limited for reasons of defense, security, risk to public health and morals, and protection of small- and medium-sized domestic market enterprises. The amendment of the list is headed by the Neda Secretariat, as provided for under Section 8 of RA 7042, or the Foreign Investments Act of 1991, which states that amendments may be made upon the recommendation of the secretary of national defense or the secretary of health, or the secretary of education, endorsed by the Neda, approved by the President, and promulgated by a Presidential Proclamation.

Economy

A4 Tuesday, October 3, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

Auckland sees sustained tourist growth from PHL By Catherine N. Pillas @c_pillas29

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he New Zealand government sees a sustained inflow of Filipino tourists, with the Philippine Airlines’s (PAL) soon to be launched nonstop flights between Manila and Auckland. As the Philippines is officially in the crosshairs of New Zealand as a key tourism source market since 2016, the South Pacific nation is expecting at least 28-percent sustained inflow growth of Filipino tourists. The impetus for this increased attention is the decision of PAL to mount a nonstop (or direct) flight service from Manila to Auckland starting December 6. The flag carrier previously operated a Manila to Auckland flight via Cairns with four weekly flights. The direct flight will cut travel time from 12.5 hours to just 10 hours. “Particularly over the last two years, the market’s grown significantly through the adding of extra capacity from PAL. We’ve seen a growth of 75 percent [in seat capacity] from this market. With the airlines to start flying direct, at three times a week on a A340, that’s an additional 21-percent increase in seat capacity in the market,” said Steven Dixon, Tourism New Zealand’s director for the Southeast Asia region. In 2016 the New Zealand government tourism agency estimated some 23,000 arrivals from the Philippines to New Zealand, a 28-percent growth from the year before. Dixon said they can at least

sustain the 28 percent with the commencement of the PAL direct flights. “I think we’ll continue to have double-digit growth,” he added. The country is also home to some 40,000 Filipino expatriates. The New Zealand government continues to target from the Philippines what it labels as “independent professionals” aged 25 to 52, and positions itself as a premium destination albeit numbers on the average expense of the Filipino traveler was not disclosed. New Zealand is considered a premium destination in the Philippines as the cost of the tour packages is one of the highest amongst the different long-haul destinations. Tourism is considered a key pillar of growth in the New Zealand economy. International visitors add around NZ $14.5 billion to the nation’s economy each year, while domestic tourism is a $20.2-billion industry. To boost the country as a tourism destination, New Zealand is holding the business-to-business platform, Kiwi Link, for the first time in the Philippines from October 2 to 4. The Kiwi Link event is hosting 39 tour operators from Singapore, Jakarta, Indonesia and the Philippines to name a few, and 31 from New Zealand consisting of accommodation, inbound operators and so-called experience tour operators. New Zealand counts China as its largest Asian tourist market; Dixon mentioned an average count of 400,000 Chinese tourists visit the Pacific country yearly.

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Paris21’s Jütting cites ‘waning’ credibility of official statistics

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By Cai U. Ordinario

@cuo_bm

he lack of trust in and of government on official statistics had evolved into a serious data concern not only in the Philippines, but also in the world, according to local and international experts. At the opening ceremony of the 28th National Statistics Month, Paris21’s Johannes Jütting said many people, including top government officials, have become vocal about their distrust of official statistics. “I think we are facing a very, very serious moment for official statistics in the world. It’s not a particularly Filipino issue; this is facing rich countries, poor countries, middle-income countries and the like,” Jütting said. He also said this distrust partly stems from the perceptions and feelings of people. For example, Jütting said the Philippines is considered one of the fastest-growing economies based on official data. But the feeling or perception of many Filipinos is that they remain poor. Jütting added that, since official data is computed in averages, many are not inclined to believe the information they are presented with. He said that, in truth, the average Filipino does not exist.

“We have to distinguish between facts and feelings. People have feelings, they believe in what they see,” Jütting said. “[We have to] go beyond the averages [or] averaging numbers. The average Filipino is not existing.” For his part, National Economic and Development Authority (Neda) Ernesto M. Pernia said that, despite these perceptions, the government holds in high esteem the need to be credible. Pernia said credibility is important for the national and local governments, as well as government line agencies that will help convince Filipinos that official data is accurate. “Official statistics of the government are very credible and accurate. They’re based on scientific methods and they’re collected religiously by statisticians working in the field,” Pernia said. National statistician Lisa Grace Bersales said the Philippine Statistics Authority (PSA) uses approved meth-

odologies and adheres to standards that make their products credible. Bersales said if there are questions regarding their data, the public can refer to the technical notes of their statistics. These will provide the ways by which official data is derived and processed. She added that the PSA encourages vetting of information. Bersales said the public is free to engage with the PSA and discuss the results of whatever data the agency generates. In a news statement, the Neda said the theme of this year’s National Statistics Month reflects the role of reliable statistics and factual information in determining appropriate strategies for tracking the Philippines’ progress toward its long-term vision of a stable, comfortable and secure life (matatag, maginhawa at panatag na buhay) for all Filipinos. In line with the goal of laying down the foundation for a globally competitive knowledge economy and a high-trust society, speakers and attendees exchanged insights on the importance of statistics in data journalism, use of statistics in academe and processing of information in the age of social media. “Reliable statistics are among our tools to help people to enable citizens to be more discerning, for them to become smart and innovative. The government and the private sector should also be able to count on properly vetted statistics to make sound decisions and choices toward the country’s progress,” Pernia said.

DOH urged to classify e-cigarettes as ‘less harmful’ option for smokers

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Fuel-price hikes A male attendant conducts an inventory of LPG tanks at a warehouse in Makati City. The price of LPG cooking gas has

increased by almost P5 per tank over the weekend. Fuel-gas pump price is, likewise, expected to increase this week. Oil companies say the expected price hike for diesel will be from P0.30 to P0.40, gasoline at P0.20 to P0.30 and kerosene at P0.50 to P0.60 per liter. Nonoy Lacza

Sereno says she won’t yield to Duterte’s pressure to quit

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he camp of the chief magistrate on Monday said Supreme Court Chief Justice Maria Lourdes Sereno stands pat on position and won’t resign from her post. In an interview, lawyer Josa Deinla, one of the spokesmen of the chief justice, said Sereno has done nothing illegal that could either to her ouster or resignation. “The Chief Justice will not resign because she has done nothing unlawful, illegal and impeachable. But what she wants to happen is to continue fulfilling her job as chief magistrate,” Deinla said. Last Sunday President Duterte called for the resignation of Sereno and Ombudsman Conchita Morales, “I challenge the two [Sereno and Morales], we will go to Congress, in a simple ceremony, we sign the letter of resignation. Then let us open all the books, including yours.” Meanwhile, responding to lawyer Larry Gadon’s reply to her answer to

his impeachment complaint, Sereno has filed also on Monday before the House Committee on Justice a rejoinder. Last week Gadon described Sereno’s verified answer as a “litany of lamentable lies and lame logic” designed to maneuver her escape from impeachment. In a 28-page verified rejoinder, Sereno said the impeachment complainant Gadon filed failed substantiate the allegations in his complaint against her, which should compel the committee to dismiss Gadon’s complaint. According to the rejoinder, Gadon conceded that some of his allegations may not be impeachable offenses. These include Sereno’s alleged misdeclaration of her statement of assets, liabilities and net worth, her allegedly illegal acquisition of a Toyota Land Cruiser vehicle, her business-class travels, her shortlists for the six vacancies in the Sandiganbayan and her mental and

psychological evaluation results. Sereno also noted that some of Gadon’s allegations “will be verified later” during “evidentiary hearings”. Under the House rules, Sereno cited that a “hearing presupposes that the grounds for impeachment presented by the complainant are already sufficient, a hearing is not the means to achieve that sufficiency.” Sereno said the time, energy and resources of the state should not be devoted to a case where the complainant pleads so-called grounds for impeachment, but then readily admits the legality of the acts in question. “Public funds should not finance a proceeding where the complainant swears based on personal knowledge and authentic records, but then cites news reports and expresses the need to verify his facts later. The people’s money should never fund a fishing expedition,” the Chief Justice’s rejoinder said. Jovee Marie N. dela Cruz

he House Joint Committee on Health and Trade and Industry has adopted House Resolution (HR) 973 urging the Department of Health (DOH) to adopt harm-reduction measures, particularly the use of electronic cigarettes (e-cigarettes or vapes), as an alternative for smokers as part of the country’s National Tobacco Control Strategy. In his sponsorship speech during the joint committee hearing held recently, HR 973 author Party-list Rep. Anthony M. Bravo of Coop-Nattco said the Philippines is a signatory to the Framework Convention on Tobacco Control (FCTC), which defines tobacco control as a range of supply, demand and harmreduction strategies that aim to improve the health of a population by eliminating or reducing their consumption of tobacco products and exposure to tobacco smoke. “This FCTC provision is a recognition that harm-reduction measures can be considered for tobacco control,” Bravo said. According to Bravo, harm reduction is a strategy directed toward individuals or groups that aims to reduce harms associated with certain behaviors. In recent years, harm reduction has been successfully applied to sexual-health education in an attempt to reduce both teen pregnancies and sexually transmitted diseases, including HIV. Programs using a harm-reduction philosophy have also successfully lowered risky alcohol use among adolescents. Bravo cited Dr. Konstantinos E. Farsalinos, a leading expert on tobacco harm reduction and e-cigarettes, who said that appropriate regulation of e-cigarettes can help prevent serious sickness in and the premature death of millions of cigarette smokers in the Philippines. During his visit to Manila in April 2017, when he spoke on tobacco harm reduction and e-cigarettes in a series of media events, Farsalinos urged the Philippine government to create a regulatory framework for e-cigarettes that is reasonable, proportionate and realistic. He stressed that the regulatory framework for e-cigarettes “must be different from regulation of tobacco cigarettes; otherwise, people may be deceived into thinking that e-cigarettes are the same as tobacco cigarettes”. Farsalinos noted that an appropriate e-cigarette regulatory framework is important to ensure product quality; promote harm-reduction products only to intended populations (i.e. smokers and former smokers); maintain a competitive advantage for harm-reduction products compared to smoking (price, availability, accessibility; and promote research to monitor population use and develop better (and even safer) products. Farsalinos also noted that nicotine is the reason quitting smoking is very difficult. However, he explained that while smoking is a leading cause of heart disease, stroke and lung cancer, among many others, these diseases are not caused by nicotine. “People smoke for nicotine, but die from the tar. Tar refers to the combustion products of cigarettes produced by the burning of organic matter, dried tobacco leaf, something which is not present in e-cigarettes.” A research fellow at the Onassis Cardiac Surgery Center and University of Patras in Greece, Farsalinos has been conducting research on e-cigarettes as principal investigator since 2011. As of 2016, he has published more than 40 studies and articles in international peer-reviewed scientific journals about smoking, tobacco harm reduction and e-cigarettes.

Official statistics of the government [of the Philippines] are very credible and accurate. They’re based on scientific methods and they’re collected religiously by statisticians working in the field.”­—Pernia

Pursuant to Presidential Proclamation 647, “Declaring the Month of October of Every Year as the National Statistics Month”, the proclation aims to promote nationwide awareness and appreciation of the value of statistics among different sectors of society. In a memorandum circular issued on September 24, the PSA called on all agencies of the government, academic institutions and the private sector across the country to actively participate in and support the celebration of the National Statistics Month.

Go Local! outlets to showcase Marawi products

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he Department of Trade and Industry (DTI) will showcase products produced by Maranao craftsmen in a bid to assist entrepreneurs from the conflictridden area. In a news statement issued on Monday, the trade and investment agency announced the launching of the “Bangon Marawi” store at the ground floor of the DTI building along Sen. Gil Puyat Avenue in Makati City. The Maranao products to be put on sale include brass wares, wooden furniture, wearables, Maranao woven products, jewelry, fashion accessories and native delicacies, the DTI said. The initial rollout will be supported by distributing the Maranao products in Go Lokal! stores nationwide. The Go Lokal! store is a program by the DTI to partner with large retail establishments to set up rent-free spaces for small and medium enterprises (SMEs) products in high foot-traffic areas. The DTI, in partnership with the SM Group, already has the first Go Lokal! store at SM Makati, and with in Robinson’s Ermita. A Go Lokal! store has also been set up at the Enchanted Kingdom in Santa Rosa, Laguna. The DTI accredits the eligible SMEs to qualify for the program, while the retail establishment chooses which products can be displayed. Each store earns an average of P500,000 per month, the DTI said. Go Lokal! carries a wide range of locally made products across the categories of food, home décor, arts and crafts, health and wellness products, to fashion apparel and accessories. Aside from market access, the move by the DTI is in line with its livelihood assistance initiative in line with Malacañang’s the Administrative Order 03, mandating the creation of an interagency task force that would implement the recovery, reconstruction, and rehabilitation of Marawi City and other affected localities. “Given that the Maranaos are inherently traders, we thought it is appropriate to find a way to help them showcase their products and bring them to the mainstream market,” Trade Secretary Ramon M. Lopez said. The project is being undertaken in partnership with the Bangsa Moro Federal Business Council, the Tugaya Local Government, the Muntinlupa Local Government and Magsaysay Shipping and Logistics. Catherine N. Pillas

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Editor: Jennifer A. Ng • Tuesday, October 3, 2017

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Dressed-chicken inventory up 43%–report US experts to help PHL boost marine turtle population

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he country’s dressedchicken inventory as of September 18 rose by 43 percent to 34,869.82 metric tons (MT), from 24,377.46 MT recorded a year ago, according to data from the National Meat Inspection Service (NMIS).

Poultry growers said earlier that the decline in demand for broiler meat following the birdf lu outbreak in Central Luzon resulted in the buildup of dressedchicken inventory. NMIS data showed that the bu l k of d ressed c h ic ken, or 26,528.28 MT, in cold storages consisted of local poultry. Imports accounted for 8,341.53 MT. Central Luzon recorded the biggest inventory at 10,353.54 MT, followed by the National Capital Region with 8,243.47 MT and Region 4-A with 3,677.17 MT.

File photo

By Jonathan L. Mayuga @jonlmayuga

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he Philippines is banking on the expertise of the National Oceanic and Atmospheric Administration (NOAA) of the United States Department of Commerce to improve its ongoing marine turtle population-management program. “Through information exchange and technology transfer, we are hoping to improve our ongoing marine turtle-conservation program,” Director Theresa Mundita S. Lim of the Department of Environment and Natural Resources’s Biodiversity Management Bureau (DENRBMB) told the BusinessMirror in an interview. Lim said studies on the behavior of the marine turtles will help Philippine experts piece together and solve the mystery surrounding the life cycle of the marine turtles. She said the NOAA’s research into ways to reduce the bycatch of marine turtles will be “very useful” in improving the Pawikan Conservation Program (PCP). “We can use their science to come up with appropriate policy

and prepare appropriate action plans to make our programs and project science based. This will help improve not only the management of our turtle population but the management of their habitats, too,”Lim said. “Our intention is also to use their science to come up with programs that will help our communities, whether in ecotourism or fisheries,” she added. Lim said the Philippines can help NOAA experts by sharing information on managing marine turtle hatchery and its best conservation practices. “With the Philippines and the US having shared population of turtles, we can count on their help to enhance our programs on turtle-population conservation and combat illegal wildlife trade,” she said. Earlier, the Philippines, through the BMB and the NOAA, particularly the Pacific Islands Fisheries Science Center, are eyeing to collaborate to improve the management of the marine turtle population shared by the two countries. NOAA-Pacific Islands Fisheries Science Center research ecologists

Summer L. Martin and John H. Wang recently met with experts from the DENR-BMB to share ongoing programs and initiatives on marine turtle-population management on September 19. Based on their studies, Martin said some of the marine turtles from the US were observed to forage in seagrass beds in the Philippines, particularly in Mindanao. She said some species from the US were tagged and tracked through global positioning satellite device that allowed them to track and observe the behavior of the tagged turtles at different age levels. Wang shared some of the technologies they developed to reduce the bycatch of marine turtles. One technology, which could be used by those involved in long-line fisheries, involves the use of circle hooks, instead of the “J” hook, which can reduce the bycatch of marine turtles, as well as other nontargeted species without significant effect on the volume of fish catch. Wang said fishermen can also use illuminated nets so marine turtles would be able to avoid it.

The farm-gate price of broiler meat fell drastically after the gover n me nt a n nou nce d l a st month that bird flu struck commercial layers in San Luis, Pampanga, and pou ltr y far ms in Nueva Ecija. Just days after the Department of Agriculture (DA) announced the outbreak of avian influenza in Pampanga, the United Broiler Raisers Association (Ubra) said poultry sales declined by as much as 50 percent. This prompted the Ubra to ask the DA to lift the ban on the

NFA collects ₧11.86-M fines from erring grains retailers

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he National Food Authority (NFA) collected P11.86 million in fines and enforcement fees from 1,758 grains sellers who violated the country’s grains business laws in January to August. NFA Administrator Jason Laureano Y. Aquino said the fines were collected from unlicensed grains retailers, and those who did not display price tags properly, used uncalibrated weighing scale and engaged in the rebagging of NFA rice. “Most of the apprehensions were recorded in Regions 1, 2, 9, the Autonomous Region in Muslim Mindanao and Caraga,” Aquino said in a statement. He noted that under Presidential Decree (PD) 4, which created the NFA, the agency is empowered by law “to inspect pa lay, r ice, and other grains stored by a ny person, pa r t nership, cor poration or asso-

ciation, for purposes of taking inventor y and record of such commodities”. He added the NFA is also authorized “to order the seizure, when there is hoarding of rice and other grains products, including facilities and equipment used in said hoarding, or whenever there is a scarcity of supply in such commodity in the consumer market and/or an unwarranted increase in the price”. In 2016 the NFA recorded

Europe is on the brink of sugar deluge as decade-long quotas end

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urope is about to get a lot sweeter. After a decade of quotas, sugar firms in the European Union (EU) can now produce and export as much as they want. Companies, such as France’s Tereos and Germany’s Suedzucker AG, have been ramping up operations to get ready for the change, which will help fuel a global sugar glut. The scrapping of quotas—the last of the EU’s agriculture curbs— may also lead to major changes in the global sugar trade. With increased EU production, there will be less need to import supplies from places like Africa and the Caribbean. While the industry has been readying for the change for years, it may further pressure prices that have dropped 28 percent in 2017, the worst performance in a Bloomberg index of 22 commodities. In the EU the sugar-beet harvest is now in full swing and tests are showing higherthan-average yields in France and Germany, the region’s top growers. “We have a big crop coming,” said Ruud Schers, an analyst at Rabobank International in Utrecht, Netherlands. The bank sees EU production surging 23 percent in the season that started October 1.

Bloomberg

The quotas that ended this weekend were set in 2006 in preparation to phase out limits that were first imposed in the 1960s to ensure food security were rejected by the World Trade Organization. That curbed the amount of sugar EU producers could sell in the domestic market and boosted imports.

Scrapping the restrictions will help the EU boost exports by almost 50 percent to 2.2 million metric tons this season, according to the United States Department of Agriculture (USDA). Other analysts forecast even higher shipments. Top grower France’s exports alone may triple to more than 1 million tons, crops

shipment of poultry products from Luzon to the Visayas and Mindanao, as this made matters worse for poultry growers. Poultry exporters were also affected, as foreign buyers from Japan and the United Arab Emirates imposed restrictions on chicken products from the Philippines. These restrictions would be lifted once the Philippines regains its bird flu-free status. Last month the Bureau of Animal Industry (BAI) said the Philippines may regain its bird f lu-f ree stat us in December, af ter a l l t he necessar y measures to manage the virus in affected areas have been undertaken by the government and poultry growers. The BAI said it would take at least 75 days to implement all the measures prescribed in the government’s manual for managing bird-flu outbreaks. The guidelines of the World Organisation for Animal Health include a 90-day waiting period after the last infected farm has been cleaned and disinfected before a country can be regarded as bird flu-free.

office FranceAgriMer estimates. The EU accounted for about 10 percent of global sugar production last season, according to the USDA. The region makes sugar grown from local beets or by refining raw supplies imported from countries with tropical climates. Refiners will still remain limited to duty-free shipments from some least developed countries and imports at reduced levies from certain nations. EU sugar prices, which for years have traded at a premium to the world price, are set to move more in line with global rates, according to Rabobank. Average EU prices are at about €500 ($590) a ton, according to the European Commission. That compares with about $361 a ton for white-sugar futures traded in London. The abolition of quotas could be good news for consumers, according to Investec Bank Plc. It “could result in cost reduction for food, pharmaceutical and other manufacturers who use sugar”, Callum Macpherson, head of commodities at Investec in London, said by e-mail. “This may result in a cost reduction for the end consumer.” Bloomberg News

3,155 violations by 2,404 grains businessmen and was able to collect P19.67 million in fines and enforcement fees. “Our constant market monitoring did not only keep the price of rice stable at P35 to P42 per kilogram but we were also able to keep the grains retailers from unnecessarily increasing their retail price based on market speculation or manipulation of big rice traders,” Aquino said. He added he instructed enforces of the NFA to be “more stringent” in the monitoring of any illegal activities in the market after the delayed arrival of NFA rice imports for the lean months. Aquino said grains retailers caught in violation of PD 4 have to pay a fine, while NFA-accredited rice retailers are covered by the agency’s “One Strike Policy”, which means retailers would lose their accreditation on the first offense.

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Banking&Finance

Tuesday, October 3, 2017 • Editor: Jun B. Vallecera

BusinessMirror

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MTS seen helping meet ₧1.8-trillion revenue goal

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he Bureau of Internal Revenue (BIR) said more or less 19 percent of revenue collection could come from the recently launched medium taxpayers segment (MTS) comprised of the top 500 individual and corporate taxpayers. This should further shore up revenue collection the rest of the year and help the agency meet its collection goal of P1.8 trillion. According to BIR Assistant Commissioner Marissa O. Cabreros, around 60 percent of the bureau’s collection comes from the Large Taxpayers Service (LTS), and an estimated 17 percent to 19 percent of revenues can be collected from the MTS. “Large taxpayers comprise around 60 plus percent of the entire bureau collection. Adding the medium taxpayers, which is targeted around 17 percent to 19 percent, it’s really a huge substantial database of collections for the BIR,” Cabreros told financial reporters. The existing large taxpayers segment has around 2,600 taxpayers as of 2016, which increased to 3,000 this year. With

the huge number comprising the LTS, the bureau said it will use the regions to monitor the other MTS. “Eventually, around 500 taxpayers will be targeted for every region. I cannot remember the total number of the initial target because it will be tested first,” she added. According to the BIR, the establishment of an MTS in the region will play a vital role in helping hit the revenue-collection target. Its creation is intended to strengthen the LTS by expanding its coverage. During its initial implementation, the project will cover the top 500 taxpayers of 12 identified regions, including Quezon

City, for a total of 6,000 medium taxpayers. The top 500 taxpayers of the region composing the MTS are technically large taxpayers without the requisite notification from the Commissioner of Internal Revenue to be enlisted and classified as taxpayer. Their activities and compliance will be closely monitored by a special unit in the regional office headed by the regional director. “Last 2016 the group contributed P26.778 billion in taxes, or roughly 21 percent of the region’s total actual collection of P130.59 billion. The region has a total of 350,534 registered taxpayers with a collection goal for 2017 of P143.9 billion. Emerging goal for the remainder of the year is P38.8 billion,” said BIR Regional Director Marina C. de Guzman. Benchmarking allows the agency to detect leakages and improve the collection on value-added tax, income and other taxes. The tool will help plug loopholes and increase voluntary compliance resulting to higher tax collection and, thus, a higher tax-effort ratio, according to BIR Deputy Commissioner Nestor S. Valeroso. A taxpayer found to be below industry benchmarks will be issued a notice to rectify his tax returns and improve compliance. The notice will also give the concerned taxpayer due process and the chance to rebut or prove otherwise the findings of the BIR. Rea Cu

Legislator proposes e-microinsurance for TNCs

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he House Committee on Transportation on Monday urged local insurers to develop affordable emicroinsurance products for transportation network companies (TNCs) and transportation network vehicle service (TNVS) units. Assistant Minority Leader Neil Abayon of Aangat Tayo party-list said the insurance industry, including the microinsurance sector, should create affordable emicroinsurance products the TNCs and TNVS operators can jointly avail of to provide insurance cover for their customers and hired drivers. “These [insurance products are very important] in case of accidents and other insurable situations,” Abayon said. According to him, e-microinsurance

is the solution that will address the concerns raised by the TNVS regarding limited shared liability. “E-microinsurance acquired by TNCs and TNVS to insure passengers can be designed to be specific to each booking, factor in road risks during bad weather and calibrated for risks during late-night trips and travel through high-risk areas or localities,” he added. The lawmaker also said car theft and robbery are among the insurable situations the e-microinsurance should cover. Earlier, TNCs Uber and Grab Philippines told the House of Representatives a total 118,398 cars ply the roads of Metro Manila. Meanwhile, Abayon also urged Uber, Grab and other TNCs to upgrade their

booking apps with emergency silent alarms so they can be instantaneously notified if or when their passengers and TNVS drivers are in danger. “[With these alarms, they can be notified if there is] imminent or present threat from robbers, carnappers, molesters or rapists. The TNCs should, of course, devise some ways by which they can alert the police of TNVS units in distress,” he said. A bayon sa id emergenc y si lent alarms could also be used for medical emergencies. “The emergency alarms should also be designed for medical emergencies, such as heart attacks, stroke, sudden childbirth, that could befall or affect their TNVS drivers and passengers,” he said. Jovee Marie N. dela Cruz

Buyers of nonlife insurance unduly taxed

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t is a fact that the buyers of nonlife insurance products are subject to an array of taxes based on the premium charged by the insurers. At present, the government collects the following taxes from nonlife-insurance policyholders: 12 percent value-added tax, a 12.5 percent documentary stamp tax, a 2 percent fireservice tax and a 0.15 percent to 0.75 percent local government tax. For example, those who purchase motor insurance will have to shoulder an additional tax amounting to approximately 25 percent of the premium, while the buyers of fire insurance are subject to an extra 2-percent fireservice tax or a total of 27 percent of the premium. Even microinsurance products

are subject to the same tax rates and this is truly a burden on the low-income sector of our country. Likewise, the Philippine Insurers and Reinsurers Association, the nonlife association of the insurance industry, as well as the Insurance Commission, have noted that the high taxes levied on buyers of nonlife-insurance policies was counterproductive and, thus, have jointly supported the reduction of the present rate of taxes to a more reasonable level. In this regard, they supported House Bill 3235, which was introduced by Representative Karlo Alexei B. Nograles at the 16th Congress of the House of Representatives, which seeks to reduce the taxes on

nonlife-insurance policies to a more reasonable rate of 2 percent of the premium and documentary stamps tax ranging from P10 to P100 per year similar to that now enjoyed by life-insurance policyholders. In the long term, we believe the approval of this bill in the present Congress will be beneficial to both the insurance industry and the government, as increased sales of non-life insurance will be generated by the reduction of taxes. It is a sad commentary, but why should nonlife-insurance buyers be so heavily taxed to protect their properties and assets against fortuitous events, such as fire and natural disasters.

​The golden rule in personal finance “We have committed the golden rule to our memory; let us now commit it to life.” ­—Edwin Markham

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ife is a constant change. We feel these around us. They may or may not have bearing on our existence, yet, to some people, there are major shifts that intimately affect their being. Are we comfortable with the idea of change or do we feel that the constant change means constant uncertainty? The dynamic relationship of a person with his life experiences brings a lot of changes. It may also have a direct impact on one’s financial condition. Changes like birth, life and death involve decisions. Decisions are always significant like whenever one leaves the family to work abroad for a better future or when buying a new car or in welcoming a new member in the family, to transfer to a bigger house or to save for the

education of the little ones. More often than not, the changes that occur are mostly predictable because they come in cycles. However, the adverse impact related to these changes often disrupts the normalcy of life, especially from the financial viewpoint. The life of a common Filipino is a good example of change. Filipinos are a friendly people able to keep smooth interpersonal relationship with others. Most leave the country to provide their loved ones a better life. So, aside from the various psychological makeup, Filipinos play different life roles as parent, daughter/son, brother/sister, friend, employee, spouse and the like. While the shifting of roles and the change that comes with it can go on and on, it is interesting that each life role accords its own financial role, not to mention complications, too. The sad plight of our kababayan who

Zell Sulit, MA

personal finance came back to the Philippines after working for so many years abroad with no savings and hunted down by creditors is a familiar story. They are the common example of people who regard the present as the moment at which they have finally become who they are the rest of their lives—but fail to succeed. Change may be complicated, but we don’t need to feel that constant change equals constant uncertainty. We often notice that most overseas

World water leaders cite PHL team in Korean event

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orld water leaders cited the 20-year-old successful publicprivate partnership (PPP) between the Metropolitan Waterworks and Sewerage System (MWSS) and its concessionaires Manila Water, Maynilad Water and San Miguel Corp’s Luzon Clean Water Corp. at the First Asia Water Week and Korea International Water Week in Gyeongju, South Korea. The three-day event brought together some 2,500 water stakeholders who discussed ways to establish lasting partnerships that are needed to resolve water issues around the world. MWSS Administrator Reynaldo V. Velasco, Manila Water President Ferdinand M. de la Cruz and Maynilad P resident R a monc ito S. Fer n a ndez shared stellar billing in the twin Korea water conferences as they presented “Water Security under the Duterte Administration and the Successful PPP in the Philippines”. “The Korea water conferences was an important event to promote the country’s effective, participative and successful PPP legal framework started in 1997 by President Fidel V. Ramos through a con-

cession agreement in the water industry that the Philippines, through Manila Water, is now exporting to Asean countries like Myanmar, Vietnam and Indonesia,” Velasco said. In his speech, de la Cruz said, “Water PPP can work in many places, provided the regulatory framework is clear, transparent and consistent. An output-based scheme is appropriate for the private sector to provide an environment to perform well and in an efficient manner. Water PPP has worked in Metro Manila. It has worked in other parts of the Philippines. It can work in many more places in Asia. Manila Water is a testimony that Asians can solve Asian water issues.” Fernandez said, “Our partnership with the MWSS has benefited millions of Filipinos, spurred economic activity with our investments and generated thousands of jobs. We are now setting our sights to other areas in the Philippines, as there are still 15 million Filipinos without access to water. We want to replicate our success story to other areas so others can also enjoy improved water supply and sanitation.”

Case clippings

By Justice S J Ranada Jr. SUMMONS–when substituted service is not proper Substituted service presupposes that the place where the summons is being served is the defendant’s current residence or office/regular place of business. Where the defendant neither resides nor holds office in the address stated in the summons, substituted service cannot be resorted to. Thus, substituted service of summons, upon a defendant thru a caretaker of defendant’s old family home is ineffective, where said defendant is already residing abroad. Express v. Ocampo 06 Sep 2017

workers are not prepared to go back to the Philippines despite the end of their work contract. The hard work of overseas Filipino workers (OFWs) does not equal the skills they need to achieve financial freedom. Although they earn more, they are caught in a cycle of financial instability and uncertainty. The have to have the skills to achieve their financial goals as solution to the uncertainty. However, not everyone is born with a natural talent to handle their own finances. There are but few who are fortunate, who can effortlessly manage their finances and succeed to fulfill their financial goals. They are those who practice financial emotional qoutient (FEQ ). It is FEQ that helps people to manage their finances and financial goals properly. The certainty of change does not distress them.

GR 202505 Jardeleza, J

The golden rule of personal finance is to understand one’s FEQ. There may be numerous financial resources and investment vehicles available, but a sound FEQ will make the difference between emotions that affect their financial decisions and to label them accordingly. Consequently, the emotional information will provide guidance in making sound financial decisions. The knowledge of FEQ can lead OFWs to the road of certainty. Life’s constant changes no longer mean uncertainty. Zell Sulit, RFP, is a registered financial planner. He is a founding member of the Psychological Empowerment to Resources and Aspirations Inc. To learn more about financial planning , at tend the 65th R FP prog ram this October. To inquire, e-mail at info@rfp.ph or text <name><e-mail><RFP> at 0917-9689774.

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The World BusinessMirror

Editor: Lyn Resurreccion • Tuesday, October 3, 2017 A7

‘Dreamers’ scramble to renew their protection

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OS ANGELES—Brian Solis was the first to arrive at 3 a.m. He unfolded his beach chair and tried to get some sleep, slumping over a backpack laden with schoolbooks and immigration paperwork. By dawn, dozens of others, many wearing hoodies and wrapped in blankets, had joined him on the sidewalk. Around the country, thousands of young unauthorized immigrants like them have been lining up at legal clinics and scrambling to finish paperwork before the clock runs out on their chance to live and work legally in the United States. Like Solis, who came to the United States from El Salvador when he was 7, they are hoping to renew their participation in Deferred Action for Childhood Arrivals (Daca), which since 2012 has allowed them to obtain work permits and reprieves from deportation, renewable every two years. But on September 5 the Trump administration announced that it was winding down the program, and that it would accept no more renewal applications after Thursday. Since the announcement, nonprofits and advocacy groups have rushed to offer free legal advice, help filling out applications and, in some cases, assistance covering the $495 renewal fee. In Chicago the Resurrection Project, which has held Daca clinics in Korean, African and Latino churches and centers, has processed about 45 applications a week since September 5, compared with just two or three a week previously. In Houston Catholic Charities has helped recipients replace documents lost in hurricane floodwaters and has held numerous application events. “Organizations like ours have been on overdrive,” said Amy Taylor, legal director for Make the Road New York, which she said had done “massive outreach” and hosted renewal workshops in Queens and on Long Island. In Los Angeles a group called Coalition for Humane Immigrant Rights of Los Angeles (Chirla) had arranged for lawyers and for help with the fee, which several people in line said they could not afford, especially on short notice. “That’s a whole paycheck—$495,” said Blessing Soriano, 21, who works

As a practical matter, not only 800,000 people are affected by what may happen here. It’s unacceptable, quite frankly, to me as a human being in America. I’m just glad I was born in Paterson, New Jersey, and not Mexico City.” —Judge Garaufis in retail and arrived at 5 a.m. to get a place in line. The Trump administration— facing the threat of a lawsuit from several Republican state attorneys general if it did not repeal Daca— argued that the program was unconstitutional and an overreach of presidential power. It said it would begin phasing out the Obama-era program, which covers about 800,000 people, on March 6, 2018. The president added that it was up to Congress to grant the protections, and he has urged it to do so. The administration allowed only those recipients whose benefits expire between September 5 and March 5, 2018, to renew for a final two years. About 154,000 fall into that group. Between September 5 and last Wednesday, the US Citizenship and Immigration Services said it had received 39,400 renewal requests, more than it typically receives in a whole month. That number does

Brian Solis, a Deferred Action for Childhood Arrivals recipient from Mexico, waits in line at the Coalition for Human Immigrant Rights of Los Angeles, on September 26. Christopher Lee/The New York Times

not include applications filed before September 5, or the ones that have flooded into government processing centers in the final days. Several advocacy groups and Democratic-led states are suing the government over the termination, claiming that it violates the Constitution and shows animus against Mexicans, who constitute the overwhelming majority of recipients, and other Latino groups. Last Tuesday Judge Nicholas Garaufis of US District Court in Brooklyn, who is hearing two Daca lawsuits, called the administration “heartless” for refusing his request to extend the October 5 deadline. “As a practical matter, not only 800,000 people are affected by what may happen here,” said Garaufis, referring to recipients’ families. “It’s unacceptable, quite frankly, to me as a human being in America. I’m just glad I was born in Paterson, New Jersey, and not Mexico City.” A Justice Department attorney responded that October 5 was an “appropriate deadline to promptly and efficiently” wind down the program. When Daca recipients apply for renewal, they must pass a new background check—those who have committed serious crimes may be rejected—update their information and provide details about their fi-

nancial circumstances. Question No. 3 on the form asks them to justify “economic need to work.” Applications are mailed to one of three lockboxes of Citizenship and Immigration Services, in Arizona, Illinois or Texas, depending on an applicant’s state of residence. Cases are reviewed at an agency center in Nebraska, and then applicants are notified to visit a facility in their area for fingerprints and photographs. Approvals take about three months. The demise of the program has drawn condemnation from corporations, faith-based groups and politicians on both sides of the aisle. Donors have contributed millions of dollars to help with the renewal fees. The San Francisco-based Mission Asset Fund has raised nearly $4 million, some of it from the W.K. Kellogg Foundation, to cover fees for about 6,000 applicants nationwide, express mailing them checks made out to the Department of Homeland Security. In Rhode Island philanthropy groups, companies and the state government joined forces to cover fees for all applicants. In Washington state an anonymous donor pitched in $125,000. In Texas Unbound Philanthropy is subsidizing renewals for those affected by

Hurricane Harvey. Mexican consulates are also assisting people who prove they cannot afford the fee. President Donald J. Trump, who has at times praised Dreamers—a common term for Daca recipients based on the never-passed The DREAM Act that would have provided similar protections for young immigrants—put the onus on lawmakers to protect the young immigrants as part of an overhaul of the immigration system that would also toughen enforcement. But if Congress does not act, the program’s expiration will begin to have life-changing consequences on beneficiaries come March 2018. Paula Romano, 31, whose protection expires on March 18, 2018, frets about losing the $73,000 salary that she earns managing the office of an oil-field company in Hobbs, New Mexico. For years, she toiled in the underground economy in food service. Thanks to Daca, five years ago she got a good job, received a promotion and saved enough for a down payment on a house. “I was able to achieve the middle class,” she said, “and now I feel the weight of uncertainty.” Jose Magon’s Daca expires on March 6, the day after the cutoff. “I

was hoping to continue my education and now I don’t know what will happen,” said Magon, 17, of Capitol Heights, Maryland. Some immigrants who do not realize they do not qualify for renewal are showing up at clinics, only to be turned away. “A lot of people who aren’t eligible come in, and there’s a lot of crying,” said Kathy Khommarath, a lawyer for Chirla, the group that held the Los Angeles event. Even those who were eligible did not want to leave anything to chance, so they lined up hours before the doors opened. “I wanted to make sure I could get in and get everything done, then make it to my calculus class and to work,” said Solis, 20, who manages inventory and schedules for a restaurant while attending community college, with hopes of transferring to the University of Southern California. Just before 10 a.m., Soriano stepped out into the bright sunshine with a huge smile on her face. Her application was done, and she planned to celebrate that night with dinner at Olive Garden. “I feel like the weight of the world is off my shoulders,” she said. “I’ll be heading to work happy, even if I’m tired.” New York Times News Service

Trump diminishes outreach to Pyongyang: Tillerson is ‘wasting his time’ on N. Korea

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ASHINGTON—President Donald J. Trump seemed to undercut his own secretary of state last Sunday as he belittled the prospect of a diplomatic resolution to the nuclear-edged crisis with North Korea even as the administration was seeking to open lines of communication. In a fresh set of Twitter messages from his New Jersey golf club, where he was spending the weekend, Trump diminished Secretary of State Rex W. Tillerson’s outreach to Pyongyang and its autocratic leader, Kim Jong Un, leaving the impression that he was focused on possible military action. On a visit to China, Tillerson acknowledged last Saturday that he was trying to open talks. “I told Rex Tillerson, our wonderful Secretary of State, that he is wasting his time trying to negotiate with Little Rocket Man,” Trump wrote, using the derogatory nickname he has assigned to Kim. “Save your energy Rex,” he added, “we’ll do what has to be done!” North Korea has provoked a confrontation with the United States and its Asian allies in recent weeks with

its sixth test of a nuclear bomb and its first successful tests of intercontinental ballistic missiles that could potentially deliver a warhead to the US mainland. Trump has responded by vowing to “totally destroy” North Korea if forced to defend the US or its allies, while ratcheting up economic pressure through sanctions. Tillerson told reporters traveling with him in Beijing last Saturday that he was seeking a diplomatic solution. “We are probing, so stay tuned,” he said. For the first time, he disclosed that the US had two or three channels to Pyongyang asking “Would you like to talk?” Therefore, he said, “we’re not in a dark situation, a blackout.” There have been no indications that Kim is any more interested in talks than Trump. He has responded to the president’s threats with more of his own, castigating Trump as a “mentally deranged US dotard” and suggesting through his foreign minister that he might order the first atmospheric nuclear test the world has seen in 37 years. Negotiations with North Korea have long proved frustrating to US

President Donald J. Trump walks to Air Force One at Joint Base Andrews in Maryland on September 29. Undercutting his secretary of state, the president told him not to bother with negotiations in the nuclear-edged crisis with North Korea. “Save your energy, Rex,” he wrote on Twitter last Sunday. Al Drago/The New York Times

leaders. Presidents Bill Clinton and George W. Bush both tried talks and granted concessions while ultimately failing to prevent North Korea from developing nuclear weapons. But national security analysts have said there is no viable military option at this point without risking devastating casualties. White House officials have had no comment on Tillerson’s disclosure, and it was unclear whether Trump was aware of it in advance or was using his Twitter feed to play

a diplomatic version of good cop, bad cop with his secretary of state. Trump plans to visit China, South Korea and Japan in November, among other destinations, to keep up regional pressure on Pyongyang. Sen. Bob Corker, RepublicanTennessee, chairman of the Senate Foreign Relations Committee, said the US had no choice but to seek a diplomatic agreement. “I think that there’s more going on than meets the eye,” he said on

Meet the Press on NBC before the president’s tweets. “I think Tillerson understands that every intelligence agency we have says there’s no amount of economic pressure you can put on North Korea to get them to stop this program because they view this as their survival.” “Should we step it up a little bit?” he asked. “The answer is absolutely yes. I mean, we should step it up. I mean, you know, we’re moving to a place where we’re going to end up with a binary choice soon.” Tillerson, a former chief executive of Exxon Mobil with no prior government experience, has been deeply frustrated working for Trump, according to associates, who have said it is not clear how long he will choose to stay. This was not the first time the secretary of state has been publicly contradicted by Trump. In June the president launched a harsh broadside against the Persian Gulf state of Qatar barely an hour after Tillerson, trying to mediate a dispute among Arab neighbors, called for a “calm and thoughtful dialogue.” The president has not shied away from undercutting other members of his own team during his eight

months in office. The most sensational example came in July, when Trump spent days publicly castigating Attorney General Jeff Sessions as “very weak” and saying that he regretted appointing him. The president’s tweets about Tillerson came on a day when he planned to attend the President’s Cup golf tournament and present the trophy to the winner at Liberty National Golf Club in Jersey City, not far from his own golf club in Bedminster, New Jersey. He planned to return to Washington in the evening. He continued to attack critics of his administration’s response to Hurricane Maria in Puerto Rico, which was left without power and with limited fuel, water and other basic services, calling some on the island “ingrates” for not appreciating all he had done. “We have done a great job with the almost impossible situation in Puerto Rico,” he wrote from his golf club. “Outside of the Fake News or politically motivated ingrates, people are now starting to recognize the amazing work that has been done by FEMA and our great Military.” New York Times News Service

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Tuesday, October 3, 2017

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China’s pollution curbs to slow growth, lift prices–SocGen

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hina’s drive to cut pollution could reduce economic growth by 0.25 percentage points in the next six months while boosting factory inflation, according to Société Générale SA (SocGen). Production cuts to curb emissions and tougher nationwide environmental inspections will also support the profits of large industrial companies as producer prices rise, said Yao Wei, chief China economist at SocGen in Paris. She added the campaign would give a “notable supply shock” to the economy. “The Chinese government has turned very serious about fighting pollution,” Yao wrote in a note. It will be “more than a transitory objective for the current leadership. Modestly slower growth will be a necessary sacrifice for maintaining social stability over the medium term.” Authorities have intensified their antipollution drive before a twice-a-decade Communist Party Congress set to begin on October 18. The expansion hasn’t yet shown signs of suffering for it, and economists surveyed by Bloomberg project a second-straight year of 6.7-percent growth. Yao reiterated her view that leaders are likely to tolerate growth rates below 6.5 percent in 2018 and beyond. That’s the country’s longerterm growth target for the five years through 2020, as well as the target for this year, when policy-makers have said they’re aiming for GDP growth “of around 6.5 percent, or

0.25% The percentage-points reduction in economic growth in the next six months that would be the result of China’s drive to cut pollution while boosting factory inflation, according to Société Générale SA higher if possible in practice.”

Growth targets

Annual growth should be no less than 6.5 percent in the next five years to realize the goal of doubling 2010 GDP and per-capita income by 2020, President Xi Jinping said in 2015. The 13th five-year plan unveiled that year was the first to confront an era of sub-7 percent expansion since Deng Xiaoping opened the nation to the outside world in the late-1970s. Now, if China manages to grow 6.8 percent this year, the pace of expansion needed to achieve Xi’s goal is just 6.3 percent in the next three years, Yao said. She wrote in a De-

cember report that China is poised to abandon its 6.5-percent growth target within two years as leaders push to contain asset bubbles and financial leverage. The Ministry of Environmental Protection’s new plan to tackle winter air pollution focuses on Beijing, Tianjin and the provinces of Hebei, Henan, Shanxi and Shandong. It aims to reduce coal consumption used for power generation, and vehicle emissions. Assuming production cuts are strictly implemented, industrial production growth is likely to be 0.6 percentage point to 0.8 percentage point lower than otherwise, while GDP growth will be 0.2-percentage points to 0.25 percentage points lower in the next six months, Yao said.

Output disruptions

“This campaign is likely to result in additional production disruptions on top of the impact of the antiair-pollution plan, as the inspections may have led to the closure or production suspension of factories throughout the country in a wide range of sectors,” Yao wrote, adding that supplier shutdowns could upset production by several major carmakers. She said that the push might have a lasting impact on local officials’ behavior when it comes to balancing economic growth and noneconomic developments. Inspection results, she added, “are said to have affected the potential promotions of thousands of officials, a stern reminder to other officials that environmental production should be given higher priority.” Bloomberg News

Confidence among Japan’s firms touches a decade high

People on the pedestrian crossing in Shibuya, Tokyo Bloomberg

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onfidence among Japan’s big manufacturers has improved to the highest level in a decade, underscoring Prime Minister Shinzo Abe’s run of success on the economy as he heads into an election later this month. Highlights Sentiment among large manufacturers rose to 22, from 17 three months ago, the highest level since September 2007 (estimate 18), according to the quarterly Tankan survey released by the Bank of Japan (BOJ) on Monday. The outlook among large manufacturers rose to 19, from 15 in June (forecast 16). The BOJ surveyed 10,687 companies from August 29 to September 29.

Key takeaways

A weak yen and a stronger global economy have fueled record profits in Japan, even as trade tensions and North Korea’s nuclear program have clouded the outlook. While Abe’s Liberal Democratic Party is expected to win a parliamentary election set for October

22, the margin will be important to his quest for constitutional revision. The longest economic expansion in a decade has raised sentiment, but many households are still waiting for companies to turn those profits into significant pay increases.

Economist views

“Manufacturing was up this time, which I think is due to the strong export figures through the summer,” said Masaki Kuwahara, senior economist at Nomura Securities Co. “But nonmanufacturing is flat, and investment plans from large companies look down a bit. So, while exports are strong, domestic demand is still subdued.” “Overall, it’s above consensus,” said Atsushi Takeda, an economist at Itochu Corp. in Tokyo. “What’s improving is machinery, and areas related to capital expenditure.” “Improvement in small- and medium-sized companies point to a broadening of better conditions,” Takeda added.

Bloomberg intelligence

A surprisingly sharp and broadbased improvement in business sentiment in theBOJ’s 3Q Tankan suggests the economic expansion is gaining staying power, Bloomberg Intelligence economist Yuki Masujima wrote. Stronger domestic demand, supported by public investment, is lifting the mood among smaller companies, which employ most of Japan’s work force, Masujima added. Some slack in capital expenditure plans is a concern, but could indicate that companies are directing more resources toward higher pay to attract workers in a tighter job market, he said.

Other details

Large manufacturers forecast the yen will trade at 109.29 per dollar for the fiscal year ending in March 2018. Large companies across all industries say they plan to raise fixed investment by 7.7 percent in the year through March 2018 (forecast 8.3 percent). Bloomberg News

Beijing smog

Bloomberg

Euro area’s danger year morphs into economic optimism

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he euro area’s year of living dangerously is turning out well. On track for the strongest economic expansion in a decade and with consumer and business confidence at the highest since before the financial crisis, the 19-nation economy is emerging as fertile ground for dealmakers, investors and executives. “The wind is well and truly back in the sails of Europe,” said Simon Wells, chief European economist at HSBC Holdings Plc. “The question for investors I suppose is: can this continue?” The upbeat outcome for 2017 wasn’t at all certain at the start of the year, when the shockwaves from votes for Brexit and US President Donald J. Trump were prompting warnings that the euro area would be the next to witness a populist surge that could splinter the currency bloc. Instead, as German Chancellor Angela Merkel readies for a fourth term in power, newly elected French President Emmanuel Macron is pushing a reform program, and fellow European Union leaders are planning deeper integration. The European Central Bank (ECB) forecasts an economic expansion of 2.2 percent this year, enough to persuade President Mario Draghi to consider slowing the institution’s extraordinary monetary stimulus. The Governing Council is slated to take that decision as soon as next month. Euro-area unemployment data on Monday will probably show a decline to 9 percent in August— the lowest level since early-2009, though still more than twice as high as the UK or US. A purchasing-managers survey the same day should show manufacturing activity at the strongest in more than six years, and economic confidence is at a decade high.

Mergers and acquisitions

Investors have responded by pushing the Stoxx Europe 600 up more than 7 percent this year, headed for the strongest gain since 2013. European takeovers have jumped 41 percent to $526 billion, offsetting a slowdown in US deals, according to data compiled by Bloomberg. Consumer transactions—such as French lensmaker Essilor International SA’s purchase of Luxottica Group SpA, the producer of RayBan sunglasses—are leading the increase, reflecting growing optimism that job creation will boost

household demand. “Confidence is rising,” Marco Settembri, head of Nestlé SA’s European business, said on Tuesday. “People are more confident to spend.” Politics could still get in the way. Italians will vote to choose their parliament next year, with the euroskeptic Five Star Movement set to make a strong showing. Merkel may have won the German election, but her party still had its lowest share of the vote since 1949 as the far-right Alternative for Germany made gains. That might throw a spanner in the works for Macron’s vision for overhauling the world’s largest trading bloc, where Germany’s cooperation—from setting up a common euro-zone budget to potential harmonization of corporate taxes— would be essential.

Euro upside

The brighter economic outlook and political stability are also helping to push up the euro, which has risen more than 12 percent against the dollar this year and almost 6 percent on a trade-weighted basis. While the single currency has stabilized in recent weeks, options show upside risk. That’s worrying for the ECB because it depresses import prices and so curbs inflation, complicating its discussion on whether to start paring back on its assetpurchase program. It also makes exports less competitive, an issue for countries, such as Italy, that rely heavily on foreign sales and haven’t quite healed the wounds from the recent crisis. HSBC est imates for ever y 10-percent jump in the tradeweighted euro, exports fall by 5 percent, and says net trade is going to be a drag on growth. Bloomberg Intelligence predicts the expansion will slow slightly in the third quarter and decelerate further into the end of the year as the economy approaches its potential, according to BI economist Maxime Sbaihi. The ECB itself forecasts a slowdown to 1.8 percent in 2018 and 1.7 percent in 2019. One warning sign? An unexpected decline in German business confidence for a second month in September. The region’s biggest economy also saw unemployment fall to a new record low last month—at 5.6 percent—but even it is struggling to lift wages and inflation. Bloomberg News

Saudi’s 0.6% growth in non-oil econ alarms experts

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audi officials steering efforts to prepare the kingdom for the post-oil era will likely pay little attention to the main reason that caused the economy to shrink in two consecutive quarters for the first time since 2009. T he big gest A rab economy contracted at an annual rate of 1 percent in the second quarter, after shrinking 0.5 percent in the previous three months—not an unexpected outcome at a time when the Organization of Petroleum Exporting Country members are cutting oil production to bolster prices. More alarming to analysts was the 0.6-percent growth in Saudi Arabia’s non-oil economy, showing the effects of government spending cuts and subdued consumer demand. That rate of expansion is insufficient to offset the impact of lower oil output or to reduce unemployment, according to Ziad Daoud, an economist with Bloomberg Intelligence based in Dubai. “There has been little momentum in the non-oil sector—its growth rate has been stuck at below 1 percent for a few quarters,” he said. “For an economy that’s trying to diversify away from oil, the performance of the non-oil sector has been too closely linked to oil prices. Breaking this link should be the main priority of Saudi policymakers.” Crown Prince Mohammed bin Salman is leading the push to transform the economy at a time when crude prices are at about half their 2014 peak, ending more than a decade of prosperity that helped government coffers swell and Saudis enjoy generous handouts. Under his plan, authorities have reduced subsidies and capital spending to control a budget deficit that ballooned to about 15 percent of GDP. They also canceled some financial perks for state employees, but reversed the decision in April. The latest data showed that businesses and Saudi consumers were still struggling to cope with government policies. Private-sector activity grew at an annual rate of 0.4 percent, compared with 0.9 percent in the previous quarter. “There is very little capital spending going on in Saudi Arabia at the moment,” Mohamad Al Hajj, an equities strategist at the research ar m of EFG Hermes in Dubai, told Bloomberg TV. Bloomberg News

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Catalans signal they may declare independence within a week

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atalan separatist leaders signaled they might be moving toward a unilateral declaration of independence as early as this week after hundreds of activists were injured last Sunday as they sought to stop Spanish police from shutting down an illegal referendum. Catalan President Carles Puigdemont appealed to the European Union for support as he pledged to inform the regional parliament of the result of the vote in the coming days. The assembly will then act in line with the referendum law, Puigdemont said—and that could lead to a unilateral declaration of independence within 48 hours of the notification. “The citizens of Catalonia have won the right to have an independent state,” Puigdemont said in a televised statement, flanked by members of his regional administration. Catalonia’s government will hold a closed-door Cabinet meeting to discuss the next steps in its plan to declare independence from Spain following a disputed referendum marred by violence. Regional officials say the vote, which Spain insists is illegal and invalid, shows that a majority favor secession. Puigdemont will chair Monday’s meeting, which is expected to consider asking the regional parliament to vote on an independence declaration later in the week. Spanish Prime Minister Mariano Rajoy, meanwhile, meets with ruling party leaders before seeking a parliamentary session to discuss how to confront the country’s most serious crisis in decades. Catalonia said preliminary poll results showed 90-percent favored independence after under half the electorate voted in a day that saw around 850 people injured in clashes with the police. Two million Catalans backed independence out of 2.3 million votes cast in total, government Spokesman Jordi Turull said at news conference in the early hours of Monday. Just over 5 million people were eligible to vote. Before the government crackdown began, separatist leaders said they would be comfortable declaring independence with about 1.8 million votes. Puigdemont’s time frame could see him announce the formation of a Catalan republic on October 6, exactly 83 years since his predecessor as regional president, Lluis Companys, also declared independence. Companys was executed by the dictatorship of Francisco Franco. The euro fell 0.33 percent to $1.1776 in early-Monday trading in Asia. “The developments in Catalonia sent the euro lower in early trading, but is unlikely to cause wider negative effects on European

asset prices,” said Khoon Goh, head of Asia research at Australia and New Zealand Banking Group Ltd. in Singapore. Rajoy is wrestling with his country’s biggest constitutional crisis since Franco’s death in 1975, as Puigdemont looks to harness decades of frustration to force Catalonia out of Spain. Heading a minority government, Rajoy is fighting to maintain his authority as allies peel off in the national parliament and his officials struggle to enforce the law in the rebel region. While a declaration of independence would have no legal force, and would most likely not be recognized by the international community, it would nevertheless constitute a historic challenge to the authority of the Spanish government and state institutions. Last Sunday night Rajoy praised the police for their “calmness” in defending the constitutional order after they raided polling stations and seized ballot boxes in their efforts to shut down the vote. As forces deployed, camera phones beamed the confrontations to the world. In one video, broadcast by a local newspaper, a woman is seen being thrown down a flight of stairs. In another, the police rip ballot boxes from the hands of would-be electoral officials. “We’ve proved that our rule of law has the resources to repel an attack on democracy of this magnitude,” Rajoy said in a televised statement. “Look for no culprits other than those who organized an illegal act and have broken our common bonds. We’ve witnessed the type of behavior that would be repugnant for any democrat: the indoctrination of children, persecution of judges and journalists.” As polling stations prepared to open at 9 a.m., officers in riot gear smashed in the doors and dragged protesters away by the hair, beating some with batons and firing rubber bullets at others. The Catalan government said 73 percent of polling stations had opened. “There are no words to describe what this government has done,” said Anna Bonet, a 56-year-old homemaker who’d waited since 6 a.m. to vote for independence. “We’re living under a state of emergency.” Puigdemont described the crackdown as an “unjustified, excessive and irresponsible use of violence.” “The European Union can no longer look the other way,” he said after the polls had closed. “It must act swiftly to maintain its moral authority inside and outside the continent when these abuses are scandalizing good men and women all around the world.”

Bloomberg News and AP

2 women plead not guilty in N. Korean scion’s killing

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HAH ALAM, Malaysia—Two women accused of fatally poisoning the estranged half brother of North Korea’s ruler pleaded not guilty as their trial began on Monday in Malaysia’s High Court, nearly eight months after the brazen airport assassination that sparked a diplomatic standoff.

Siti Aisyah of Indonesia and Doan Thi Huong of Vietnam are suspected of smearing Kim Jong Nam’s face with the banned VX nerve agent on February 13 at a crowded airport terminal in Kuala Lumpur, killing him within about 20 minutes. The women say they thought they were playing a harmless prank for a hidden-camera show. After asking for the charges to be read in their native languages, the women shook their heads when asked if they were guilty. The two women are the only suspects in custody in a killing that South Korea’s spy agency said was part of a five-year plot by North Korean leader Kim Jong Un to kill a brother he reportedly never met. The police say several North Koreans suspected of involvement left the country on the day of the attack. Others who holed up inside North Korea’s embassy were allowed to leave in a deal with Pyongyang to ease tensions, despite Malaysia’s anger at the public use of a chemical weapon on its territory. Lawyers for two women, who face the death penalty if convicted, asked the court to compel prosecutors to

identify four people still at large mentioned in the charge sheet as having a common intention to kill Kim. The judge denied the request. “A fair trial must include the right to know,” Gooi Soon Seng, Aisyah’s lawyer, told the court. “The charge must be clear, not ambiguous.” Prosecutors began calling witnesses, including an airport informationcounter worker and a police officer who were among the first to interact with Kim after the attack. The prosecution phase of the trial is expected to last about two months, after which the judge will decide if there is a strong case for the women to have to mount their defense, said Hisyam Teh Poh Teik, Huong’s lawyer. Kim, who was 45 or 46, was the eldest son of the family that has ruled North Korea since its founding, yet he reportedly fell out of favor in 2001 when he was caught trying to enter Japan on a false passport, saying he wanted to visit Tokyo Disneyland. He had been living abroad for years and at the time of his death was traveling on a North Korean diplomatic passport under the name “Kim Chol.”

North Korea has a long history of ordering killings of people it views as threats to its regime, though Kim was not thought to be seeking influence over his younger brother. He had, however, spoken out publicly against his family’s dynastic control of the reclusive, nuclear-armed nation. Pyongyang has denied any role in the killing and has not even acknowledged the dead man was Kim Jong Nam. It has suggested the victim died of a heart attack and accused Malaysia of working with South Korean and other “hostile forces” in blaming Pyongyang. During Monday’s hearing, Kim was referred to as “Kim Chol.” The two defendants listened intently and were briefed by their translators during the trial, with Huong seen smiling on several occasions. The trial will be closely watched by the Indonesian and Vietnamese governments, which have hired lawyers to defend the women. Aisyah’s core defense will be that she didn’t know she had poison on her hand when she smeared Kim’s face and was instead the victim of an elaborate trick, her lawyer Gooi said before the trial began. The 25-year-old was at a pub in Kuala Lumpur in early-January when she was recruited by a North Korean man to star in what he said were video prank shows, Gooi said. Over the course of several days, the North Korean, who went by the name James, had Aisyah go out to malls, hotels and airports and rub oil or pepper sauce on strangers, which he would film on his phone, the lawyer said. Aisyah was paid $100 to $200 for each prank and hoped the income would allow her to stop working as

L

Joseph Lombardo said. Authorities say the man died. The police did not release the suspect’s name but said he was a local resident. Concert-goers reported hearing what they described as automatic gun fire during the shooting. Lombardo said they believe this was a “lone wolf” attack but said they were looking for a roommate of the dead suspect as a person of interest. The two slain off-duty officers were attending the concert, Lombardo said. An on-duty officer was in critical condition and another was

an escort, Gooi said. In late-January Aisyah flew to Cambodia, where James introduced her to a man called Chang, who said he was the producer of video prank shows for the Chinese market, the lawyer said. Back in Malaysia, Chang asked Aisyah to do several more pranks at the Kuala Lumpur airport a few days before Kim was attacked. At the airport on the day of Kim’s death, Chang pointed him out to Aisyah as the next target and put the poison on her hand, the lawyer said. The police say neither Chang nor James were who they say they were. Chang was actually Hong Song Hac, one of four North Korean suspects who left Malaysia on the day of the killing, while James was Ri Ji U, one of another three North Koreans who hid inside their country’s embassy in Kuala Lumpur to avoid questioning. Those three were later allowed to fly home in exchange for nine Malaysians allowed to leave Pyongyang in a deal easing the countries’ tensions. Gooi said James was key to Aisyah’s defense and that his absence could weaken her case. Aisyah, who has a son, wrote to her family and told them to pray for her “so that the case will be over soon and I can go back home.” The 29-year-old Vietnamese suspect Huong was caught on airport security surveillance camera wearing a white sweatshirt emblazoned with the big black letters “LOL”—the acronym for laughing out loud. Little is known about her. Raised in a rice farm in northern Vietnam, her family said they had hardly heard from her since she left home a decade ago. She made postings on a Facebook page under the name Ruby Ruby, according to her niece, Dinh Thi Quyen. AP

Edmonton attack suspect faces terrorism charges

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Independence supporters gather in Barcelona’s main square, Spain, last Sunday. Authorities say 844 people and 33 police were injured in Spanish police raids to halt the independence vote organized by the Catalan autonomous government that was declared illegal by Spain’s constitutional court. AP/Santi Palacios

Shooting on Las Vegas Strip kills 20, wounds more than 100 AS VEGAS—A gunman on the 32nd floor of a Las Vegas Strip casino opened fire on an outdoor music festival, killing at least 20 people—including two off-duty police officers—and wounding more than 100, officials said early on Monday. Country-music star Jason Aldean was performing when the shots began ringing out last Sunday night at the Route 91 Harvest Festival. Officers confronted the suspect on the 32nd floor of the Mandalay Bay Hotel and Casino across the street from the concert, Clark County Sheriff

Tuesday, October 3, 2017 A9

wounded, Lombardo said. Several officers from California were attending the music festival. A Bakersfield police officer was shot and taken to the hospital with non-life threatening injuries. Hours after the shooting, Aldean posted on Instagram that he and his crew were safe and said the shooting was “beyond horrific.” Kodiak Yazzie, 36, said he and his girlfriend were watching Aldean’s performance when he heard what sounded like fireworks. The music stopped temporarily and started up again before

another round of pops sent the performers ducking for cover and fleeing the stage. Thousands f led as bursts of gunfire could be heard for more than five minutes, Yazzie said. Jose Baggett, 31, a Las Vegas resident, said he and a friend were in the lobby of the Luxor hotel-casino—directly north of the festival—when people began running. He said people were crying and as he and his friend walked away, they encountered police checkpoints where officers were carrying shotguns and assault rifles.

“There were armored personnel vehicles, SWAT vehicles, ambulances and at least a half-mile of police cars,” Baggett said. Witnesses said they saw multiple victims and dozens of ambulances near the concert venue. Some attendees later huddled in the basement of the nearby Tropicana hotelcasino. Authorities shut down part of the Las Vegas Strip and Interstate 15. Flights were temporarily halted at McCarran International Airport because of the shooting, the airport said on its verified Twitter account. AP

harges a r e p e n d i n g against a suspect in a knifeand-vehicle attack outside a football game in the Canadian city of Edmonton that left one police officer and four pedestrians injured, a day before two women were killed in France by a man wielding a knife. Charges are anticipated “in the very near future” against a Somali national accused of running down and stabbing a police officer and then injuring four pedestrians in a high-speed chase through the streets of Alberta’s capital, Marlin Degrand, assistant commissioner for the Royal Canadian Mounted Police, said at a news conference last Sunday afternoon. It was the latest in a series of assaults around the world that authorities have labeled as terrorism, including a blast on a commuter train in London last month and last Sunday’s knife attack in Marseille’s Saint Charles train station in France. Earlier this year, a gunman killed six people inside a mosque in Quebec City. In 2014 a man killed a soldier in Ottawa and stormed the parliament building with a rifle before he was shot. The attack last Saturday night happened outside an Edmonton Eskimos Canadian Football League game promoted as a military-appreciation event. A man driving a Chevrolet Malibu drove into a police officer, got out of the vehicle and began stabbing the officer before fleeing the scene, Edmonton Police Service Chief Rod Knecht said in a news conference last Sunday. Bloomberg News

A10 Tuesday, October 3, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Strengthening Filipino families

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ot too many Filipinos might be aware that there is such a thing as a National Family Week and that the country just concluded its 25th-year celebration of the event.

The National Family Week is based on Presidential Proclamation 60, which was signed by former President Fidel V. Ramos on September 28, 1992. It seeks to strengthen family unity and relationships through the promotion of Filipino family values. Held every fourth week of September, this celebration is led by the Department of Social Welfare and Development as chair of the National Committee on the Filipino Family, together with partners from other government agencies, non-governmental organizations, academe, churches and sociocivic groups. In recognition of this milestone year, the theme for the 2017 celebration is “Tungo sa Maginhawa, Matatag at Panatag na Pamilyang Pilipino”, which envisions better initiatives to strengthen the Filipino family in the new generation. The Family Code says the family is the foundation of our nation. It is the basic unit of our society, “which public policy cherishes and protects”. But what constitutes a family nowadays? Family relations are no longer confined between husband and wife or parents and children, or among brothers and sisters, as defined in the Family Code. In the Philippines, where millions of Filipinos work abroad, where more women join the work force every day and where there are more dual-income families than ever before, it is not uncommon to have married couples or parents and children who live in different places, to have grandparents caring for grandchildren or aunts and uncles caring for nieces or nephews while the parents work overseas or other kinds of family structures. It is understandably quite difficult to encourage a positive experience and have positive relationships at home when one or both parents are working abroad or are too busy eking out a living here in their own country. Poverty and the pressure to make ends meet definitely put a stress on family relationships. We certainly welcome the government’s commitment to the Filipino family, in its various forms and structures, and we hope last week’s activities will eventually result in a variety of doable strategies and policies that would help Filipinos cope with work and family responsibilities. Of course, first things first: ensuring long-term economic growth and job creation would help bring more Filipino fathers and mothers working abroad back home, which, in turn, would help immensely in restoring harmonious family relations. The government is also armed with a host of labor-friendly laws and policies that are supposed to guarantee not only better working conditions but also more time with one’s family, like maternal- and paternal-leave laws, childcare provisions and flexible work arrangements. However, these laws must be strictly and seriously enforced, otherwise they would just look good on paper. In the private sector, companies must also recognize that having a familyfriendly culture and implementing family-oriented policies could actually improve the bottom line of their businesses. Flexible work arrangements, for instance, not only help workers spend more time with their families but also greatly improve their productivity. Fastevolving technologies certainly allow more and more workers not to come into the office every day. A 2012 poll by property lessor Regus Centres Inc. revealed that 68 percent of businesses in the Philippines believe they are more productive as a result of flexible work arrangements, and 63 percent have seen an increase in revenues accordingly. More and more companies are also providing child-care services in their workplaces, which has also boosted their employees’ morale and productivity while reducing turnover, tardiness and absenteeism. We hope employers everywhere in the country would help their workers achieve work-family balance by having such and similar practices. No doubt, happier families lead to happier workers, which could only ensure a high return on their investments.

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Changes Manny B. Villar

THE Entrepreneur Continued from A1

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dvancements in technology are bringing changes much faster today, so we often hear people saying time is getting faster.

It was not so long ago when we used the analog telephone with the circular dial to communicate. For long-distance calls, we needed operators to connect with other people. Then came the cellular or cell phones, which first discarded human operators for overseas calls, then introduced the face-to-face calls. Filipinos can talk with and see their loved ones almost in any part of the globe in real time—it doesn’t matter whether it is morning in Manila and evening in Los Angeles. In the transport sector, commuters no longer have to wait for taxis to come by; they just need the mobile application, and the Uber or Grab vehicle will come to their door. Also in the transport sector, concern for the adverse impact of climate change has ushered in the development of cars that run on electricity instead of fossil fuel. The major car companies—General Motors,

Nissan, Ford and others—have joined the competition launched by Tesla in producing electric cars. Some countries in Europe are already setting dates on when only electric cars would be allowed on their roads. Some manufacturers are also making plans to shift to the production of environment-friendly vehicles and totally abandon gasoline and diesel cars. New cars are now equipped with systems that automatically stop them before a collision happens. Driverless cars, which we saw only in the movies, are no longer a dream— they are already a reality. Some changes completely affect how we do things. For example, the advent of mobile communications completely discarded the analog system. When it comes to shopping, however, the growth of online shopping may not have an immediate and significant impact on mall shopping.

Based on recent news reports, the Philippine Retailers Association said many of its members were losing customers to online shopping, which offers convenience amid the traffic congestion in Metro Manila.Online shopping sites are estimated to account for a 5-percent share of the retail business at present. In a research note, Colliers International noted that the recent launch of Amazon in Singapore indicated the growing interest in Southeast Asia as an e-commerce hub. In the Philippines, some mall developers are partnering with online shopping platforms and logistics firms, such as Zalora, Lazada and 2Go, to reach remote areas that are becoming hot spots for online shopping. Lazada already has two logistics hubs in the Philippines—one in Muntinlupa and another in Cebu. However, traffic congestion, which online shoppers avoid, also serves as a disadvantage, because it delays delivery of purchases. This is why online shopping sites cannot compete with supermarkets when it comes to fresh produce and other perishable groceries. Modern malls have other inherent advantages that are difficult for online shopping to beat—they provide a complete menu of activities, like dining, entertainment, services and supermarkets—in addition to shopping. Many shoppers want to see and

Business principles taught by an expert John Mangun

OUTSIDE THE BOX

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T is a tale of the rise and fall of a man worthy of the best Shakespearean tragedy. A child born in poverty is shielded from that poverty by his mother, who humiliates herself so her son can have new shoes. Throughout his life, his mother is there to support and encourage his efforts to be successful.

At his peak, he employs thousands, and his generosity helps thousands more. But, in the end, he is ruthlessly and mercilessly taken down and killed by his enemies, leaving behind an unparalleled legacy. A grieving mother stands by his grave. Unfortunately the “unparalleled legacy” belongs to Colombian Pablo Escobar, the most notorious drug lord and narco-terrorist in history. Escobar’s legacy also includes the murder of thousands while supposedly becoming the seventh-richest man in the world with an enterprise generating personal revenues of $20 billion a year. While it probably would not be a good idea to encourage your

children to emulate Escobar’s rise to fame and fortune, there are some valuable business lessons that his career can teach. And, contrary to popular belief, Escobar’s family was middle class, his mother being an elementary-school teacher.

Expand and diversity

Escobar reportedly started smuggling and selling cigarettes on which taxes had not been paid. His son claims that his father was also counterfeiting and selling fake highschool diplomas. This clearly shows him expanding and diversifying his product line. But the early-1970s saw Americans beginning to discover the

untold joys of heavy cocaine use, and that is where Escobar set his sights. The US demand for cocaine was huge, and Escobar filled that demand.

Incentivized everyone

The old saying that “If you pay peanuts, you get monkeys” is valid. But, also, if you pay a basic salary, you get basic performance. While the 20/80 rule—20 percent of your marketing force generates 80 percent of your sales—is also relevant, you still need to offer incentives to everyone. However, bonus money often needs to be combined with penalties for not meeting goals. Escobar followed the motivational technique of “plata o plomo”—silver or lead. “Take the money [bribe], or I will take your life” may not be applicable to all companies, but the principle properly applied can make for a more successful business.

Befriend your competitors

Competition is a healthy outside factor for any business. It keeps you sharp, flexible and ready to meet new challenges. But too many business owners view their competition as a threat. The goal of any group of competitors should be to expand the total market rather than simply

try the clothes or shoes before they buy—items bought online need to be returned for replacements if these fail to satisfy the buyers. On a more human perspective, of course, it’s not possible to go on a movie or dinner date online. In general, however, we cannot avoid change. We have to accept the fact that life today, which was not the same 10 years ago, will not be the same 10 years from now. The private sector, which is usually the first affected by changes brought in by new technology, must always be prepared to make adjustments to adapt to these changes. The invention of computers killed typewriter companies—I tried, and failed, to locate a single store selling brand-new typewriters in Metro Manila; I was told only reconditioned models were available. The development of computerized offset systems forced the retirement of the skilled typesetters in local printing companies, as well as the telephone operators in the telecommunication firms. We should not look at changes as threats or enemies, but as challenges to do better. This is how local retailers cope with the global trends in the business, which encouraged international brands to come into the Philippines, and made the country a shopping destination in this part of the world.

For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

trying to gain a larger piece of a smaller pie. The Cali drug cartel was too greedy and coveted Escobar’s dominance of the South Florida cocaine market. Escobar had no choice but to become a “bitter enemy”. Both drug cartels suffered.

Never mix politics and business

IN 1982 Escobar was elected as an alternate member of the Chamber of Representatives of Colombia. With his “pork-barrel” funds, supplemented by his own money, Escobar was responsible for building houses and recreational facilities, and his popularity with people increased. However, the law of the jungle says that politicians trade influence and power for money. Businesspeople trade money for political influence. That keeps the system functioning properly. Therefore, when a wealthy person steps into the political arena, politicians rightly feel threatened and cannot tolerate this sort of situation. Be a politician or a business mogul—not both. 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.

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Tuesday, October 3, 2017 A11

Corruption in the Ombudsman Helping gov’t fight illicit cigarettes that led to a bloodbath Ernesto M. Hilario

Cecilio T. Arillo

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ALKING of corruption, here’s one for the books: On August 23, 2010, exactly 54 days before the Aquino Administration completed its second month in office, the sorry state of the country’s corruption and national security situations embarrassingly unfolded before the eyes of the world. For 10 hours on that fateful day, a man armed with an M16 automatic rifle and a .45 caliber pistol held hostage a busload of tourists from Hong Kong, killing eight of them and wounding seven others. The incompetence of the government in negotiating, in neutralizing the gunman and in controlling the crowd of onlookers, unfolded in living colors before television screens. What eventually came to light was that the gunman was a highly decorated police officer, Capt. Rolando Mendoza, who was dismissed from the police after 30 years of service and his meritorious appeal for reinstatement, which should have been resolved within five days, had been pending with the Office of the Ombudsman for more than nine months. Mendoza claimed that his motion for reconsideration was not acted upon because he failed to pay the P150,000 that an Ombudsman official demanded. Instead of investigating his startling revelation that could have prevented the bloodshed, Ombudsman authorities just ignored him. While negotiators were feverishly working for his surrender, he saw on TV his younger brother, Gregorio, also a policeman, being arrested and disarmed while trying to help pacify him. That scene enraged him, and he started shooting his hostages. It was only then, over nine and a half hours later that the police stormed the bus. The younger Mendoza later told reporters his brother had grown tired of waiting for justice. The police assault stalled when they failed to immediately break through the plexiglass windows of the bus to force open its door. It strangely took 66 minutes, from the time the assault began, to finally neutralize the gunman when a sniper shot him in the head. Subsequently, the committee tasked to investigate and review the incident adjudged the police ground commander to have been an “incompetent commander, organizer and manager”, who was also “grossly and recklessly insubordinate at a most crucial moment”. The committee also found fault with many more people, including the top officials of the city of Manila for failing to fully activate the Office of the Ombudsman, ranking and middle-level officers of the police and meddlers from the press. In the epilogue of its report, the committee wrote: “The ghosts are ours alone. A man with a perceived injustice and oppression done against him, so common in Philippine society, cornered and forced to a murderous and insane mission, the incompetence and insubordination of a police commander, the aggravating vigilantism of a politician, the disregard for the proper use of a crisis system by the crisis responders, the reckless irresponsibility of media people and their total abhorrence to any form of the restraint in the practice of their trade. These are our own ghosts that we must now face squarely.…” Investigators learned later that the irate Mendoza was removed from his post as chief of the Manila Police’s Mobile Patrol Unit in 2008 after he was charged with a flimsy crime of robbery and extortion, known as the so-called hulidap, a practice of some police

What eventually came to light was that the gunman was a highly decorated police officer, Capt. Rolando Mendoza, who was dismissed from the police after 30 years of service and his meritorious appeal for reinstatement, which should have been resolved within five days, had been pending with the Office of the Ombudsman for more than nine months. Mendoza claimed that his motion for reconsideration was not acted upon because he failed to pay the P150,000 that an Ombudsman official demanded. of planting evidence and extorting from the victims. Mendoza claimed he was innocent and appealed for reinstatement. After hitching a ride while the tourist bus was moving from Fort Santiago to Manila Ocean Park, Mendoza pulled out his guns from a bag, told his hostages to freeze and posted hand-written messages on the bus windows, including “Big deal will start after 3 p.m. today,” that alarmed policemen patrolling nearby. As the bus stopped, he just ignored some policemen who tried to convince him to give up. Meanwhile, the bus driver, Alberto Lubang, 38, who escaped minutes before the attack, told police and reporters that hostages had already been killed. Media men at the scene claimed Mendoza was provoked by the sight of his emotional policeman-brother being pacified and handcuffed. On October 2, in the aftermath of that hostage-taking incident, then-President Benigno S. Aquino III issued Memorandum Order 6, directing the formulation of the National Security Policy and National Security Strategy for 20102016. The policy and strategy were to focus on four key elements: governance; delivery of basic services; economic reconstruction and sustainable development; and securitysector reform. He directed the national security adviser and director-general of the National Security Council to submit the National Security policy by endNovember 2010, and the National Security Strategy by end-April 2011. All government agencies were tasked to prepare security-related programs. The private sector was enjoined to participate, “in order to arrive at a national consensus on our development objectives and national security priorities”. One might conclude that, with the new National Security Policy in place, our lives and businesses can proceed in an environment of peace, safety and security. But, it was not the case, as his inept government got stuck with several more intractable incidents, including plunders and corruption of every size, make and shape involving billions of pesos in pork-barrel funds and the Malampaya funds. Worse, the corruption at the Ombudsman was not even investigated, and, thus, created a perception that it exists just to protect the Yellows. To reach the writer, e-mail cecilio.arillo@ gmail.com.

ABOUT TOWN

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lans to impose new taxes to fund government’s ambitious “Build, Build, Build” infrastructure program will be for naught if no decisive action is taken against smugglers.

A recent study commissioned by the Federation of Philippine Industries (FPI) under its Fight Illicit Trade project showed that, from 2011 to 2015, the government failed to collect P904.6 billion in revenues due to smuggling. The largest value of smuggling was recorded in the petroleum industry, amounting to P680 billion. Cigarettes made it to the top 10, contributing about P10 billion in foregone revenues. The other most smuggled goods are steel at P106.1 billion; resin, P42.9 billion; palm oil, P30.9 billion; wood, P24.8 billion; sugar, P9.3 billion; and automotive battery, P750 million. The latest order from the Department of Finance (DOF) tasking the Bureau of Internal Revenue (BIR)

and Bureau of Customs (BOC) to intensify their campaign against smuggling of tobacco products and even local production of counterfeit cigarettes is a welcome move. Finance Secretary Carlos G. Dominguez III has specifically instructed the BIR and BOC to keep a vigilant watch on fake and smuggled cigarettes amid the annual increments in tobacco excise tax. This year tobacco excise tax is at P30 per pack. Next year it will further adjust to P31.2 per pack. Government has all the right to fret over the impact of cigarette smuggling if it wants to keep its 2017 excise-tax target of P173.19 billion, with tobacco tax alone valued at P120.66 billion. Notwithstanding Executive Order 26, the tobacco industry can

Kneeling versus winning By David Leonhardt New York Times News Service

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hen a young organizer named John Lewis spoke at the March on Washington in August 1963, he delivered a scorching rebuke of racism and its “political, economic and social exploitation”. But Lewis also did something else: He aligned his side, the civil-rights movement, with the symbols and ideals of America. The marchers would not rest, he said from the Lincoln Memorial steps, “until true freedom comes, until the revolution of 1776 is complete”. It was a deliberate strategy. Even as the movement’s leaders raged, most justifiably, against their country’s oppression of them—and even as their enemies called them traitors—they cast themselves as patriots, the historian Simon Hall has noted. They urged the country to live up to its founding creed. They knew that by doing so, they gave themselves the best chance to win their fight. In one of his first prominent speeches, during the 1955 Montgomery bus boycott, Martin Luther King Jr. spoke of “the glory of America, with all its faults”. At the March on Washington, King described not just a dream but “a dream deeply rooted in the American dream”. Before finishing, he recited the first seven lines of “My Country, ‘Tis of Thee,” ending with “Let freedom ring!” A year-and-a-half later, marchers from Selma to Montgomery carried American flags. Segregationist heck-

lers along the route held up Confederate flags. Within six months, Lyndon Johnson had signed the Voting Rights Act. Symbols matter in politics. They often matter more than the detailed arguments that opposing sides make. Symbols are a shortcut that helps persuadable outsiders figure out where to line up. The professional athletes doing political battle with President Donald J. Trump are heirs to the civil-rights movement. They are protesting government-sanctioned violence against African-Americans. Risking popularity for principle, they have shown a courage frequently lacking among the affluent and famous. Trump, meanwhile, is heir to yesterday’s racist demagogues. He called an athlete “a son of a bitch” not long after saying that white supremacists included “very fine people”. (This weekend, he used an insulting stereotype against, of all people, Puerto Ricans.). From a moral standpoint, this issue is clear. The athletes are right—and

now heave a sigh of relief that, finally, the government is doing something to address the problem of smuggling and counterfeiting of their tax-paid products. Since the time that tobacco taxes were hiked years ago, fake and smuggled cigarettes have proliferated. Smugglers were dumping cheap smuggled and counterfeit cigarettes in Southern Mindanao, reaching Western Visayas such as Bacolod, Iloilo and even the province of Cebu. Luzon has its share of fake and smuggled cigarettes in Central Luzon. In Manila, fake cigarettes have started to appear at the “University Belt” along Recto Avenue. The illicit cigarettes come from Thailand, China, Indonesia, Taiwan, Vietnam and Malaysia. In Malaysia, which has increased its taxes over the years, the illicit trade has reached close to 60 percent and some of it is probably finding its way to our shores. The previous government responded by launching an app that could empower smartphones to track fake cigarettes via its tax stamps. The BIR app was initially effective but was somewhat limited due to its erratic efficacy and the lack of broader access to the Internet. The FPI, which counts local tobacco players as members, took the

initiative by launching its Fight Illicit Trade campaign and has been collaborating with law-enforcement agencies to catch smugglers and counterfeiters. But, after some time, syndicates will pick up a lesson or two by improving their smuggling and counterfeiting ways. This is where the government should wise up and revisit its policing tools. It might need to secure the help of its Asean neighbors to stamp out illicit trade, considering that the latest batch of smuggled cigarettes came from Thailand. It will also need to get the assistance of local tobacco players to track and trace smuggled and counterfeit cigarettes sneaking into the market. The import of this marching order from the DOF is that, aside from its adverse impact to state coffers, smokers have the right to be protected from smuggled cigarette products that have questionable origin, content and intent. Because, with the rise in terrorism, the trade of illicit cigarettes is proving to be a lucrative tool to raise funds for their guns and bombs. This is where the government should really step up its game.

have every right to protest as they have. Trump is wrong, about the scourge of police violence and about freedom of speech. But righteousness does not automatically bring effectiveness. And as someone who cheers when Stephen Curry or Von Miller speaks out and makes the president look small, I’ve reluctantly become convinced that many athletes are making a tactical mistake. Yes, the athletes and their allies can make nuanced, genuine arguments about why kneeling during the national anthem is not meant as a rebuke to the entire country. Liberals have rallied to their side, almost uniformly. I have the same instinct. Winning over blue America, however, is a pretty modest goal. The kneeling argument needlessly alienates persuadable people, and it’s one the athletes don’t need. Almost 70 percent of Americans get that the protests are directed at police violence or Trump and not the flag, according to a YouGov/HuffPost poll. Yet, only 36 percent consider the kneeling protest to be “appropriate”. Why? Because most Americans respect the country’s symbols and because standing is a simple sign of respect. You stand to greet someone. You stand at weddings and in church. You stand for ovations. Sitting while others stand sends a different message. Beyond the athletes, there is a bigger question: Do Trump’s opponents want to oppose him in ways that are merely just and satisfying? Or do they want to beat him? “You can’t get angry,” as

the longtime activist Vernon Jordan has said, describing a different civilrights battle, in the 1950s. “You have to get smart.” Getting smart means nominating progressive candidates who can win, even if they aren’t progressive on every issue. Getting smart means delaying internal fights (like single-payer health care) and unifying against Trump’s agenda (as Democrats in Congress have). Getting smart means understanding, as civil-rights leaders did, that American symbols are a worthy ally. The athletes shouldn’t apologize for anything. Those who continue to kneel, and draw ire, deserve support. But the smart move now is not to expand a tactic that Trump loves as a foil. It’s to shift toward protests that don’t need a counterintuitive and distracting defense, while he gets to bleat on about America first. The protests can still be aggressive —like the “I can’t breathe” shirts in the National Basketball Association, and much more. Trump, of course, will blast any protest as some version of uppity. But so what? The target audience are the many Americans open to opposing police violence and a bullying president—but uncomfortable with a gesture that seems to oppose America itself. The athletes, after all, are the true patriots here, defending life, liberty and equality under the law. They’re also intensely competitive people. They are familiar with the idea of finding a way to win.

Speaking ill of Hugh Hefner By Ross Douthat

New York Times News Service

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ugh Hefner, gone to his reward at the age of 91, was a pornographer and chauvinist who got rich on masturbation, consumerism and the exploitation of women, aged into a leering grotesque in a captain’s hat and died a pack rat in a decaying manse where porn blared during his pathetic orgies. Hef was the grinning pimp of the sexual revolution, with quaaludes for the ladies and Viagra for himself—a father of smut addictions and eating disorders, abortions and divorce and syphilis, a pretentious huckster who published Updike stories no one read while doing flesh procurement for celebrities, a revolutionary whose revolution chiefly benefited men much like himself. The arc of his life vindicated his moral critics, conservative and feminist: What began with talk of jazz and Picasso and other signifiers of good taste ended in a sleazy decrepitude that would have been pitiable if it wasn’t still so exploitative. Early Hef had a pipe and suit and a highbrow reference for every occasion; he even claimed to have a philosophy, that final refuge of the scoundrel. But

late Hef was a lecherous, lowbrow Peter Pan, playing at perpetual boyhood — ice cream for breakfast, pajamas all day — while bodyguards shooed male celebrities away from his paid harem and the skull grinned beneath his papery skin. This late phase was prettied up by reality television’s The Girls Next Door, which kept the orgies offstage and relied on the girlfriends’ mix of desperation, boredom and charisma for its strange appeal. The behind-the-scenes accounts were rather grimmer: depression and drugs, “dirty hallway carpets and the curtains that smell like dog piss”, the chance to wait while Hef “picked the dog poo off the carpet—and then ask for our allowance”. Needless to say, the obituaries for Hefner, even if they acknowledge the seaminess, have been full of encomia for his great deeds: Hef the vanquisher of puritanism, Hef the political progressive, Hef the great businessman and all the rest. There are even conservative appreciations, arguing that for all his faults Hef was an entrepreneur who appreciated the finer things in life and celebrated la difference. What a lot of garbage. Sure, Hefner supported some good causes and published some good writers. But his good deeds and aesthetic aspirations were

ultimately incidental to his legacy—a gloss over his flesh peddling, smeared like Vaseline on a pornographer’s lens. The things that were distinctively Hefnerian, that made him influential and important, were all rotten, and to the extent they were part of stories that people tend to celebrate, they showed the rot in larger things as well. His success as a businessman showed the rotten side of capitalism—the side that exploits appetites for money, that feeds leech-like on our vices, that dissolves family and religion while promising that consumption will fill the void they leave behind. The social liberalism he championed was the rotten and self-interested sort, a liberalism of male and upper-class privilege, in which the strong and beautiful and rich take their pleasure at the expense of the vulnerable and poor and not-yet-born. The online future his career anticipated was the rotten side of the Internet—the realms of onanism and customtailored erotica, where the male vanity and entitlement he indulged has curdled into resentment and misogyny. And his appreciation of male-female difference was rotten, too—the leering predatory sort of appreciation, the Cosby-Clinton-Trump sort, the sort that

E-mail: ernhil@yahoo.com.

nicknames quaaludes “thigh openers” and expects the girls to laugh, the sort that prefers breast implants to female intellect and rents the charms of youth to escape the realities of age. No doubt what Hefner offered America somebody else would have offered in his place, and the changes he helped hasten would have come rushing in without him. But, in every way that mattered, he made those changes worse, our culture coarser and crueler and more sterile than liberalism or feminism or freedom of speech required. And, in every way that mattered, his life story proved that we were wrong to listen to him, because at the end of the long slide lay only a degraded, priapic senility or the desperate gaiety of Prince Prospero’s court with the Red Death at the door. Now that death has taken him, we should examine our own sins. Liberals should ask why their crusade for freedom and equality found itself with such a captain, and what his legacy says about their cause. Conservatives should ask how their crusade for faith and family and community ended up so Hefnerian itself—with a conservative news network that seems to have been run on Playboy Mansion principles and a conservative party that just elected a playboy as our president.

Global Eye

A12 Tuesday, October 3, 2017 • Editor: Angel Calso

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Knitting empire is moving into car parts By Kazunori Takada & Emi Urabe | Bloomberg

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TSMC’s founder to retire and hand reins to co-CEOs in June

uilding a machine to construct high-end Prada sweaters was just the start.

Now Mitsuhiro Shima, who took over his dad’s knitting-machine firm three months ago, is setting his sights on—of all places—the car industry. The 56-year-old president of Shima Seiki Manufacturing Ltd. is in talks with auto-parts makers to use its technology to develop lighter, nonsteel components, and plans to sign a deal next fiscal year. It’s the latest evolution of the company founded in 1962 by Masahiro Shima, a prodigy who made a series of inventions before he turned 20. Back then, Shima Seiki developed machines for making work gloves. More than half a century later, it’s one of the top global suppliers of advanced knitting machines, which create seamless and other clothing for brands from Prada and Giorgio Armani to Fast Retailing Co.’s Uniqlo. And it’s not stopping at that. “Our company’s spirit is to create things the world has never seen,” the younger Shima said in an interview at Shima Seiki’s headquarters in Wakayama, a small regional city near Osaka in western Japan. While Japan is known for its giant manufacturers, such as Sony Corp. and Toshiba Corp., it also has legions of smaller firms that are world leaders in the niche products they produce. In some cases, they’re overlooked by analysts and foreign investors. Not so for Shima Seiki, which counts BlackRock Inc., the State of California and Norway’s giant sovereign wealth fund among its shareholders. The company’s stock has more than tripled since February 2016, with gains really taking off after it signed a joint venture agreement to produce “innovative” knit products for Fast Retailing, Asia’s largest clothing maker, in October that year. The shares rose 2.9 percent in Tokyo on Monday to close at their highest level since 2007. Headquartered in one of the country’s least populated and fastest-aging prefectures, which is known as a major grower of plums and mandarin oranges and for its tradition of whale hunting, Shima Seiki—and its inventor founder—are household names among the locals. The older Shima created a type of sewing machine when he was just 16 and went on to develop a fully automated glove knitting machine during the postwar economic boom when there was big local demand for

gloves for laborers. “People said he was a genius inventor,” Mitsuhiro said. Masahiro, now 80, took the chairman’s role when Mitsuhiro became president in June. But these days, the company is, perhaps, best known in its industry for being the pioneer of whole-garment knitting machines, which allow apparel makers to produce entire pieces of clothing with no seams at all. Items that used to take hours or days can now be made in minutes on one machine, Shima Seiki has said. The devices, which cost as much as ¥18 million ($159,400) each, can produce everything, from pleated skirts to low-neck sweaters and even running shoes. All this can be done from start to finish in as quickly as 30 minutes. Fast Retailing said it sees the technology spreading in the clothing industry. Founder and owner Tadashi Yanai, Japan’s richest person, said in an interview in March that speeding up the clothing-making process will be key to his company’s success.

By Samson Ellis & Yu-Huay Sun Bloomberg

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Whole garments

“The whole-garment technology by Shima Seiki enables us to create innovative and high-quality clothing in a new, efficient way that was not previously possible,” Fast Retailing said in an e-mailed statement. While the apparel industry will remain Shima Seiki’s main focus, Mitsuhiro Shima says the company also plans to use its knitting technology for auto-parts, as carmakers seek lighter components to increase energy efficiency. He declined to give further details of the company’s talks with potential partners. “The industry has a wide supply chain,” Shima said. “Of the various industries switching out of steel parts, this is the easiest to enter.”

Profit growth

Analysts expect Shima Seiki’s profit to rise by more than 50 percent to ¥11.4 billion in the year ending March 2019, compared with ¥7.3 billion two years earlier. The company projects that annual sales will reach 20,000 machines from next fiscal year, compared with 15,000 forecast for this year, Shima said. But uncertainties lie ahead, even in the company’s main business. While demand from China, a target

The machines would make the frames of the parts using textile fabrics, which would then be solidified by coating them with resin. BLOOMBERG

market, is increasing, it’s not a given that this will translate into actual orders, according to Tachibana Securities Co. “Whether or not the whole garment business takes off will be key,” said Yoshikazu Shimada, an analyst at the brokerage in Tokyo. Still, one thing at least is clear: as Mitsuhiro takes over the knittingmachine maker that his father built into a $2-billion company, he has no illusions about following in his footsteps as an inventor. “I don’t think I have such powers,” Mitsuhiro said. “So I want to change the company to one where young people’s innovative thinking pushes us ahead.”

What China’s communists need to become good capitalists By Michael Schuman Bloomberg View

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S it heads into a major leadership transition, China is attempting a strange breed of corporate reform. Rather than privatizing state-owned enterprises outright, the government is testing whether selling minority stakes to private investors may improve their performance. Meanwhile, state companies are busy revising their governing laws to give the Communist Party more control over management. The goals of these clauses include ensuring that apparatchiks hold greater sway over key corporate decisions and, according to a recent article in a Communist Party-run newspaper, “creating more returns for shareholders.” Karl Marx must be spinning in his grave. Communist parties were meant to overthrow capitalists, not help them get rich. But China’s leaders haven’t paid much attention to their supposed spiritual guru for quite some time. Instead, they’re hoping to prove that political direction can improve corporate competitiveness, as well as the market can.

Most observers, especially those outside of China, would say they’re deluding themselves. Fixing China’s bloated, inefficient state sector, economists generally believe, requires less officious oversight, not more. There’s an argument for resisting this knee-jerk reaction, however. First, China’s Communist Party, which carefully grooms and trains the country’s best and brightest for national service, does have a reasonable track record of developing talent. This is the group, after all, that has steered China’s economy quite successfully over the past three decades. While one can debate how much credit bureaucrats can claim for that performance, at least we shouldn’t be too quick to dismiss the managerial capabilities of Party members. More important, it matters far less who sits in the corner office than the environment that surrounds them. The main problem with China’s state sector is the fact that the government spoon-feeds them subsidies, encourages state banks to provide cheap loans and roll over soured debts and protects them from

competition. The coddling eliminates most of the incentives that might actually encourage them to prune unprofitable businesses, rationalize their workforces and generally bolster competitiveness. Little wonder that they aren’t nearly as profitable as private firms in China. Party overseers might be able to ferret out some corruption and scare company managers into operating a little more diligently. But unless the government cuts off subsidies and forces these firms to stop using state banks as ATM, they’ll continue to waste money. Unless exposed to real competition—both from foreign and private Chinese companies—and the threat of bankruptcy, they’ll never innovate. Forced to stand on their own, by contrast, any manager— whether from the Party or the private sector—would be compelled to improve productivity, product and service quality. That’s the only way to increase shareholder value. Other countries provide some evidence that such reforms can work. Singapore, for instance, boasts some highly competitive state-linked firms, such as Singapore Airlines,

because their government overlords force them to act as profit-seeking corporations, not job banks. South Korea also offers a comparison. The giant conglomerates that dominate the economy there, called chaebol, have been run by founding families, not the state. But historically, they were treated much like state-owned companies—protected from competition and able to tap almost unlimited capital. When that changed during the 1997 Asian financial crisis, so did the fortunes of the chaebol. As many of them collapsed and, with them, the assumption the chaebol were “too big to fail,” money began flowing more rationally. Though for the most part management didn’t change very much, company performance did. The rise of Korea’s biggest brands to global prominence can be traced back to the years after the crisis, when the chaebol were finally compelled to compete on their own merits. In theory, this is the direction in which China plans to head. In a 2013 plenum, the Communist Party pledged to allow the private sector and market forces a larger role in the economy, while maintaining levels

of state ownership. The question economists and investors should be asking then is whether or not the party will follow through on its promise. After four years, certainly, the financial system hasn’t been opened up sufficiently to break the IV drip that sustains the state sector, nor have markets been pried open. What matters as well is how the Communists intend on wielding their new corporate influence. If party members and managers at stateowned firms are permitted to run their companies with independence, aiming for greater productivity, transparency and profitability, perhaps they have a chance of successfully reforming them. But if party officials simply become conduits for diktats from the top, aimed at pursuing the goals of policy-makers rather than shareholders, these companies will remain stumbling behemoths and a drag on economic progress. That’s a lot of ifs. Perhaps in the end, China’s communists will forge a newfangled type of corporate governance that departs from traditional Western models. To get there, however, they can’t ignore the market.

aiwan Semiconductor Manufacturing Co. (TSMC) Chairman and founder Morris Chang will retire in June next year, handing the helm of the world’s largest producer of made-toorder microchips to the company’s two co-chief executives. Mark Liu will succeed Chang as chairman, while C.C. Wei will become CEO when Chang steps down, the company said in a statement that confirmed long-standing speculation about the heirs-apparent. The announcement establishes a formal succession at the contract manufacturer of chips for Qualcomm Inc. and Apple Inc.—its largest customer. Chang stepped down as CEO in 2013 after the board installed Liu and Wei as his lieutenants. On Monday Chang left little doubt that he plans to step completely away from the corporation he founded in 1987. “I will not be a director in the next term of the board of directors, nor will I participate in any TSMC management activities after the annual shareholders meeting in early June, 2018,” he said in a statement. Liu and Wei will be inheriting a company that, in three decades, established itself as the world’s preeminent foundry or contract chipmaker, about 30 times larger than local rival United Microelectronics Corp. It spends billions on constant upgrades and new production facilities to keep pace with rivals, like Intel Corp. and Samsung Electronics Co., using the most advanced processing technologies. Its shares have surged 21.5 percent this year, thanks to projected demand for Apple’s new iPhones and other products. That helped make Chang a billionaire this year at the age of 86, according to the Bloomberg Billionaires Index. He owned 0.48 percent of the business directly as of August 31, according to a filing to the Taiwan Stock Exchange. Its shares rose 1.9 percent in Taipei on Monday. Chang, one of the chip industry’s most respected figures, spent most of his life in semiconductors. Born in 1931 in the coastal Chinese city of Ningbo, Chang’s earliest memories were of moving through a succession of cities as his family fled before the Japanese occupation and, later, civil war between the Communists and Nationalists. He passed through Hong Kong before heading to Harvard and then the Massachusetts Institute of Technology to study mechanical engineering, laying the groundwork for his future career. Growing chipset demand from China spells a major opportunity for TSMC. It’s building capacity to meet the future demand it anticipates, not just from Chinese smartphones but also connected devices in the so-called Internet of Things. TSMC said last week it will build its first three-nanometer technology plant in southern Taiwan’s Tainan. “TSMC will proceed with the blueprint Chairman Chang has laid out. Its leading edge in the foundry industry isn’t going to change in the next three to five years,” Taishin Securities Investment Advisory Co. Vice President Huang Wen-ching said. “The succession shouldn’t impact the stock or the fundamentals of TSMC.” The task of ramping that up however will fall to Wei and Liu. “The past 30-odd years, during which I founded and devoted myself to TSMC, have been an extraordinarily exciting and happy phase of my life,” Chang said in Monday’s statement. “Now, I want to reserve my remaining years for myself and my family.”

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Tuesday, October 3, 2017 A13

A better way to make economic forecasts

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By Mark Buchanan | Bloomberg View

conomists are famously bad at predicting growth. A new technique might help them get a little better.

When assessing a country’s potential to prosper, economists typically look at aggregate measures such as education, investment or national debt. This hasn’t worked particularly well: China’s economy, for example, has kept growing at a fast pace even though they’ve been predicting a slowdown for nearly 30 years. An emerging line of research— which I’ve written about before— points to what the economists might be undervaluing: the importance of a country’s technological and industrial capabilities. The research focuses on “economic fitness”, a measure that seeks to capture the range and sophistication of the goods a country produces. Two years ago, for example, it suggested that China would keep growing rather than succumb to a much-predicted “hard landing”—a forecast that proved correct. New research has demonstrated that the “fitness” technique systematically outperforms standard

methods, despite requiring much less data. This has helped attract the interest of the International Monetary Fund and the World Bank’s International Finance Corporation, signaling what could be a major shift in perspective. Instead of encouraging countries to focus on those areas where they have a comparative advantage, economists might start seeing an economy as more like a living ecosystem, its resilience dependent on its diversity. So how can “fitness” be measured? Building on earlier research, physicist Luciano Pietronero and colleagues estimate it by assigning a value to each of a country’s exports and adding them all up. The more different things a country produces, and the more complex those things are, the greater its fitness—and one indication of a product’s complexity is how few countries can successfully make it. Advanced nations such as Germany and the United States, for

Seriously, longer Tweets are a win for democracy

Double your fun Chris Ratcliffe/Getty Images

By Kara Alaimo Bloomberg

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AST Tuesday Twitter announced that a select group of users would be able to send 280-character tweets—double the platform’s signature 140-character limit. It’s part of an experiment testing whether longer character limits would be better for everyone. The company explained that, in languages where a single character carries more meaning—Chinese, Japanese and Korean—they see “more people tweeting—which is awesome!” If lifting some of the character constraints gets more people to tweet in English and other languages for which the shorter limit feels confining, it would indeed be awesome for Twitter. But it would be even better for America. The benefits to the company are obvious. Twitter has 328 million monthly active users globally. By contrast, Facebook has more than 2 billion. And as Bloomberg’s Shira Ovide explained in July, Twitter “doesn’t turn a profit under any conventional meaning of the word”. The company’s revenue in this year’s second quarter was almost 5 percent less than in 2016. More users would, of course, mean more ad revenue for the company, and could put it on a path toward profitability. But more Twitter users could also be a boon for the country, because it could encourage broader participation and more civility in political debates. Yes, civility. Currently, Twitter is a tool used most heavily by the elite. Twenty-nine percent of Americans with college degrees use the platform, compared with 20

percent of Americans who have highschool degrees or less, according to a 2016 Pew Research Center study. The study also found that 30 percent of Americans who make more than $75,000 use the platform, compared with 23 percent of those earning less than $30,000. If more Americans didn’t find Twitter limits so constraining and jumped into political debates on the platform, they might have more of an impact on public policy. A 2014 analysis by researchers at Princeton and Northwestern University found that the influence of the ordinary person on such decisions is “nonsignificant, near-zero”. The people who wield influence are the wealthy—the same people who use Twitter most. The use of Twitter by more Americans could also make our discussions on the platform more civilized. In The Disappearing Center: Engaged Citizens, Polarization, and American Democracy, Emory University political scientist Alan Abramowitz explains that the people who are most engaged in politics are also the most extreme partisans. Currently, the 24 percent of Americans who use Twitter are likely the people most eager to share their views. No wonder our debates are so nasty. (Forty-one percent of Americans say they’ve been harassed online, according to a 2017 Pew study). But, if the 79 percent of Americans who use Facebook were all also on Twitter—where people tend to communicate more with strangers —people with less extreme views would be part of the conversation. That could lead to some more productive—and polite—exchanges.

Economies, like ecosystems, thrive on diversity. Kevin Frayer/Getty Images

example, make just about everything, from breakfast cereal to supercomputers. Less fit nations tend to make fewer, simpler things. Empirically, fitness tends to be roughly correlated to measures of

wealth, such as GDP per capita, but deviations carry hidden information that can be used to make forecasts. If a nation is poorer in GDP terms than its fitness score suggests, one might expect it to soon get richer. This has

proven true especially for relatively advanced nations that have become capable of producing many sophisticated products: The capacity shows up in the fitness measure even before it affects GDP. China, Vietnam and

India, for example, all look poised for growth. The fitness measure can also help differentiate among nations that might otherwise appear similar. Consider the case of the BRICs— Brazil, Russia, India and China. As early as 2005, four years after Goldman Sachs started its BRIC fund on the premise that the four countries would dominate global growth for the next several decades, the fitness measure would have suggested that the first two were headed for trouble. (Of course, Goldman couldn’t have known this—the measure didn’t exist until 2012.) Goldman closed the fund in 2015 after suffering consistent losses linked directly to the poor performance of Brazil and Russia. Pietronero and his colleagues are now extending the method to include “fitness added”—the difference in score between a country’s exports and its imports. Here, too, China stands out: Its added fitness ranks among the highest in the world. Only a decade ago, it was still far behind nations such as Germany and the US. So looking for crude correlations among dozens of inputs might not be the best way to predict growth. The quality and variety of what a country makes, however it manages to do so, appears to matter more.

Why Uber must stop acting like a conqueror By Leonid Bershidsky Bloomberg View

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ith the British prime minister calling London’s refusal to extend Uber’s license “disproportionate”, and Uber’s chief executive heading to London to talk to regulators, a compromise is on the offing. But it shouldn’t give Uber a false sense of security: Isolated regulatory demands are not its biggest problem. Viewed in isolation, each of Uber’s setbacks this year triggered a disproportionate response. Neither a toxic work culture, nor unequal gender representation, nor any of the specific legal or business issues that dragged down the ride-hailing company was lethal. Nor was any of these problems likely beyond former CEO Travis Kalanick’s ability to fix or sweep under the rug, as he’d done for years. That all of the crises broke out at once was the result of an emotional backlash against the company’s arrogant push for global dominance. Something akin to this backlash is also beginning to catch up with Facebook and Google. They’ve done nothing in particular terribly wrong, it’s just the general perception of large, uncaring, overly powerful corporations running on unchecked ambition. TfL, the London traffic authority, has a list of specific problems Uber has failed to solve: the way it reports criminal incidents and does medical and background checks on its drivers. It can all be pretty easily fixed, especially with CEO Dara Khosrowshahi’s personal involvement. Prime Minister Theresa May wants to move on because the Uber case contradicts her party’s claims that Brexit Britain will be open for business. London Mayor Sadiq Khan has nothing to gain politically from banning Uber but everything from being seen to make it comply

Building trust Betsie van der Meer/Getty Images with rules. Khosrowshahi has nothing to gain by not cooperating —that’s why he’s coming to London. But even if his talks succeed—as everyone wants them to—new trouble will almost immediately crop up for Uber in the UK and everywhere else it operates. It’s not well liked, and it’s fair game for politicians, regulators and judges who don’t like it, as well as for the many drivers and customers who have had a bad experience with it. This requires a big, unconventional trust-building campaign. Unfortunately, Khosrowshahi appears to have an incomplete understanding of the problem’s emotional nature. In a letter to staff after the London ban, he wrote, correctly, that “there is a high cost to a bad reputation”, and “it really matters what people think of us”. But he also added he didn’t believe the company “did everything that is being said about us in London today” and promised Uber wouldn’t abandon its principles, meaning that it would “vigorously appeal TfL’s decision”. Despite Khosrowshahi’s public apology to Londoners,

these lines must have raised red flags with Khan, who has little respect for Uber’s “principles”: He’s described their implementation as “unfair pressure” on the TfL and “aggressive threats about taking us to court and all the rest of it”. That’s part of Uber’s reputation problem; Khan’s reaction to the perceived pressure is emotional, and, even if Uber fixes its specific problems with the TfL after fighting it at every step, that emotion will remain. Khosrowshahi is right to try dissolving the bad blood with apologies and promises of change, but Kalanick used to do that, too. Publicrelations methods won’t work, as they didn’t at the end of Kalanick’s tenure; perfunctory nods to social respionsibility—the wheelchair-accessible vehicles and “Clean Air Plan” Khosrowshahi mentioned in his letter of apology—won’t do the trick either. Overcoming its bad reputation requires from Uber a series of surprising, disarming moves. For starters, it needs to start asking rather than demanding; rather than pursue its “vigorous appeals”, it should

politely request a little time to meet the TfL requirements. Uber should declare, openly and publicly, that its first impulse will be, from now on, to follow rules rather than challenge them. The fierce resistance has already made clear it won’t take over the world by sheer aggression. So why keep provoking it? But simply playing deliberately from a position of weakness won’t be enough. On its own, it’ll just let regulators bite off the whole arm, not just the proffered finger. In order to gain trust, and to guard against bureaucratic nitpicking, Uber needs to be proactive and do things it doesn’t strictly have to do. In London, the company books its rides through a Dutch subsidiary, which allows it to avoid the UK’s 20 percent value-added tax. A TfL official apparently raised the issue during the licensing discussion, though the transport authority has no tax-related powers. Uber could voluntarily abandon the practice. It could also voluntarily offer its drivers some benefits of employment, such as paid leave or a minimum wage guarantee, in recognition that though they are technically self-employed, the ride-hailing company dictates how they must work once they log into the Uber app. Uber’s fares are about 35 percent lower than those of London’s black cabs; assuming these fares are sustainable and not just a case of temporary dumping to gain market share, Uber can afford to make such gestures and still remain competitive. It’s not enough for Khosrowshahi to act nicer than Kalanick. He needs to put his money (OK, Uber investors’ money) where his mouth is and show clearly and unequivocally that the company is changing, that it’s putting fairness ahead of aggression on its priority list. There’s no way to make the bad reputation go away on the cheap.

Singapore’s home prices rise for first time in four years By Pooja Thakur Bloomberg

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ingapore’s home prices rose for the first time in four years, snapping a record run of declines and confirming recent signs that the property market is rebounding. An index tracking private residential prices gained 0.5 percent in the three months ended on September 30 from the previous quarter, according to preliminary data from the Urban Redevelopment Authority released on Monday. A jump in home sales and developers’ aggressive bids for land are stoking

optimism that the property market is making a comeback. At the same time, the bulk of Singapore’s cooling measures rolled out from 2009 are still in place. Before the latest data, a 15-quarter decline in prices was the longest since the index was first published in 1975. “The price rise was expected because sentiment has been buoyant,” said Christine Li, director of research for Singapore at Cushman & Wakefield Inc. Li expects prices to remain flat for 2017 and rise 5 percent in 2018, as developers market a “significant” number of new homes at higher prices. “The government is closely monitoring the

property market,”Li said.“Buyers should realize that the government has the ability to tweak and refine policies that strike a balance between affordability and home ownership.” Analysts at BNP Paribas SA and Morgan Stanley are among those forecasting that prices will rebound after officials in March boosted sentiment by loosening some curbs. In a UBS Group AG report last week on global propertybubble risks, Singapore housing was described as “fair-valued”, with declines in prices likely to end this year and be followed by moderate increases. Morgan Stanley has predicted the

city’s prices will climb 2 percent this year and 10 percent by the end of 2018, turning earlier and rising faster than people expected. Sales of about 8,388 private homes in the first eight months of this year were already ahead of some past full-year totals. Apartment prices in prime districts rose 0.2 percent last quarter after falling 0.5 percent the previous quarter, the data showed. Suburban apartment prices gained 0.7 percent, while areas near prime districts remained unchanged. In March the government reduced a stamp duty imposed on sellers and some mortgage restrictions.

2nd Front Page BusinessMirror

Lower tax take may imperil some flagship projects–Neda chief By Cai U. Ordinario

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ome of the flagship projects of the government may not be rolled out if the tax-reform program will yield lower revenues, according to the National Economic and Development Authority (Neda). At the sidelines of the launch of the 28th National Statistics Month on Monday, Socioeconomic Planning Secretary Ernesto M. Pernia told reporters that the current version of the Tax Reform for Acceleration and Inclusion (TR AIN) at the Senate may generate lower revenues for the government. If this happens, Pernia said the government will be forced to prioritize its infrastructure projects according to need, urgency and completion date. “We are still hoping that the Senate version will improve and move closer to the same level as the house version, at least”, Pernia said. “The criteria will be the need and urgency and, you know, also the likelihood of getting completed”. Finance Undersecretary Karl Kedrick T. Chua said via text message that the Senate’s new TRAIN

₧1.58T The combined cost of 53 of the Duterte administration’s 75 flagship projects, according to Neda estimates

bill will only generate P59.9 billion for the government. This is significantly lower than the House of Representatives’s version, which is expected to generate a net

revenue of P130 billion. Pernia also said the budget for 2018 will not be enough to prevent some projects from being delayed or scrapped altogether in case the TRAIN will yield lower revenues. He added it is no longer possible to modify the proposed 2018 General Appropriations Act ,as the House of Representatives has already approved it. Apart from government funds, the Asian Development Bank (ADB) said rolling out projects under the “Build, Build, Build” program requires the “timely” implementa-

tion of the TRAIN and increased private-sector funding. The TRAIN, ADB Country Director for the Philippines Richard Bolt said, will be “crucial” in financing the infrastructure push of the government through 2018. As of June 2017 the Neda estimates that 53 of its 75 flagship projects would cost P1.58 trillion. The other 22 projects still do not have cost estimates. This is the reason the government put together a list of 70 projects in the Build, Build, Build See “Lower tax,” A2

In building a competitive business environment, judicial and anticorruption policies are very important to attract and to keep investors. Reforms in the administration of justice are ongoing, but their implementation should be continuously intensified. Some of the problematic factors in the WEF competitiveness ranking pertained to the judicial and security problems that afflict the Philippines. According to the WEF ratings, investors also identified corruption (16.9 percent), policy instability (7 percent) and crime and theft (3 percent). The Supreme Court and the judicial system it administers face major challenges, such as case backlog, using modern technology and obtaining more funding. These are factors that investors very much consider before they invest in a particular country and compr i s e s of w h at m a k e s a country competitive. Clogged courts have long been an issue in the Philippine judiciary system. It often takes numerous years to have a case decided and, as new cases come every year, caseloads have piled up. Major reforms have been introduced under the leadership of Chief Justice Maria Lourdes A. Sereno, including computerization of decisions, court

INDONESIA’S GO-JEK LIKELY TO BRING ITS RIDE-HAILING SERVICES TO MANILA SOON

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o-Jek, Indonesia’s first billion-dollar start-up, is looking to expand its ride-hailing services to three to four countries in Southeast Asia, escalating its rivalry with Grab and Uber Technologies Inc. Cofounder and CEO Nadiem Makarim didn’t specify the countries or services that Go-Jek will target, but said in an interview they will be places with a large population and where cash rules, hinting that Go-Jek’s digital-payment service will be a key part of its push into new markets. Singapore-based Grab, aided by massive funding from SoftBank Group Corp. and China’s Didi Chuxing, has pushed aggressively onto Go-Jek’s home turf. Grab, Southeast Asia’s largest ondemand transport company with operations in seven countries, is run by Anthony Tan, Makarim’s former classmate at Harvard Business School. For Go-Jek, this will be its first foray outside its home country. “We’ve always been on the defensive,” Makarim said in Jakarta, without saying when Go-Jek would expand. “It’s time to bring competition to their doorsteps.” After Indonesia, the Philippines, Vietnam and Thailand have the most number of people in the region, with a combined population of about 270 million. Go-Jek and Grab have rolled out mobile digital-payment services, seeing it as a way to scale their businesses and build a potentially lucrative business by offering financial services to a large number of people with little access to banking. “I think we’ve cracked the model of a platform that works in an emerging economy where infrastructure isn’t so great,” Makarim said. “There is a high likelihood that we would leverage our full stack. If we come in, we come in with the whole sweep of weapons.” Bloomberg News

INTERACTIVE PLAY A panel composed of (from left) Patricia Feria Lim of Teach for the Philippines, Tanghalang Pilipino President Jolly Gomez, Visa Sales Head Dan Wolbert and Bangko Sentral ng Pilipinas (BSP) Inclusive Advocacy Head Pia Roman answers questions from the media and students present during the launch of Lukot-lukot, Bilog-bilog, an interactive play featuring national heroes, developed with Tanghalang Pilipino and the BSP. The play is designed to educate and empower the Filipino youth to make informed financial decisions. This is the first program of its kind launched by Visa in the Philippines in support of the government’s National Strategy for Financial Inclusion spearheaded by the BSP. ALYSA SALEN

Judicial Issues and Corruption Continued from A1

www.businessmirror.com.ph

Bloomberg photo

A14 Tuesday, October 3, 2017

records and continuous trials. Corruption has long been a major concern for doing business in the country. Only in recent years has it moved down from first to third place in the WEF assessment to be slightly below red tape and poor infrastructure. In the Transparency International annual Corruption Perception Index the Philippines improved from 134th in 2010 to 101st in 2016, yet is still ranked in the bottom 50 percent, along with Indonesia, Thailand and Vietnam. The Arangkada Team has listed 26 recommendations; I have taken the liberty to reduce the recommendations a bit: 1. Continue to increase judicial salaries and hire more judges, encouraging new judges to reduce the case backlog more. Steadily raise the budget for the judicial branch. 2. Make greater use of alternative dispute resolution and arbitration to resolve civil disputes outside of courts, which should reduce the backlog of cases and hasten justice. 3. Reduce the caseload of the Supreme Court by limiting acceptance of cases largely to cases involving national issues. 4. The Ombudsman should improve its capability to investigate and prosecute allegations of corruption against public officials.

The Sandiganbayan should reduce its backlog of cases and increase it conviction rate. 5. Pass amendments to the Ombudsman Act to Strengthen the Ombudsman as an Institution, Upgrading of Ombudsman Employee Skills, Augmenting Compensation and Benefits, and Enhancing Fiscal Autonomy. 6. The government must demonstrate through consistent example that it has the political will to greatly reduce corruption. Investigating, bringing charges against and successfully prosecuting government officials and private-sector persons and corporations guilty of not paying proper taxes, bribery and other major corrupt acts must be sustained. 7. Public officials and private persons found guilty of major corrupt activities should, after a fair trial, be punished with heavy sentences, including imprisonment and seizure of assets. 8. Strengthen the anticorruption legal framework by passing: a) anti-Graft and Corrupt Practices Act amendments; b) Witness Protection Act; and c) Whistleblowers Protection Act. 9. Pass laws to exempt BIR and BOC employees from the Salary Standardization Act (or, better, privatize the activities of both government organizations). 10. Appropr iate resources

should be provided to the justicesector actors to support the fair administration of justice. 11. S t r e n g t h e n e c o n o m i c justice. Establish and enhance special courts that will address specific cases and pursue contract enforcement. For instance, infrastructure courts, commercial courts, cybercrime courts and environmental courts. 12. Streamline rules on the disposition of land cases. The Supreme Court should study the need to designate special courts on landdispute settlement. 13. R a i se sc ient i f ic-i nves tigation capabilities and strengthen witness and whistleblower protection. 14. Reinforce alternative ADR mechanisms so that courts can refer cases for ADR and help in the speedy disposition of cases. 15. Information and communication technology should be used sector-wide to help address fragmentation in the justice system and greatly enhance the information management of the whole justice sector. There is no doubt that good intensions by the government and the private sector are not enough; jud ic i a l refor m a nd anticorruption initiatives are needed to successfully implement the 10-point socioeconomic agenda of the Duterte administration.

Govt workers ask Angara to restore PIT exemption for low-salaried employees By Alladin S. Diega

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group of government employees slammed Sen. Juan Edgardo M. Angara for removing the planned tax exemption for workers earning up to P250,000 annually under the proposed taxreform law being deliberated at the Senate. According to the Public Services Labor Independent Confederation (PSLINK), Angara’s Senate Bill (SB) 1592 is proposing to tax workers who earn a measly P13,000 a month, or an annual salary of P150,000. PSL I N K , wh ic h compr i ses public-sector unions and federation from national government agencies to local government units, said Angara’s reduction of the exemption for personalincome tax (PIT), from the Department of Finance’s (DOF) proposal of P250,000 per annum to P150,000 is “anti-workers and anti-fixed earners”. The DOF’s proposal to exempt workers earning a little more than 20,000 per month, or P250,000 per year, from paying PIT, is expected to bring relief to more than 80 percent of income earners, based on data from the Bureau of Internal Revenue. “The Angara bill has removed an important feature of the Tax Reform for Acceleration and Inclusion [TR AIN] to give relief to a majority of our workers who have been ca r r y ing muc h of the tax burden for the past two

de c ade s”, P SL ink P re s ide nt Annie Geron said. “Worse, Angara even lowers the marginal tax rate of the topmost bracket to 32 percent instead of retaining the DOF’s proposal of 35 percent,” Geron added. She said the Angara bill is “deceiving” because it proposes to bring back the P25,000 deduction per child dependent, but this is only for the male head of the family. The DOF proposal removes the deduction per dependent because this is already included in the threshold of exemption and applicable to all income earners in the household, regardless of sex or role in the household. “We even want a higher threshold of exemption, but Angara further erodes it. At the same time, he compromises the reform by maintaining many VAT [value-added tax] exemptions. But everybody knows the reason”, Geron said. “By not acting on the critical reforms, Angara is denying us the revenues necessary for social services, particularly the hiring of government health-care workers and teachers who are badly needed in the remote and poor communities that have long been ignored and left behind”, she added. In a separate statement, Action for Economic Reforms (AER) said the government’s target revenues of P74.8 billion on the first year will suffer a large cut in the Angara bill. For fuel tax alone, the expected revenues of P73.7 billion will be reduced to only P40 billion. See “Govt,” A2