Businessmirror october 04, 2016

“I will visit China. I will open the door for everyone. I will go to Russia.

I’m serving notice now to the US: I will maintain the alliance but I will establish new alliances.”—President Duterte, giving notice to the United States that the scheduled war games between the Philippines and the United States next month would be the last. AP

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“Better think twice now, because I would be asking you to leave the Philippines altogether.”—President Duterte, on a review of the Enhanced Defense Cooperation Agreement, which, if halted, would mean a big setback for US efforts to boost its influence in Asia. AP

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n

Tuesday, October 4, 2016 Vol. 11 No. 360

50% tariff on rice seen when QR ends in 2017 T

By Cai U. Ordinario

@cuo_bm

he Philippines is planning to impose a tariff of as much as 50 percent on rice imports by next year, when Manila is expected to scrap the quantitative restriction (QR) on the staple.

An official of the National Economic and Development Authority (Neda) told the BusinessMirror that the agency would recommend to the President a tariff ranging from 40 percent to 50

INSIDE

trump’s a businessman. where’s his business backing?

BusinessSense

The volume of imported rice that is slapped a lower tariff of 35 percent under the MAV scheme

In the case of South Korea, it was able to impose a tariff rate of more than 500 percent on imported rice, using a formula approved by the World Trade Organization (WTO).

The Philippines imports more than 1 million metric tons (MMT) of rice annually to plug the shortfall in its production and beef up the National Food Authority’s (NFA)

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Trump’S A BuSiNeSSmAN. Where’S hiS BuSiNeSS BAckiNg?

DonalD Trump, the republican presidential nominee, speaks with John paulson, the hedge-fund billionaire, about economic policy at a luncheon for the Economic Club of new York at the Waldorf astoria Hotel in new York, September 15, 2016. Damon Winter/the neW York times

S

By Andrew Ross Sorkin

That was the news reported by The Wall Street Journal over the weekend after tabulating the latest donation disclosures through August 11.

Trump’s supporters trumpeted, excuse the pun, the lack of donations from the nation’s largest companies as a badge of honor. Big business, they say, has failed the country, so why would their guy want its support?

But the logic of this argument is backward. Trump has campaigned as a successful businessman, a brilliant negotiator and someone, as he said in his own words, who can “get along with people.” He has contended that his economic policies will unleash unheard-of levels of growth—as much as 6 percent. He plans to lower corporate taxes, remove regulations and allow companies to repatriate cash held overseas. Together, these policies sound like a CEO’s dream.

And yet here we are: Many of the most successful business people in the country refuse to support him — or do

business with him, either.

This is not an opinion. In case there is any doubt, here is a list of companies that in the past two years have publicly severed or reduced business relationships with Trump, mostly over his inflammatory rhetoric: Macy’s, Univision, Comcast’s NBCUniversal, Serta, Disney’s ESPN, the PGA, Nascar and Perfumania, among others.

Those companies, which have customer bases that include broad swaths of the nation that ostensibly look like the electorate, all said some variation of what Macy’s said: “In light of statements made by Donald Trump, which are inconsistent with Macy’s values, we have decided to discontinue our business relationship with Mr. Trump.”

As this column has noted previously, virtually no big US banking institution has done new business with Trump in years, in part because of his history of bankruptcies and his penchant for litigation. During orientation for new employees, Goldman Sachs specifically

used to use Trump as an example of the kind of prospective client to avoid.

Still, based on Trump’s policies, you would think that companies like Apple or Nike, which have railed for lower taxes and are pining to bring tens of billions dollars stashed abroad back to the United States, would be kneeling at the altar of Trump. (Apple’s and Nike’s chief executives have contributed to Clinton.)

Granted, there are his views on immigration and trade, which aren’t in sync with US multinational companies that manufacture products abroad. But then again, Clinton opposes the TransPacific Partnership too, so that doesn’t provide much of a choice.

Jeffrey Immelt, General Electric’s chief executive, who employed Trump on The Apprentice when GE owned NBC, was asked by Vanity Fair about him over the summer. “The Donald Trump that I had a chance to work with, I found to be fun to work with,” he said. “The words? I can’t reconcile with anything I believe in, or that I think the country stands for or that the company stands for.”

By the way, this was Trump’s reply last year to businesses that stopped doing business with him: “Macy’s, NBC, Serta and Nascar have all taken the weak and very sad position of being politically correct even though they are wrong in terms of what is good for our

country.” (I should note here that I coanchor Squawk Box on CNBC, which is a unit of NBCUniversal.)

In fairness, it is worth pointing out that only 11 CEOs of the Fortune 100 donated to Hillary Clinton, according to The Journal. All of which is to say there may be executives who privately support Trump but are unwilling to say so aloud. But for a group that has historically leaned Republican, the absence of contributions is eyeopening, particularly since at least 19 of them gave to the other Republican candidates in the primaries.

There is a good reason, wholly unrelated to political correctness, that the business community has not rallied around Trump’s economic plans.

On its merits, that plan is expected to hurt the economy, according to nonpartisan economists. It is hard to find many serious economists, except a handful mostly advising his campaign, who say otherwise.

According to the Committee for a Responsible Budget, a nonpartisan think tank that includes a list of luminaries from both sides of the aisle, Trump’s economic plan would add $5.3 trillion to our national debt. That compares with $200 billion as a result of Clinton’s plan.

“Both Clinton and Trump would increase the debt relative to current law—though Trump would increase

it by an order of magnitude more, and Clinton’s plan would slightly reduce deficits if we incorporated unspecified revenue from business tax reform,” the committee wrote.

None of this column is meant to suggest that Clinton’s economic plan will usher in a new age of stupendous growth. It won’t. It doesn’t fully address the need for corporate tax reform, and it won’t bring many companies out from under the regulatory morass that they suffer. It won’t bring trillions of dollars back from abroad.

Her plan is unlikely to pump up the economy much compared with the path that we are currently on. It is very possible some of her policy measures could even slow the economy.

And finally—again—there is the issue of trade. A centerpiece of Trump’s economic agenda is renegotiating many of the country’s trade agreements. In a new report published by his campaign, Trump’s advisers suggest he would threaten, for example, to leave the World Trade Organization to get a better deal. “Without the US as a member, there would not be much purpose to the WTO,” the advisers wrote.

There is no question that the country would be improved by better trade pacts, but Trump’s risky approach could start a trade war that could be disastrous for the country’s largest companies. And the uncer-

tainty of the negotiations themselves could slow the economy and rattle our foreign neighbors; just look at the resignation of Mexico’s finance minister for helping bring Trump there to meet-and-greet with the Mexican president. Other countries will want to avoid similar situations in which they could look like they are caving in to Trump. (By the way, for those who say, “Who cares about what happens to big businesses that outsource anyway?” think about all the money in all those 401(k) plans that is invested in them.)

The Trump economic report cites the Business Roundtable, a lobbying group representing big business, and its complaints about regulatory burdens. The suggestion is that big business will back Trump, since he plans to reduce regulation. Yet it is hardly clear the Business Roundtable supports him. The organization has not endorsed either candidate, and its chief executive, John Engler, told The New York Times over the summer: “We’re just on the opposite side of Trump on trade and immigration.”

Trump, the self-described great negotiator, may brush aside the views of the country’s leading business executives—but perhaps that is because he hasn’t been able to strike a deal with them.

businesssense

the entrepreneur

O

Manny B. Villar

ne problem with tax amnesties is that those who avail themselves of them are those who are willing to pay their obligations. Those who really don’t want to pay taxes just ignore the amnesty offer.

Another problem is that some delinquent taxpayers settle their past obligations to clear their tax records during an amnesty period, then default on tax payments in the following years, and just wait for another amnesty program to comply.

During the period 1997 to 2004, the government implemented seven amnesty programs, which generated a total of P19.2 billion. Republic Act 9480, which lapsed into law in 2007, provided for a tax amnesty covering all national internal-revenue taxes for the taxable period 2005 and prior years.

Continued on A10

DENR meeting with experts, getting ready to use TEV tool

By Jonathan L. Mayuga

T

e1

© 2016 The New York Times

mission accomplished!

Police investigators examine the body of one of the three suspects killed in an alleged “buy-bust” operation by the authorities in the continuing “war on drugs” campaign of President Duterte before dawn on September 30 in Caloocan City. AP/Bullit Marquez

By Rene Acosta

@reneacostaBM

& Manuel T. Cayon

Mindanao Bureau Chief @awimailbox

sports

Tax amnesty

Continued on A2

PHL yet to unearth full extent of narcopolitics

analysis, ideas and commentary from

E1 Tuesday, October 4, 2016

percent once the country converts the rice-import quota into tariffs.

However, experts said the Philippines could shoot for a higher tariff rate if it could justify the need to do so.

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BusinessMirror

HOUlD it come as a surprise that not one chief executive among the Fortune 100 has donated money to Donald Trump’s campaign?

“I met with Medvedev, I am revealing it to you now. I told him this is the situation, they are giving me a hard time, they are disrespecting me, they are shameless.”—President Duterte, on a conversation with Russian Prime Minister Dmitry Medvedev, where he complained about the US. AP

c1

D

Part Two

AVA O C I T Y— U n d e r standing the full reach of narcotics syndicate’s control of government bureaucracy has, for now, remained confined

PESO exchange rates n US 48.4820

to trickles of information.

What trickled was that illegaldrugs criminals have long established a wide network in the villages, and its tentacles have reached as high as the key and senior posts in the police.

However, remained largely unknown, especially to authorities, was how coordinated the narcotics syndicates are as to fund candidacies of politicians in national

elections. The bombing of the night market here on September 2, nonetheless, revealed these syndicates have the capability to fund terror attacks.

President Duterte repeated in several of his speaking tours that the full extent of the drug menace did not come to the full and scary awareness that no less than 3.7 million Filipinos are hooked on Continued on A2

JASARENO: “It will be part of the action planning. It depends on how fast our experts could provide us the action plans.”

@jonlmayuga

he Department of Environment and Natural Resources (DENR) is still bent on using the Total Economic Value/Valuation (TEV) tool in evaluating mining projects, despite warning from miners that it would be unconstitutional.

Environment Undersecretary Leo L. Jasareno said his team is now working with experts to find ways to operationalize the TEV the soonest, as directed by Secretary Regina Paz L. Lopez.

“Last week we met with experts from UP [University of the Philippines] about the TEV. There will be another meeting this week,” Jasareno said. “We are hoping they can provide us with action plan and cost estimate.”

But Jasareno assured the miners that the Department of Environment and Natural Resources (DENR) would still consult with mining companies before operationalizing the TEV. “It will be part of the action planning. It depends on how fast

our experts could provide us the action plans,” Jasareno said.

According to Jasareno, the DENR would also tap other learning institutions that have knowledge on the use of the TEV, particularly those situated near mine sites.

“In Palawan there is the Palawan State University. In Bicol there is the Bicol State University. But not all SUCs [state universities and colleges] are capable of doing it, so it depends [on the situation],” Jasareno said.

He also said the DENR’s legal and policy office would look into the legality of imposing the TEV as a tool in evaluating mining projects.

The Chamber of Mines of the Philippines (COMP), which represents mining industr y’s big Continued on A2

n japan 0.4791 n UK 62.6484 n HK 6.2514 n CHINA 7.2692 n singapore 35.5727 n australia 37.0984 n EU 54.4598 n SAUDI arabia 12.9268

Source: BSP (3 October 2016 )

BMReports BusinessMirror

A2 Tuesday, October 4, 2016

www.businessmirror.com.ph

PHL yet to unearth full extent of narcopolitics Continued from A1

illegal drugs that not a few commit heinous crimes even against their own kin.

He admitted to being overwhelmed with the numbers, notably in those who surrendered and claimed to be users and pushers.

Mr. Duterte has told soldiers in Mawab, Davao del Norte, the long list of barangay captains has shown the full picture of the extent of control of narcotics syndicates in government bureaucracy. The Commander in Chief then said the war on drugs is becoming a war between “government versus government”.

“Now, it’s government functionaries who are now directing the distribution of drugs,” he said.

History of violence

THIS city has been through different phases of development, from an economically stagnant major

19 hotels. . .

urban center with less than a million residents in the 1980s. That number, however, declined, as residents fled to other areas and even abroad, to avoid the bloody conflict between the urban assassins of the New People’s Army and the statesponsored armed vigilante group Alsa Masa (rising masses).

As members of these groups brought their war on the streets of Davao, bodies turned up along roads, dark alleys, grassy areas, vacant lots and inside houses. The only visible brisk economic activities were reported by pharmacies.

One urban slum area, called Agdao, was soon renamed to Nicaragdao, in reference to the violence that gripped Nicaragua that time.

Agdao is the city’s largest slum area where many Sparrows were recruited and established mass bases. But it was also in one of the barangays there that the police and the military recruited locales

Continued from A12

exhibits, a bazaar sale, cultural presentation, parlor games, and recognition of outstanding and long-time DOT employees.

Meanwhile in Bangkok, during the two-day celebration of World Tourism Day, participants from 60 countries exchanged best practices and experiences on accessible tourism and have committed to advance universal accessibility in all components of the tourism value chain to ensure all citizens enjoy the benefits of travel, whatever their abilities may be.

“As 1 billion people across the globe have some kind of disability, accessibility becomes and will continue to be a major concern for us all,” said Gen. Prayut Chan-o-Cha, prime minister of Thailand who presided over the official celebrations on September 27. “We need to create more accessibility, for all including the aging groups. We need to provide better services for all. This is also part of our commitment to the Sustainable Development Goals,” he added.

Together with the commitment of governments and the need to develop regulatory frameworks linked to accessibilityrelated measures, the World Tourism Day celebrations have served to emphasize the immense business opportunities that Universal Design can bring to the tourism sector. “Sooner or later, all of us will suffer circumstances that impede us moving freely and independently, so adapting Universal Accessibility principles will benefit us all,” underlined Ivor Ambrose, Director of the European Network of Accessible Tourism.

He added that by 2050, as much as 22 percent of the world population will be over 60 years old and, thus, have specific access needs.

Participants adopted the Bangkok Declaration on Tourism For All, a document resulting from a consultation process involving governments, the private sector, civil-society organizations and accessibility experts. The declaration calls upon all stakeholders to advance policies and business actions that promote universal accessibility, including training, awareness raising as well as considering Universal Design in all new tourism infrastructure and services and while adapting existing ones.

to become their eyes and ears, and armed as members of vigilante group Alsa Masa.

The result of the conflict was the so-called dirty war, which was replicated in other urban centers in the country even after the 1986 People Power event that toppled dictator Ferdinand E. Marcos.

The Alsa Masa lorded over Davao City after declaring the Sparrows neutralized. By mid-1990s the Alsa Masa members were still armed but no longer had an enemy.

Trade-off

BEFORE the turn of the century, a new face of city life emerged, especially when Davao City became the location for the founding of the East Asean Growth Area of four memberstates of the Association of Southeast Asian Nations. It was here that key officials of Brunei Darussalam, Indonesia, Malaysia and the Philippines forged in 1994 an agreement

for economic cooperation.

But as the immediate economic windfall was seen in the revival of construction and trading, the city government also warned of the emerging threat of the proliferation and sale of methamphetamine hydrochloride, or shabu.

Called the poor man’s cocaine, shabu soon became the most sought-after substance abuse replacing marijuana. Authorities also raised the warning to a higher bar following findings that many crimes, including heinous ones, were committed under shabu use.

Intelligence fund

THEN-Mayor Rodrigo R. Duterte mounted a relentless campaign to stamp the use of shabu, including naming the local drug addicts and pushers in his weekly television program, titled Gikan sa Masa, Para sa Masa.

There is no immediate estimate

as to how much the city government spent on its war on drugs since thenMayor Duterte began his crusade.

However, it was also during this time that he sought a higher amount for his intelligence fund, which became the highest funded item in the annual budget since then.

In 2005 the city’s peace-andorder fund amounted to P311 million, which excluded P80 million, dubbed as intelligence fund.

Still, Mr. Duterte assured the City Council that the money has been spent literally for which it was named: intelligence gathering, including buying information to track the flow of shabu and locate criminals in high-profile crimes.

Armed response

MORE than a month into the presidency, Mr. Duterte admitted he was not prepared to see the numbers in his war against drugs. He added that he was taking stock only of his expe-

rience in Davao City. But the fact that he has involved the Armed Forces in this war, making it as a top priority, transformed narcotics-syndicate operations as threats to national security and no longer ordinary law-enforcement problems.

The immensity of the drug problem was amplified by President Duterte by saying that more than a thousand people, from the national government down to the local level, Congress, the Philippine National Police and even the Judiciary, are involved in the illegal-drugs trade.

Even the movie industry was penetrated by the problem, which is not unusual, with Mr. Duterte saying he also has a list.

So much is the President’s focused on his war on drugs, he told reporters here he wants the immediate approval of the 2017 budget to hasten the construction of rehabilitation centers even inside military camps. To be concluded

50% tariff on rice seen when QR ends in 2017 Continued from A1

buffer stock. In recent years, the government has taken charge of rice importation, as Manila has existing rice-supply deals with the governments of Thailand and Vietnam.

Currently, the government allows rice imports within the minimum access of volume (MAV) of 805,200 metric tons (MT) to enter the country at a lower tariff of 35 percent. Imports in excess of the MAV are slapped a higher tariff of 50 percent.

The extension given to the Philippines on the use of the QR is set to expire in 2017, unless Manila bids for another reprieve and is granted by the WTO. Philippine Institute for Development Studies (PIDS) Senior Research Fellow Roehlano Briones said the recommendation of the Neda is a good starting point.

Based on his own computation, Briones said the tariff on rice could be set at 35 percent, consistent with

the Asean Free-Trade Agreement. He said this “made more sense,” given that most of the country’s rice imports come from Asean.

“There is no point in setting a higher tariff when 95 percent of your rice imports come from the region,” Briones said in a phone interview.

In his study in 2015, Briones said the removal of the QR and the imposition of a 35-percent tariff rate can generate as much as P28 billion in revenues for the government annually. This, he said, can more than cover the proposed compensatory payment for farmers.

These projected revenues are also significantly higher than the tariff revenues estimated to reach P13 billion to 14 billion if Manila would continue to implement the QR.

Winners and losers

Setting a tariff rate on rice imports is part of the road map crafted by the Neda, which will also be presented to the President’s economic team this

month. The road map first identified the provinces that will be affected by the removal of the rice-import cap.

These provinces were identified based on yield and cost of production.

The Neda said the government is prepared to extend safety nets to ensure the affected farmers will be able to shift to other crops.

In terms of yield, the Neda classified the provinces according to their potential production, which should be at 10 MT per hectare. Currently, the average yield is at 4 MT per hectare.

The provinces that made the cut included Nueva Ecija, Davao del Sur, Ilocos Norte, Pampanga, Kalinga, Bataan, La Union and Biliran. Yield in these provinces range from 4.5 MT to 5.5 MT per hectare.

To be able to determine the provinces that will survive a post-QR regime, the Neda said the government would have to set a tariff rate of as low as 35 percent. This will result in a retail price of P24.10 per kilogram of milled rice.

The provinces that had among the highest production costs were La Union, at P21.67 per kilo, and Ilocos at P20.31 per kilo.

The provinces that had the lowest production cost are Pampanga, at P15.51 per kilo; Biliran, P15.76 per kilo; Nueva Ecija, P16.51 per kilo; and Bataan, P16.92 per kilo.

The Neda said it did not yet factor in transport and logistics cost in its computation.

The proceeds from the tariffication of the QR will be used to finance safety nets needed by farmers, such as to provide for mechanization needs and the provision of hybrid and/or certified seeds.

Currently, the Neda is crafting a bill that would amend Republic Act (RA) 8178, which allowed the Philippines to impose the QR on rice—a nontariff barrier.

The agency has also recommended to the Legislative Executive Development Advisory Council to certify as urgent the amendment of RA 8178.

DENR meeting with experts, getting ready to use TEV tool players, has yet to issue an official position on Lopez’s plan, although Ronald Recidoro, its vice president

for Legal and Policy, said the group is willing to know more about Lopez’s idea and would be willing to sit down

with the DENR to discuss the issue.

Dante Bravo, president of Global Ferronickel Holdings Inc., earlier told the BusinessMirror that imposing the TEV is “unconstitutional,” as it would impair contract obligations for existing mining projects.

He said the TEV is not specified in the Philippine Mining Act of 1995, as well as existing contracts between the government and mining companies.

Environmental and antimining groups, meanwhile, support Lopez’s plan to use the TEV as a way of measuring or evaluating mining projects.

Alyasa Tigil Mina (ATM), for its part, said the government could always cancel a mining contract, if it is found to be onerous and benefits only the mining companies.

Environmental group KalikasanPeople’s Network for the Environment (Kalikasan-PNE) said it is high time that the environment and environmental services became part of the equation in mining.

In the three studies mentioned by Lopez earlier to support her desire to use the TEV tool—in Palawan, Bicol and Mindoro—the DENR chief said the cost always outweighs the benefits of mining, because of the loss in terms of agriculture, fisheries and people’s livelihood affected by mining operations.

A concept in cost-benefit analysis, the TEV refers to the value derived by people from a natural resource, a man-made heritage resource or an infrastructure system, compared to not having it.

According to Lopez, the method gives monetary value for everything relevant to or affected by mining operations, such as the

Continued from A1

environment, livelihood, agriculture, fisheries and tourism, and the number of people affected as against the benefits, such as the taxes and various projects implemented by the mining companies.

Lopez made this pronouncement last week at a press conference to highlight the result of the mine audit.

Through the TEV, she said mining companies would know whether or not the benefits of mining are enough to cover for the relevant costs, which she said, often leads to environmental degradation that causes people in mining communities to suffer.

Interviewed at the sidelines, Lopez said she is entertaining the idea of limiting the number of mining operations in the Philippines through TEV. She defended the strict audit procedure implemented by the DENR as part of its mandate and her personal commitment to the people.

“People are suffering. We cannot build an economy based on suffering. We cannot build an economy based on social injustice. It is not right. The DENR is the protector of the environment and natural resources. We are just following the law,” she said. Meanwhile, Jasareno said none of the 20 mining companies the DENR identified as facing possible suspension have received the audit reports.

“We are in the process of producing the documents,” Jasareno said.

According to Jasareno, the audit reports are at least 2-inch thick and the DENR needs to produce seven copies for each of the participating audit team members.

The audit reports, he said, would be distributed to mining companies as soon as they become available.

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House crafting tax-reform package counterproposal

S

By Jovee Marie N. dela Cruz @joveemarie

peaker Pantaleon D. Alvarez on Monday said the House Committee on Ways and Means will come up with its own tax-reform package to counter the proposal of the Department of Finance (DOF) that he already labeled as antipoor.

In a news conference, Alvarez said the “counterproposal” will be a substitute bill to the DOF’s first tax-reform package submitted to the House Committee on Ways and Means.

Alvarez said he will set a consultation with the Senate and DOF to discuss the proposal, which seeks to lower the personal income-tax (PIT) rates.

“It [DOF proposal] needs to be reviewed carefully. We will request for a meeting with the Department of Finance and [the Senate]. We are now doing a counterproposal,” he said.

Last week, Alvarez rejected the DOF-proposed offsetting measures for the estimated P159 billion in revenues that will be lost to the

planned lowering of PIT rates.

Under the DOF’s bill, workers earning not more than P250,000 annually will be exempted from the PIT. However, the DOF bill will expand the value added-tax (VAT) base by reducing the coverage of its exemptions, including privileges granted for senior citizens and persons with disabilities; adjust excise taxes imposed on petroleum products; and restructure the excise tax on automobiles except for buses, trucks, cargo vans, jeeps, jeepney substitutes and special-purpose vehicles to recover the estimated P159 billion in revenues that will be lost.

Alvarez said instead of removing the VAT exemptions for senior

citizens and PWDs, and imposing excise tax on petroleum, the finance department and its attached agencies should improve their tax-collection efficiency.

“Rest assured that the lower chamber will be always on the side of the people. We will not allow these kind of [antipoor] proposals here in the House of Representatives,” Alvarez said.

Alvarez also reiterated that he will not allow the lower chamber be used as the rubber stamp of the DOF. Meanwhile, Rep. Luis Raymund F. Villafuerte Jr. of the second district of Camarines Sur, Rep. Raul A. Daza of Northern Samar and Party-list Rep. Lito Atienza of Buhay have called on the DOF to ensure its existing and new polices will result in better tax collection and more services for the people, especially the poor. Daza said DOF policies should push for a more vigorous and direct inter vention to alleviate the plight of the poor and other marginalized sectors.

“The DOF should come up with more measures that will supplement its plan to provide additional subsidies to poor families to soften the effect of the excise tax, especially on oil,” Daza said. Atienza said the DOF should properly implement the new Customs Modernization and Tariff Act (CMTA) for better tax collection.

“The DOF should use the CMTA to address the lapse in the strict inspection of container vans at the ports, which causes a big loss in the collection of possible taxes,” he said.

T he CMTA , or Republic Act 10863, which was signed into law on May 30, simplifies, modernizes and aligns with global best practices the country’s customs procedures, including import clearances and valuations, to expedite the release of goods, regardless of whether the owner is an individual entrepreneur or a large multinational company.

Villafuerte, who sponsored and defended the agency’s proposed 2017 budget, which is 16-percent higher than the current year’s budget of P18.4 billion, emphasized the importance of reforming the tax system and funding the DOF budget in achieving the country’s development objectives. “ T he DOF is proposing t a x measures that would meet the expectations of the people in reducing poverty in the countr y,” Villafuerte said.

Meanwhile, the lawmakers said that, while they are rejecting the DOF’s recommendation to scrap VAT on some items for senior citizens and impose excise tax on petroleum products, they are supportive of its proposals to adjust income-tax brackets to inflation.

B.P.I.-PHILAM LIFE MAKATI BUILDING Officials of the Bank of the Philippine Islands (BPI) and Philam Life Assurance Corp. (PLAC) gather during the unveiling of the new BPI-Philam Life Makati Building (formerly Ayala Life FGU) as they also celebrate Bancassurance Month. Present are (from left) BPI-PLAC CEO Surendra Menon; Philam Life President and CEO Ariel Cantos; BPI Family Savings Bank President Natividad Alejo; BPI-Philam Chairman of the Board Aurelio Montinolla III; and BPI President Cezar “Bong” Consing. NONIE REYES

Tan company to bid for Naia redevelopment

By Ma. Stella F. Arnaldo

Special to the BusinessMirror

T

HE Lucio Tan Group is in talks with a foreign company in its bid to redevelop the Ninoy Aquino International Airport (Naia).

In a news statement, Asia’s Emerging Dragon Corp. (AEDC), a consortium once founded by the Philippines’s richest taipans, said it will be participating in the government’s PublicPrivate Partnership (PPP) program to bid for the P75-billion Naia redevelopment project.

“The AEDC will have a foreign partner in bidding for the $1.65-billion project that would ‘improve the operational efficiencies’ of the four Naia terminals, both landside and airside, to meet International Civil Aviation Organization standards,” the statement added.

For his part, AEDC President Gen. Salvador Mison said: “We are participating in the bidding because we firmly believe in the growth potential of our country’s premier airport, given our past experience of pushing for Philippine aviation development.” Mison is currently president of Basic Holdings Inc., the

holding firm of tycoon Lucio Tan’s interests. Tan owns and operates pioneering flag carrier Philippine Airlines.

Contacted for comment, PAL President Jaime Bautista told the BusinessMirror: “We are working with a possible partner, which we are not at liberty to announce at this time.”

AEDC was the group that forwarded the unsolicited proposal to build the Naia terminal 3, upon invitation by then-President Fidel V. Ramos, but lost out to PairCargo, a consortium led by the Cheng family and Fraport AG. AEDC was founded by Tan, John Gokongwei, Henry Sy, Alfonso Yuchengco, George Ty and Andrew Gotianun. Since losing

the bid for the Naia-3, only Tan has remained as its active proponent and company chairman.

M i son s a id t he A EDC i s confident that it can provide “viable solutions to the Naia’s inter-ter mina l connectiv it y, as well as traffic congestion in the area,” while its foreign partner is expected to provide the technical expertise for the long-term proposal.

This is the second time the AEDC under Tan has forwarded its intention to redevelop the Naia. In November 2006 the company said it was in talks with Ital-Thai, Fraport AG of Germany, and Japan’s Marubeni Corp. for the redevelopment project.

The company’s lawyer then was

We are participating in the bidding because we firmly believe in the growth potential of our country’s premier airport, given our past experience of pushing for Philippine aviation development.”

—Mison

Perfecto R. Yasay Jr., current secretary of the Department of Foreign Affairs.

On September 14 the National Economic and Development Authority (Neda) Board, chaired by President Duterte, approved nine infrastructure projects costing P141 billion.

Among them is the P75-billion Naia redevelopment project, the first under the Duterte administration’s PPP program.

The AEDC said, however, the redevelopment project “excludes any proposals to improve air traffic services.” The winning bidder will operate and maintain the airport for 15 to 20 years, according to the Neda.

Tuesday, October 4, 2016

A3

Tax reforms to hike govt revenues by 3% of GDP–WB

By Cai U. Ordinario @cuo_bm

T

he government could raise its revenues by as much as 3 percent of GDP if it could improve the administration of the value-added tax (VAT) and increase excise taxes, the World Bank said on Monday.

In its Philippine Economic Update (PEU) report, the World Bank said VAT gaps cost the economy around 3 percent of GDP and another 3.7 percent of GDP is lost to noncompliance.

In terms of excise taxes, the World Bank said the government’s revenues could increase by almost 1 percent of GDP if it brings petroleum excise-tax rates closer to global standards.

“Successful implementation of public sector reforms would allow the country to increase public investment and propoor spending and take advantage of new opportunities arising from the global economic rebalancing,” the report stated.

In terms of the VAT, the World Bank said the VAT tax gap can be a policy gap resulting from legal exemptions and other special tax treatments and an administrative gap due to noncompliance.

Special tax treatments include VAT exemptions on electricity, social housing, cooperatives and spending by senior citizens and persons with disabilities. In terms of noncompliance, the World Bank said through the years, VAT compliance has been complicated and more difficult to administer. This has reduced VAT compliance since it was first introduced in 1998.

“As actual revenues averaged 4 percent of GDP, the VAT gap represented almost two-thirds [63 percent] of potential VAT revenues.

Of this, 28 percent reflects legal exemptions and special treatment, while 35 percent results from noncompliance,” the World Bank said.

Meanwhile, the World Bank said that, given the country’s low excise taxes, it urged the government to further raise the petroleum tax to generate additional revenues, among other benefits.

The World Bank said premium unleaded gasoline is currently taxed at 9 percent, while diesel is exempt.

However, in majority of Organisation for Economic Co-operation and Development countries, premium unleaded excise taxes account for between 25 percent and 40 percent of the fuel price.

As a result, in 2014 the VAT rates

in the country for premium unleaded gasoline and diesel were equivalent to just 10 percent and 11 percent of the pump price, respectively.

Apart from lower rates, the World Bank said there is also an estimated annual revenue leakage for petroleum excise taxes in the Bureau of Internal Revenue and the Bureau of Customs.

The World Bank said the leakage is estimated to average P3.2 billion between 2006 and 2013, or about 13.9 percent of potential revenue.

This amount does not include smuggling, which is estimated to cost as much as P38 billion in petroleum products, was smuggled into the country.

This cost the government some P4.1 billion in foregone VAT revenues and P8.5 billion in foregone excise revenues.

With this, the World Bank said increasing excise taxes are not enough and reforms must be coupled by lesser exemptions.

“Increasing excise tax rates and eliminating exemptions for kerosene, diesel and LNG [liquefied natural gas] could also improve the distributional equity of the country’s tax system, as higher-income households consume the vast majority of petroleum products,” the World Bank said.

Increased government revenues can help the country support efforts to reduce poverty and promote inclusive economic growth, according to the World Bank.

In another report also released on Monday, the World Bank said that, while inequality in many countries has decreased, governments, including the Philippines, need to further reduce it to improve the lives of millions.

The current Gini coefficient of the country is at 0.46, the highest compared to its Asean neighbors. Some Asean countries have a gini coefficient of as low as 0.41 or 0.42, allowing the region to post an average gini of around 0.40. The Gini coefficient is a measure of inequality. A Gini coefficient of zero represents perfect income equality, while a Gini of 1 represents perfect income inequality.

“It’s remarkable that countries have continued to reduce poverty and boost shared prosperity at a time when the global economy is underperforming— but still far too many people live with far too little,” World Bank Group President Jim Yong Kim said.

The World Bank urged countries to adopt safety nets such as the country’s own conditional-cash transfer, locally called the Pantawid Pamiliyang Pilipino Program.

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If TPP fails, China to take advantage through its RCEP

T

he administration of US President Barack Obama is moving into its final three months in office and the trajectory of one of its signature foreign-policy initiatives—the US “rebalance” to the Asia Pacific—remains unclear.

Washington’s inability thus far to ratify the Trans-Pacific Partnership (TPP) trade deal—a 12-country deal that encompasses nearly 40 percent of the world’s GDP—has its friends and partners in the region concerned about its long-term commitment to the Pacific.

Unease in Asia

IN August Singaporean Prime Minister Lee Hsien Loong bluntly referenced this unease during his trip to Washington: “For America’s friends and partners, ratifying the TPP is a litmus test of your credibility and seriousness of purpose [in the Asia Pacific].”

Lee further stressed that the United States could not achieve its aims in Asia through a security-centric posture: “It will add substance to America’s ‘rebalance’, which cannot just be about the military, or the seventh Fleet.”

Japan, one of Washington’s most important allies in the region, has also urged the US to follow through on the TPP. Japanese Prime Minister Shinzo Abe recently visited the US to attend the United Nations General Assembly meetings and indicated that: “Through the TPP, the US can make clear its commitment to playing a leadership role in the growing Asia Pacific.”

Abe, who also met Democratic presidential hopeful Hillary Clinton to press her on supporting the TPP, then outlined the stakes: “Success or failure will sway the direction of the global free-trade system, and the strategic environment in the Asia Pacific.” Ratification of the TPP during the “lame-duck” session of Congress—after the election in November and before Obama’s successor takes over in January—remains a possibility. Despite this, however, the window for finalizing the deal is closing, and political opposition from both presidential candidates has further complicated the White House’s elevator pitch to Congress.

Enters the RCEP

Aside from damaging US credibility in the region, the slow-drag on the TPP is turning the attention of some in the region back to trade possibilities with China. The most ambitious multilateral competitor to the TPP is the Chinese-led Regional Comprehensive Economic Partnership (RCEP). One of the key reasons RCEP has failed to gain traction over the past few years is the political capital that most RCEP members—including Japan, Australia, New Zealand, Singapore and Vietnam—devoted to finalizing the TPP after rounds of grueling negotiations.

While many members overlap between the TPP and RCEP, the most striking difference is the absence of the US in the latter— along with other large economies, such as Canada.

The RCEP agreement, which has 16 members with nearly a third of global GDP, has thus far been slow going, with negotiations dragging since discussions on the pact

For America’s friends and partners, ratifying the TPP is a litmus test of your credibility and seriousness of purpose [in the Asia-Pacific].”

—Lee launched in 2012.

RCEP includes other big economies in Asia that are currently outside the TPP, including India, South Korea and Indonesia.

While this wide network of key regional economies makes the pact attractive, it also is sure to lessen its standards and comprehensiveness —a watermark of the TPP. Indeed, as Obama has stated on numerous occasions, finalizing the TPP would ensure that Beijing “doesn’t get to write the rules” on trade and commerce in the region.

Significant hurdles

Despite the positive movement, however, the RCEP still faces significant hurdles. Members of the deal remain at loggerheads over cuts on goods tariffs and have yet to agree on other key areas, including e-commerce and intellectual property rights.

Moreover, the RCEP faces different challenges with the inclusion of India and Japan—neither of which has a free-trade agreement with China.

This makes negotiations more difficult as both sides are more or less breaking new ground (despite the fact that Japan is also simultaneously engaged with China on a trilateral freetrade agreements with South Korea).

But while the US may frame this as a China trade pact—the reality is that RCEP is centered on the Asean—with all 10 members involved.

Indeed—all of the other members (Japan, China, India, South Korea, Australia and New Zealand) already have free-trade agreements with Asean. The RCEP, therefore, is more of a web of all of these freetrade agreements together (Asean 6), along with the inclusion of new potential deals among the nonAsean members.

RCEP’s obstacles are not impossible to overcome, especially due to the fact that the deal—without Washington—has lower expectations on standards than the TPP. Also, the current slow-dance in RCEP negotiations may change significantly if it becomes clear that the TPP will not be ratified in the coming months and is, instead, punted to Obama’s possible successor—both of whom have slammed the deal.

RCEP lead negotiators had originally pledged to conclude a deal by the end of this year, but it now appears that this was overly ambitious.

RCEP members will hold their 15th round of negotiations next month in China and look to bridge the gap and work toward concluding a deal likely sometime next year. MCT

Vietnam seizes illegally imported elephant tusks

V

ietnamese authorities say they’ve seized 309 kilograms (682 pounds) of elephant tusks illegally imported from Nigeria.

A customs official says the tusks were seized at Hanoi’s airport on Saturday. She said on Monday the cargo had been declared as glass.

She spoke on condition of anonymity because she was not authorized to speak to the media.

Wildlife trade monitoring net-

work traffic said in a statement on Sunday, “Illegal trade in ivory continues to be a major threat to the survival of elephant populations in Africa.” It said, “Traffickers continue to move ivory into and through Vietnam, and this seizure highlights the country’s role in the illegal ivory trade.”

Elephant tusks are used as jewelry and home decorations in Vietnam, which bans hunting of its dwindling population of elephants. AP

Editor: Max V. de Leon • Tuesday, October 4, 2016 A5

Nonmilitary ships seen more likely to trigger sea clashes

T

he risk of a clash in the South China Sea lies with nonmilitary ships, Singapore’s defense minister said, as China deploys more heavily armed coast guard vessels in the disputed waters.

Singapore has joined other nations in the region and the US in warning the reliance on fishing boats and coast guards to assert territorial claims in the South China Sea raises the prospect of an incident. China has used its so-called white hull fleet to chase and shoo ships, including fishing boats, from other countries away from the reefs it claims.

A practical concern for nations whose ships travel through the area—it’s a key shipping lane that carries as much as $5 trillion in trade a year—is how to develop processes to defuse incidents as they occur, Ng Eng Hen told reporters on the sidelines of a meeting of Southeast Asian and US defense ministers in Hawaii.

“It may have, in fact, very little to do with military ships,” given an agreed code in place for navies, he said. “But you may have incidents arising from fishing, you may have incidents arising from white ships,” Ng said. “Whatever color ships they are, they can precipitate incidents.”

Singapore is not a claimant in the South China Sea, and Ng said China is “not a threat to us.” Still, it has called for a reduction in tensions and for the Asean to take a more united approach to resolving the disputes.

The South China Sea has become a

flashpoint for the broader tussle between China and the US for influence in the western Pacific, as President Xi Jinping seeks to build his country into a regional power.

“We are interested in the South China Sea because it is a major shipping route, and a lot of economies depend on it,” Ng said. “We think that uncertainty may lead to incidents.”

China’s assertions cross over those of nations, including Vietnam, the Philippines and Malaysia, and it has reclaimed thousands of acres in the waters in recent years, adding airstrips and fighter jets.

An arbitration court in the Hague in July ruled in favor of a Philippine challenge to China’s territorial claims, but that has not deterred China from continuing to beef up its presence in the waters. Ministers in Hawaii talked about how to prevent an escalation in tensions and how to keep communication open, Ng said. “We talked about forums at which we can bring up disputes,” he said. “We talked about how we can resolve disputes.”

Still, recent meetings of Asean foreign ministers or leaders have failed to take a tough stance on the disputes. Asean statements have not mentioned China by name, while expressing concern about develop-

Whatever color ships they are, they can precipitate incidents.”

—Ng Eng Hen

ments in the South China Sea. Asean operates on consensus and it only takes one member-state to disagree for a statement to be torpedoed. A meeting of foreign ministers in China in June ended in confusion after Malaysia released and then retracted a joint Asean statement that cited China for the first time over its behavior. Observers said at the time that smaller states, like Cambodia, could be swayed by Chinese pressure.

That has led several Asean states to publicly call for greater unity for the bloc, amid concerns about its effectiveness going forward.

The South China Sea is a “problem of positions,” Ng said. Still, “we have often said whether you are claimants or nonclaimants, whether you are China, US or other countries, I think there is wisdom in the system to understand what it is you are really fighting over. I do not see it as an immediate threat.”

China has recently developed shoals and coral reefs into seven islands with massive land-reclamation work. Some of the islands have airstrips capable of handling military aircraft.

In July an international arbitration tribunal ruled against China’s claims, saying they were illegal.

Beijing has rejected the ruling and

continued its activities.

Ng said the tribunal’s ruling is law, but there are “practical concerns” to consider.

“For Singapore, a nonclaimant sate, our main interest is, either with or without a ruling, how do you make sure the region is still stable and to make sure you actually have mechanisms to prevent any escalations?” he said.

Carter told reporters he and his counterparts discussed improving coordination and cooperation between their militaries to keep the region’s waterways open. He said he asked the heads of the US Navy and US Coast Guard to hold a meeting with Asean partners next year to share their best practices for maritime security.

Ng said the terror threat posed by the Islamic State group was uppermost on the minds of the ministers at the meeting. “Compared to a year or even two years ago, they are more organized, they are more networked, they are more clear in their articulation of what they want to achieve,” he said.

The group has over 1,000 fighters from Southeast Asia, aims to establish an Islamic caliphate in the region and has networks to move money and weapons, he said.

But Asean nations would suffer in the short term if the group were defeated or diminished in Iraq and Syria because the Southeast Asian fighters there would return home, potentially reenergized and trained, he said. “It’s certainly very much a core concern,” Ng said.

The ministers recognized there was a lot they could do to address the situation by sharing information and technology, he said. Bloomberg News, AP

Brunei DARUSSALAM’s Pehin Yasmin bin Haji Umar (from left), minister of energy and industry; Cambodia’s Gen. Tea Banh, deputy prime minister and minister of national defense; Indonesian Ryamizard Ryacudu, minister of defense; Lao PDR’s Lt. Gen. Chansamone Chanyalath, minister of national defense; Malaysian Hishammuddin Hussein, minister of defense; Myanmar’s Lt. Gen. Ye Aung, minister of border affairs; US Defense Secretary Ash Carter; Philippines’s Delfin N. Lorenzana, secretary of national defense; Singaporean Dr. Ng Eng Hen, minister for defense; Thailand’s Gen. Prawit Wongsuwan, deputy prime minister and minister of defense; Vietnam’s Gen. Ngo Xuan Lich, minister of national defense; and Asean Secretary-General Le Loung Minh of Laos, line up during a photo call over the weekend in Kapolei, Hawaii. AP

Singapore home prices slide by most in more than 7 years

S

ingapore home prices dropped by the most in more than seven years, as developers offered discounts amid signals from the government that it won’t roll back property curbs initiated in 2009.

An index tracking private residential prices fell 1.5 percent in the three months ended on September 30 from the previous quarter, the biggest decline since June 2009. Prices fell for the 12th straight quarter, the longest streak of quarterly losses since prices were first published in 1975, according to preliminary data from the Urban Redevelopment Authority on Monday.

The head of Singapore’s central bank, Ravi Menon, said last month that the city-state doesn’t plan to ease property curbs anytime soon, even as home prices have fallen 11 percent

1.5%

The percentage drop in the index tracking prices of residential units in Singapore in Q3

from a peak in September 2013 and sales have halved. That’s increasing the pressure on developers to offer discounts, payment programs and other incentives to stoke sales.

“The hemorrhage continues for home prices,” said Nicholas Mak, an executive director at SLP International Property Consultants in Singapore. “The prices could be

taking into account the delayed discounts offered in creative marketing by developers, which could be coming in with a lag.”

For example, developer OUE Ltd. offers four payment plans for its Twin Peaks condominium project off the prime Orchard Road shopping belt.

The most popular of those is the deferred payment program where the home buyer pays a small amount upfront and the rest over the next two years, according to its website.

High vacancies

The existing stock of unsold homes may take three years to sell, according to Augustine Tan, president of the Real Estate Developers’ Association of Singapore. In addition to the oversupply, home-vacancy rates are at their highest in more than 11 years, Tan said last month.

The residential curbs have included a cap on debt-repayment costs at 60 percent of a borrower’s monthly income and higher stamp duties on home purchases, after low interest rates and demand from foreign buyers raised concerns prices had risen too far too fast.

Apartment prices fell 1.8 percent in prime districts in the three months ended September 30, reversing a 0.3percent gain in the previous quarter, Monday’s data showed. Those in the suburbs slid 1.2 percent, while areas near prime districts declined 1.3 percent from the previous quarter.

Still, Singapore remains a highend housing market in Asia. The city was ranked the most expensive to buy a luxury home, after Hong Kong, in the region, according to a 2016 Knight Frank wealth report.

Bloomberg News

A6

Tuesday, October 4, 2016 • Editor: Lyn Resurreccion

The World BusinessMirror

www.businessmirror.com.ph

Republicans wonder if Trump can recover

T

Opponents to the peace deal signed between the Colombian government and rebels of the Revolutionary Armed Forces (FARC) of Colombia celebrate as they listen to the results of the referendum on the peace accord in Bogota, Colombia, on Sunday. The peace deal was expected to end more than five decades of conflict between the FARC and the government. AP/Ariana Cubillos

‘Shocking’ razor-blade slim lead by ‘no’ vote

Colombia peace deal rejected in referendum B

OGOTA, Colombia—After a stunning referendum defeat for a peace deal with leftist rebels, Colombians are asking what comes next for their war-torn country, which, like Britain, following the Brexit vote, has no Plan B to save an accord that sought to bring an end to a halfcentury of hostilities.

The damage from Sunday’s vote is still sinking in. Instead of winning by an almost two-toone margin as preelection polls had predicted, those favoring the accord with the Revolutionary Armed Forces of Colombia lost by a razor-thin margin, 49.8 percent of the votes to 50.2 percent for those against the deal.

Both President Juan Manuel Santos and leaders of the Fuerzas Armadas Revolucionarias de Colombia (FARC), having come this far after four years of grueling negotiations, vowed to push ahead, giving no hint they want to resume a war that has already killed 220,000 people and displaced 8 million.

“I won’t give up. I’ll continue search for peace until the last moment of my mandate,” Santos said in a televised address appealing for calm. But it’s not clear how the already unpopular Santos can save the deal, given the stunning political defeat he suffered. For now, he has ordered his negotiators to return to Cuba on Monday to confer with FARC’s top leaders, who watched the results come in with disbelief after earlier ordering drinks and cigars at Club Havana, once Cuba’s most exclusive beach club.

“The FARC deeply regret that

the destructive power of those who sow hatred and revenge have influenced the Colombian people’s opinion,” the FARC’s top commander, a guerrilla known as

50.2% The percentage of “no” votes garnered, while the “yes” votes took 49.8 percent

Timochenko, told reporters later.

The loss for the government was even more shocking considering the huge support for the accord among foreign leaders, who have roundly heralded it as a model for a world beset by political violence and terrorism.

Many heads of state, as well as United Nations Secretar yGeneral Ban K i-moon and US Secretar y of State John Kerr y, were present when Santos and Timochenko signed the deal less than a week ago in an elaborate, emotion-filled ceremony.

With the outlook uncertain, all eyes are on Santos’s former boss and chief rival: Alvaro Uribe, the powerful former president

who led the grassroots campaign against the accord.

With none of the government’s huge public relations machine, an angr y Uribe gave voice to millions of Colombians, many of them victims of the FARC like him, who bristled at provisions in the 297-page accord sparing rebels jail time if they confessed their crimes and instead reserved them 10 seats in congress.

Uribe, in prepared remarks from his ranch outside Medellin after the results were in, called for a “ big national pact” and insisted on “correctives” that guarantee respect for the Constitution, respect for private enterprise and justice without impunity. But he didn’t specify whether he would join Santos in trying to salvage the deal, and took more swipes at the FARC, who he demanded put an end to drug-trafficking and extortion.

“The entire accord was full of impunity,” said Ricardo Bernal, 60, celebrating the victory for the “no” side in a Bogota neighborhood where opponents were gathered.

“We all want peace but there has to be adjustments made.”

Across tow n, hu nd red s of supporters of the peace deal who had gathered in a hotel ballroom for what they expected would be a victory party with Santos wept in despair. The FARC ’s 7,000 guerrilla fighters are unlikely to return to the battlefield any time soon. For now, a cease-fire remains in place.

One option for Santos would be to reopen negotiations, something he had ruled out previously and his chief negotiator said would be “catastrophic.” The president, who has a little under two years left in office, could also seek to bypass another popular vote and ratify the accord in congress or by calling a constitutional convention, something

both the FARC and Uribe have previously favored.

“I’ve always believed in a wise Chinese proverb to look for opportunities in any situation. And here we have an opportunity that’s opening up, with the new political reality that has demonstrated itself in the referendum,” Santos said on Sunday night before descending to the steps of the presidential palace to address a small group of supporters, some of waving white flags symbolizing peace.

But bringing Santos and Uribe together might be harder than achieving peace with the FARC. Santos served as Uribe’s defense minister, when they worked together with the US to drive the FARC to the edge of the jungles, but the two haven’t spoken for years and frequently trade insults.

One of the reasons for the surprise defeat was low turnout, with only 37 percent of the electorate bothering to vote, a further sign to some analysts that Colombians’ enthusiasm for the ambitious accord was lacking.

Heavy rains from Hurricane Matthew especially dampened voting along the Caribbean coast, where the government’s electoral machinery is strongest and the “yes” vote won by a comfortable double-digit margin.

The campaign exposed deep rifts in Colombian society, dividing many families and making clear the road to reconciliation would have been long and torturous even had the accord passed. Colombians overwhelmingly loathe the FARC, which the US considers a terrorist group, and many considered the accord an insult to victims of the longrunning conflict. “In the end, hate toward the FARC won out over hope for the future,” said Jason Marczack, an expert on Latin America at the Washington-based Atlantic Council. AP

he worst week of Donald Trump’s presidential campaign began with a widely criticized debate performance and ended with a bombshell report that he could have avoided paying federal income taxes for 18 years.

In between, the blustery Republican lashed out at a Latina beauty queen in a series of 5 a.m. tweets; faced opposition from conservative editorial boards, went after Bill Clinton’s history of infidelity while refusing to discuss his own; was found to have appeared in a Playboy soft-core porn film; mocked Hillary Clinton’s recent battle with pneumonia; and told a crowd she “could actually be crazy.”

“This could be the worst week in presidential history for any candidate,” said Rick Tyler, a Republican strategist and former communications director to Texas Sen. Ted Cruz’s presidential campaign. “I certainly wouldn’t know how to top it.”

Many Republicans were left wondering whether Trump could recover or if he had effectively lost the race in the past seven days.

“The hole that Trump has dug for himself is very deep,” said Joe Watkins, a former aide to President George W. Bush. “Given the large viewing audience for the first debate and week of big missteps by Trump, it’s possible that it could be too late to turn it around.”

The Trump campaign and its allies seemed uncharacteristically frozen in place as the headlines mounted, unable to go on the offensive against Clinton as events spiraled beyond their control. Trump’s own advisers publicly pleaded with him to be more disciplined.

Newt Gingrich, the former Republican House speaker and a vocal surrogate, called it “a lost week, a week which has hurt him, which has shaken his own supporters” in a Friday appearance on Fox News.

On Sunday Trump’s supporters tried to spin revelations published in the New York Times that the candidate had reported $916 million in losses on his 1995 tax returns as evidence that he’s a savvy businessman.

The sequence of events further complicates Trump’s path to victory, and comes after a stretch in which he had ticked up in polls.

“It wasn’t a bad week. It was a horrible week,” said Republican pollster Frank Luntz, who argued on September 15 that Trump was “capable of winning” but fretted on Sunday that he is “unmanageable.”

“His staff has no control over him whatsoever. It’s their responsibility to keep him focused on what it takes to win, and they have lost it,” he said. But he’s not writing Trump off yet. The outcome of the race is still “up to the debates,” Luntz said. “Millions of people will read these stories. Tens of millions will watch the debates.”

‘Trump is in serious trouble’

Trump is scheduled to hold rallies in Colorado, Arizona and Nevada this week.

The vice-presidential debate on Tuesday night promises to momentarily turn the spotlight away from the New York realestate developer, with Mike Pence seeking to make the case for his running mate against his Democratic counterpart Tim Kaine. Yet, the latest headlines are sure to draw the discussion back to the fresh controversies surrounding Trump.

A Fox News poll of likely voters conducted after the September 26 debate found that suburban women favor Clinton over Trump by 20 points, despite her low favorable ratings.

One clue as to why: 69 percent of them said Trump lacks the temperament to serve effectively as president.

Among white women, a group that Republican Mitt Romney won by 14 points in 2012, Trump enjoys only a 4-point lead, with 59 percent expressing doubts about his temperament.

Overall, the survey showed Clinton leading Trump by 3 points, picking up 2 points since Fox’s mid-September poll, and gaining a net of 6 points over the Republican in a two-way contest in flipping a 1-point deficit to a 5-point lead.

Polling since the debate has been scarce, but early signs aren’t good for Trump. Swing state surveys taken after the showdown show him trailing Clinton by 6 points in Nevada, by 4 in Florida, by 7 in Michigan and by 7 in New Hampshire.

Losing each of those states would almost certainly close off Trump’s path to the White House. “Trump is in serious trouble, but there are still a couple of things working in his favor,” said Jack Pitney, a political-science professor at Claremont McKenna College, arguing that the electorate is more polarized than it’s been in over half a century, and that the race could still be upended by a terrorist incident, a foreign-policy debacle, or a Clinton scandal or health scare.

“But in the absence of out-of-left-field events, it’s hard to see how Trump fully recovers from last week.”

Republican presidential candidate Donald Trump speaks in Pittsburgh on September 22.

AP/Evan Vucci

Trump defied regular doomsday predictions in the Republican primary, but now he faces a demographic disadvantage against his Democratic competitor.

Broadening his appeal is paramount, and it’s unclear where he can gain votes.

“His bizarre rants about Ms. [Alicia] Machado will further alienate women and Hispanics. African American voters will notice his repeated warnings about vote fraud in ‘certain areas.’ And nearly everybody has to wonder about his habit of tweeting out insults in the middle of the night,” Pitney said.

‘Survivable?’

Republican reactions to Trump’s week ranged from fatalistic to cautiously hopeful, with some arguing the race isn’t over while conceding that Trump is on thin ice.

Trump’ actions last week are “merely a summation of his campaign as a whole and why Trump was the most problematic candidate the party could have nominated to run against Hillary Clinton,” said Kevin Madden, an adviser to Mitt Romney’s 2012 campaign. “He has less than 40 days to turn this race back into a referendum on his opponent and the status quo. There are no days left to spare and he can’t have another week like the last one.”

John Weaver, the chief political strategist for Ohio Gov. John Kasich and a Trump critic, said: “He had probably the worst week any presidential nominee has had in modern American history. There are no parallels.”

He argued that the debate performance and its fallout put Trump “into a place that I don’t think is survivable.”

Tyler was equally pessimistic about Trump’s hopes. “He took a bad debate performance—which is survivable, it happens—and he turned it into the worst week of postdebate spin in presidential history. It was just self-inflicted,” he said. “He has now successfully entered into the zone of being a laughingstock and a punchline.”

The bad news for Trump comes with early voting under way in some states and voters making up their minds. And the fact that Trump’s problems are dominating the political chatter drowns out daily efforts by his campaign to put Clinton on defensive over her own controversies.

A comeback, if there is one, would be predicated on the country’s desire for a new direction eclipsing Trump’s worst gaffes and foibles, strategists say. Surveys say Trump soundly defeats Clinton on who’s more likely to change Washington.

“Trump is still positioned for a comeback,” said Ed Brookover, a former strategist to both Trump and Republican rival-turned-surrogate Ben Carson. “The country still has an overriding desire for change. Secretary Clinton represents the past. Mr. Trump is the only change candidate in this election.”

‘Absolute genius’

T r u mp ’ s c a m p a i g n r e s p o n d e d t o the article published on Saturday in the Times that highlighted portions of his 1995 tax return by claiming the documents were “illegally obtained.” Trump, the campaign said, “knows the tax code far better than anyone who has ever run for President and he is the only one that knows how to fix it.”

The campaign didn’t comment on the central assertion—that Trump posted a $916-million loss on his tax returns that year.

The report came five days after Trump fueled questions about his taxes at the debate, which broke records with a viewership of more than 84 million.

“That makes me smart,” he interjected when Clinton said it’s possible he has paid “nothing” in federal taxes.

On Sunday, Trump surrogate and former New York City Mayor Rudy Giuliani said on ABC’s This Week that the Times article shows Trump is an “absolute genius” for using available tax breaks, and that the real-estate developer “would’ve been a fool not to take advantage of it.”

Meanwhile, Clinton Campaign Manager Robby Mook piled on after the Times report.

“In one year, Donald Trump lost nearly a billion dollars. A billion,” he said in a statement. “He stiffed small businesses, laid off workers and walked away from hardworking communities.” AP

The World BusinessMirror

www.businessmirror.com.ph

Tuesday, October 4, 2016

A7

Despite many issues still unresolved

PM May to pull Brexit trigger by March

P

rime Minister Theresa May said she would start pulling the UK out of the European Union (EU) in the first quarter of 2017. It was the clearest statement yet of her strategy, though it left unanswered most questions about what Brexit will actually look like.

The premier told delegates at her Conservative Party’s annual conference in Birmingham, central England, she’ll invoke Article 50 of the EU’s Lisbon Treaty—the formal trigger for two years of talks—by the end of March.

May also said she’ll introduce a bill next year to convert all existing EU laws into UK legislation on the day Brexit is completed to provide certainty for business and investors.

“We should not let things drag on too long; having voted to leave, I know that the public will soon expect to see, on the horizon, the point at which Britain does formally leave the European Union,” May said on Sunday. “There will be no unnecessary delays in invoking Article 50. We will invoke it when we are ready. And we will be ready soon. We will invoke Article 50 no later than the end of March next year.”

That means the two years of Brexit negotiations should be completed in 2019, 46 years after the country joined what was then the European Economic Community, though Trade Secretary Liam Fox cast some doubt on that timetable.

“We must give as much certainty as possible to employers and investors,” May said. “I want to give British companies the maximum opportunity to trade in and operate in the single market.”

May pledged to control immigration in Britain’s best interests while retaining access for business to the European single market. But still left unsaid is what exactly the prime minister will seek in the talks and what her counterparts in Europe will agree to.

As well as commerce and immigration, the two sides must find common ground on rights for their citizens in each other’s territory,

the border between the two Irelands and what, if anything, the UK contributes to the EU budget.

There’s also a string of legal, regulatory, energy, agricultural and security issues to address.

‘Urgent need’

“The prime minister has removed one big question—on timing—but has accelerated an urgent need for answers on others,” Confederation of British Industry Director General Carolyn Fairbairn said in a statement. “Businesses cannot continue to operate in the dark in other areas. The decisions they face today are real and pressing.

The government’s desire to play its negotiating cards close to its chest must be tempered by clear indications on how we will trade with the UK’s most important partner and how firms will be able to employ the people needed to drive growth.”

European Union President Donald Tusk said May’s announcement brings greater clarity on timing.

The remaining 27 member-states of the EU will engage with the UK once Article 50 is invoked, he said.

May played down the call to differentiate between so-called hard and soft Brexits.

“I know some people ask about the ‘trade-off’ between controlling immigration and trading with Europe. But that is the wrong way of looking at things,” May said. “We will do what independent, sovereign countries do. We will decide for ourselves how we control immigration. And we will be free to pass our own laws.”

Repeal bill

The government’s planned “Great Repeal Bill” will abolish the 1972 European Communities Act that took Britain into the bloc, while

Britain’s Prime Minister Theresa May waves to party members assembled to hear her speech at the Conservative Party Conference in Birmingham, England, on Sunday. Britain will trigger the formal process for leaving the European Union before April 2017, May said on Sunday, putting to rest weeks of speculation on the timing of the move. Ben Birchall / PA via AP

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The number of years that will take to negotiate Britain’s exit from the European Union converting all EU laws governed by it into domestic legislation on the day Britain eventually completes its pullout, May said. Subsequent governments will then be able to repeal or amend individual laws, if needed.

The bill will be introduced in Parliament between May 2017 and May 2018, Transport Secretary Chris Grayling told ITV’s

Peston on Sunday program. On the same show, former Business Minister Anna Soubry, who left her post when May became premier, said the repeal act was a necessary step but not a “ big deal.” She called for more detail on the “guiding principles” of the government’s Brexit plan.

‘Something worse’

“We need to know what are our red lines as we go into this process,” Soubry said. “ This idea that we hold the cards and that the EU is going to come to us and say, ‘Do you know what, we’ll give you pretty much what you want’—the idea that we’re going to get anything like we’ve got now is rubbish. We’re going to get something worse.”

Asked if he could be 100-percent certain that the UK would be out of the EU by the time of the next general election, scheduled for 2020, Fox declined to give a

guarantee. “What we want is the best exit for the United Kingdom, not the quickest,” he said at an event in Birmingham before the start of the party conference. “I wouldn’t put a timescale on it.”

In the continued absence of any detail, Sunday’s announcement may exacerbate concerns among investors that the gover n ment w i l l pu rsue a h a rd Brexit. That would see it willingly surrender membership of the EU’s single market for trade in return for more power over immigration, law-making and the country’s budget.

T he pound just w rapped up its worst quarterly r un against the dol lar since 1984, dr iven dow n first by the resu lt of the June 23 referendum and then kept wea k by specu lation of a sw ift, severe brea k. It found some suppor t, as the economy p r o v e d mo r e r e s i l i e nt t h a n most forecast.

Oil bulls rewarded as crude surges after Opec output deal O il investors’ bullish bets on last week’s Organization of Petroleum Exporting Countires (Opec) meeting paid off. While most analysts weren’t expecting a deal, money managers increased wagers on rising prices by the most since January ahead of the Opec’s talks in Algiers. Oil capped the biggest monthly gain since April after the group announced on September 28 an agreement to limit production for the first time in eight years.

“There’s been a lot of skepticism,” said Eric Nuttall, who manages a $130-million energy fund at Sprott Asset Management Lp. in Toronto. “Opec has changed since the last cycle. They’ve just gone through the worst selloff of oil in history. I’m more bullish than I was, and I was bullish before.”

Investors increased their long position in West Texas Intermediate (WTI) crude by 24,131 futures and options, or 8.1 percent, during the week ended on September 27, according to the Commodity Futures Trading Commission. Bets on falling prices dropped, after increasing at

the fastest pace in more than a year during the previous week.

WTI futures rose 2.8 percent to $44.67 a barrel in the report week before settling at $48.24 on September 30. Crude climbed 7.9 percent last month, the first September increase since 2010. Futures were trading 0.7 percent lower at $47.90 a barrel at 6:16 a.m. in London.

Opec surprised most analysts by agreeing on the framework for a deal to limit crude output as a supply surplus persists amid the two-year oil slump. Ministers said the group will keep production in a range of 32.5 to 33 million barrels a day. Earlier this month, Saudi Arabia signaled a decision was unlikely at the meeting, which would instead be a chance to consult.

“They did show they are going to defend prices,” said Rob Haworth, a senior investment strategist in Seattle at US Bank Wealth Management, which oversees $133 billion of assets. “They don’t want to see market volatility below $40 and are willing to defend it.”

Opec pumped a record 33.69 million barrels a day in August,

according to a Bloomberg survey, with Saudi Arabia boosting output to an all-time high.

But it’s challenging for the group to follow through on the cuts—and, historically, there’s been a “credibility problem,” he said. While the deal could add as much as $10 a barrel to oil prices, Goldman Sachs Group Inc. said it’s unclear how the plan will be implemented. Russian Finance Minister Anton Siluanov questioned the plan and said on September 30 the country will not revise its budget outlook, which is based on the assumption that oil will average $40 a barrel the next three years.

Citigroup analysts pointed to Opec’s plan to set up a committee to negotiate how to divide up cuts among members, noting that “this is still kicking the can down the road.”

Iran, Nigeria and Libya have said they’re exempt from a deal.

The last attempt for an output deal collapsed in April when Saudi Arabia insisted on Iran’s participation. Iran is in the process of restoring exports after sanctions on its nuclear program were lifted in January. Bloomberg News

Afghan President Ashraf Ghani (seated) signs a peace agreement as Chief Executive Abdullah Abdullah (second from left) watches at the presidential palace in Kabul, Afghanistan, on September 29. AP/Rahmat Gul

Afghanistan seeks $3B in aid as corruption concerns persist

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ABUL, Afghanistan—Afghanistan’s leaders will head to Brussels this week, seeking billions of dollars in aid as the country confronts an increasingly powerful Taliban insurgency and pervasive corruption. President Ashraf Ghani and Chief Executive Abdullah Abdullah hope to secure pledges totaling about $3 billion a year at the conference, which will be held on Tuesday and Wednesday.

Afghanistan already receives about $5 billion a year, mostly from the United

States, to cover defense costs. The last donor conference, in Tokyo in 2012, secured $4 billion in annual subsidies for development.

Afghanistan has been mired in war for decades. At the height of the 15-year US and North Atlantic Treaty Organization intervention, billions of dollars flowed into the country, creating a false economy with growth in the double-digits. But the drawdown of troops in 2014 led many aid workers and international agencies

Business anxiety

Nissan Motor Co. Chief Executive Officer Carlos Ghosn signaled on September 29 that he might not be able to make ne w i nve st me nt s i n Br it a i n without a government pledge for compensation in the event of adverse consequences stemming from Brexit. And Vodafone Group Plc. has said it’ ll consider moving its headquarters to mainland Europe if Britain doesn’t preser ve access to the EU’s single market.

Having agreed to grant May space to form a strategy, the 27 other EU leaders are virtually unanimous in arguing she cannot “cherry-pick ” the best parts of membership, a Bloomberg News analysis showed. The UK “cannot have the advantages of the European Union without carrying out the obligations,” Irish Finance Minister Michael Noonan said in a recent interview. Bloomberg News to depart or scale back their operations, causing the economy to all but collapse.

Officials estimate up to 50-percent unemployment. Deteriorating security deters foreign investment in key fields such as mining and infrastructure, and drives the country’s youth onto the migrant trail to Europe in search of opportunities.

Ghani will nevertheless argue that progress has been made since Tokyo regarding corruption and judicial and electoral reform.

“Afghanistan is no longer just receiving a blank check, this time we have to make sure the support we are receiving goes to the right places, in the right hands, and there is mutual accountability on both sides, Afghanistan and the donors,” said Javid Faisal, a spokesman for Abdullah.

Afghanistan’s illicit production of poppies for heroin, worth about $3 billion a year, has served as a cash cow for the insurgents and spawned a corruption epidemic. The anticorruption group Transparency International consistently ranks Afghanistan among the top 3 most corrupt countries, alongside Somalia and North Korea.

“Corruption used to be a shame in this county, but now all the things it brings are a badge of pride,” said analyst Haroun Mir, referring to officials who flaunt expensive watches and cars, and live in huge marble houses known as “poppy palaces” despite receiving official salaries of a few thousand dollars a month. The average income for Afghanistan’s estimated 30 million people, most of whom are illiterate farmers, is less than $1,000 a year. AP

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Russia will continue cyber attacks, top Democrat on House panel says

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Children peer from a partially destroyed home in Aleppo, Syria, in this photo on February 11.

Nearly 100 children were killed in a single week in Aleppo as Syrian and Russian warplanes sought to bombard into submission the rebel in eastern districts of the city that have held out against Syrian government forces for five years. Alexander Kots/Komsomolskaya Pravda via AP

Syria to Aleppo rebels: Surrender

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EIRUT—Syrian rebels and progovernment forces clashed on Sunday on several fronts around Aleppo, as the country’s military command called on militants to lay down their weapons and evacuate the contested city.

A day after pro-government forces captured the strategic alShuqeef hill north of the city, the Britain-based Syrian Observatory for Human Rights monitoring group reported fierce fighting in areas near the hill and in the Bustan al-Basha neighborhood.

The two sides also clashed

in A leppo’s sout her n Shei k h Saeed neighborhood. The government’s attempt to penetrate Aleppo’s opposition-held eastern side has been accompanied by a relentless campaign of air strikes by Russian and Syrian warplanes.President Bashar alAssad’s forces are depending on

the Russia bombardment and Iran-backed militias for support.

A spokesman for the Nour el-Din el-Zink i rebel faction told The Associated Press that foreign fighters were actively pa r t ic ipat ing in t he gover nment’s g round campaig n. He said rebels could identif y Lebanese and Iraqi militias by their f lags. An air strike, meanwhile, targeted a rebel headquarters near the central city of Hama, killing at least six militants, the Observatory said. It was a setback for the rebel campaign to advance on the government-controlled city.

The UN’s humanitarian chief, Stephen O’Brien, reported that eastern Aleppo’s health system has been “all but obliterated” by shelling and bombardment.

“Medical facilities are being

hit one by one,” O’Brien said in a statement that called for a 48-hour humanitarian pause to the fighting each week. The UN estimates 275,000 people are trapped by the government siege.

“We are in a race against time to protect and save civilians in eastern Aleppo city. They need our urgent action to bring an end to their living hell,” O’Brien said.

One of Aleppo’s largest hospitals, located in the eastern S a k hou r ne i g hb orho o d , w a s knocked out of service Saturday by the air strikes, doctors and activists reported. The Syrian military command said in a statement on state media that government forces would guarantee gunmen safe passage out of opposition-held neighborhoods.

Russia announced a month ago that

the Syrian government would give safe passage to civilians wanting to leave eastern Aleppo. Few have accepted the offer.

The UN says at least 320 civilians have been killed since the government announced its offensive on September 22. The European Union offered to help evacuate patients in Aleppo’s hospitals and deliver food, water and medical aid to besieged eastern districts.

In a statement, EU foreign policy chief Frederica Mogherini urged international players to unite to make the aid effort work “for the sake of humanity and the political future of Syria.”

The EU is mobilizing $25 million in emergency aid and offering to move patients to other medical facilities, including in Europe, if needed. AP

Hundreds trapped in Libya’s Benghazi amid fighting

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AIRO—An international rights group ex pressed alarm on Friday over the fate of hundreds of Libyan and foreign nationals trapped for months amid fighting in the eastern city of Benghazi. Amnesty International said that nearly 130 families and hundreds of foreigners in the southwestern Benghazi neighborhood of Ganfouda have been cut off from the outside world, with dwindling food and fuel supplies.

“Time is running out for civilians in Ganfouda, who are being left to die trapped by the fighting,” said Magdalena Mughrabi, deputy director of Amnesty’s Middle East and North Africa Program.

The fighting has raged in Benghazi since 2014, when forces commanded by powerful military commander Khalifa Hifter began a campaign against militants there, including branches of al-Qaeda and the Islamic State group.

Hifter, supported by British, French, and American military advisers and special forces, has managed to take control over much of the city. Ganfouda is one of the few districts where the militants have put up fierce resistance against Hifter’s National Libyan Army forces. However, international groups have

been appealing for the creation of safe corridors to evacuate civilians trapped in Ganfouda.

Amnesty quoted a resident who identified himself as Mohamed as saying that residents are in desperate need for humanitarian supplies, especially the youngest residents.

“The children look like skin and bones because of the lack of food and poor nutrition. If they could just drop us some food for the children or get them out of here, even if that meant leaving the rest of us, that would be fine,” he said.

Residents have taken to hosting displaced families whose houses were destroyed by airstrikes and shelling.

“We’re living like animals,” according to another resident whom Amnesty identified as Samir. He added that he has taken three families into his house bringing the number of residents to 24.

A mnesty feared that civ ilians caught in crossfire are facing mass punishment, under the pretext that they are supporters or sympathizers of the extremist Islamic militants.

“Civilians should not be used as human shields, and those who wish to leave must be protected from arbitrary detention, torture or any other abuses,” Mughrabi said. AP

A civilian fighter holding the Libyan flag stands in front of damaged buildings in Benghazi, Libya, on February 23. AP/Mohammed el-Shaiky

ASHINGTON—Rep. Adam Schiff of California, the top Democrat on the House Intelligence Committee, said on Sunday Russians would continue cyber attacks to interfere with US elections unless something is done.

“I think the Russians respect one thing and that’s strength—if they see an open door, that’s an invitation to do more. And I think we need to begin naming and shaming them, and work with our allies around the world who also have been hacked and interfered with by the Russians,” Schiff said on ABC’s This Week.

Schiff said he has no doubt that the Russians are responsible for the hacking and he doesn’t think the Obama administration has any doubt either. Schiff said it’s “not a question of evidence.”

He said the Russians can’t manipulate vote results with the cyber attacks but could create doubts about the election by meddling with voter-registration databases or doctoring e-mails and releasing them.

“The fact is that Americans already see the meddling. And I think it would be far worse if there is a problem with the election, and only after the election does the administration tell the American people— yes, the Russians were doing this and we knew it all along,” Schiff said.

Schiff and Sen. Dianne Feinstein of California, the top Democrat on the Senate Intelligence Committee, recently said the briefings they received show that Russian intelligence services were behind the hacking.

“And what [Donald] Trump has been doing actually has been the most tremendous gift to Russian propaganda by coming out as he did in the debates saying—‘it could be Russia, it could be China, it could be a 400 pound man’—that’s exact what Russia wants,” Schiff said.

About 20,000 of the e-mails were released in July by WikiLeaks, which provided a searchable database of Democratic National Committee (DNC) correspondence. WikiLeaks also has posted DNC internal documents and voicemail. In recent months, a computer network used by Hillary Clinton’s campaign and the Democratic Congressional Campaign Committee also have been hacked.

The White House has refused to say who is behind the attacks. Former White House counterterrorism adviser Richard Clarke suggested on the ABC show that pointing the finger at Russia could lead to calls for US retaliation and the White House is afraid of starting a cyber war that would cause the hacking to escalate.

“The United States is so vulnerable to cyberattack on our infrastructure. The White House doesn’t want to start that,” he said. TNS

India: Gun battle ends at Kashmir army camp

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RINAGAR, India—A gun battle with a group of militants who attacked an Indian army camp in the Indian portion of Kashmir that killed one Indian paramilitary soldier and wounded another has ended early Monday morning, police said.

A senior police official speaking on customary condition of anonymity said search operations were on at the base that was attacked late Sunday by an unspecified number of militants firing grenades and guns.

The police officer Syed Javeid Mujataba Gillani said earlier that it was not immediately known whether the militants tried to enter the camp in the garrison town of Baramulla, 50 kilometres northwest of Srinagar, the main city in Kashmir.

The camp is the local headquarters of a counterinsurgency military unit.

The paramilitary soldiers hit by gunfire were also stationed at the camp, a police officer said on condition of anonymity as he was not authorized to talk to reporters.

Sunday’s attack came three days after the Indian army said it had carried out a “surgical strike” in the region and destroyed “terrorist launching pads” used by the militants with support from Pakistan.

The Indian assault followed a deadly rebel attack on another Indian base in Kashmir. On September 18 suspected rebels using guns and grenades sneaked into an army base in Uri, a town in Indiancontrolled Kashmir, and killed at least 18 soldiers. AP

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India, world’s fastest-growing econ, to survive friction with Pakistan

Hungarian Prime Minister Viktor Orban (center) applauds during the Fidesz party’s event in the Balna Budapest Cultural Center in Budapest, Hungary, after the referendum on mandatory European Union quotas for asylum-seekers on Sunday. But nearly complete official results showed the ballot was invalid due to low voter turnout. Szilard Koszticsak/MTI via AP

An Indian army soldier guard his post outside the base camp, which was attacked by suspected militants at Baramulla, northwest of Srinagar, Indian-controlled Kashmir, on Monday. AP/Mukhtar Khan

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elations between India and Pakistan have entered their worst phase in more than a decade, but the likelihood of a broader conflict is remote, and analysts suggest the economic impact on South Asia’s two largest economies will be limited.

Security agencies in major Indian cities and towns are on alert for any attack in retaliation for the army killing militants in Pakistan, the Press Trust of India reported, citing the home ministry. The directive comes after the government shifted villagers living along the border with Pakistan in the northern states of Jammu and Kashmir and Punjab.

On Sunday night a group of terrorists f lung grenades into an Indian army camp as part of a fresh attack in Baramulla district of Jammu and Kashmir, according to the Indian Army. One member of India’s Border Security Force was killed in the attack, while soldiers said they killed two of the militants. The government is monitoring the situation Interior Minister Rajnath Singh said in a Twitter post.

This follows last week’s attack, in which India said it had conducted surgical strikes on what it called terrorist launchpads inside Pakistan, after a deadly strike last month killed 19 Indian soldiers in the disputed Himalayan region of Kashmir.

News of the strikes—which Pakistan called an “illusion” to cover cross-border shooting—sent Indian stocks and the rupee sliding but is unlikely to derail growth in India, now the world’s fastestgrowing major economy.

Instead, Prime Minister Narendra Modi is set to continue his efforts to isolate Pakistan inter nat iona l ly and e x amine other ways to retaliate without sparking a conflict between the nuclear-armed rivals.

“Elevated tensions alone will not impact either economy or lower the attractiveness of either market to potential foreign investors,” said Sasha Riser-Kositsky, an Asia analyst at political risk firm Eurasia Group. “The Indian government is likely to stick to its effort to isolate Pakistan diplomatically rather than risk a military escalation that could more severely rattle markets and deter corporate investment.”

India’s $2.1-trillion economy is Asia’s third largest, and its growth is expected to keep surpassing most major peers, according to Bloomberg surveys. Local assets have rallied as foreigners bought the most stocks and bonds in the September quarter since the three months ending March 2015, as the government took steps to boost growth.

C h ina a nd t he US have considerable business interests in Sout h A si a a nd a ny esca l at ion cou ld hu r t t he econom ies of bot h Ind i a a nd Pa k ist a n. T he t wo big powers have u rged India and Pakistan not to further

esc a l ate t he sit u at ion a long t heir de -facto border.

Historical animosity

Relations between India and Pakistan are often tense and the countries, both of which possess nuclear weapons, have fought three wars since the partition of British India in 1947.

India’s retaliation came after India’s director general of military operations said the army received “credible and specific” information about attacks planned both in Kashmir and major Indian cities. The move followed weeks of mounting domestic pressure on Modi to punish Pakistan for what New Delhi believes is Islamabad’s support for terrorists striking inside India.

“We are entering the worst period for India-Pakistan relations in over a decade,” said Shashank Joshi, a fellow at the Royal United Services Institute in London.

‘Save face’

India’s announcement of its raid is likely to heighten tensions along the Line of Control, including skirmishes and shelling, Joshi said. But Pakistan’s initial respons—denying that surgical strikes even took place—suggests recent moves are unlikely to result in all-out war.

Instead, “Pakistan may seek to respond by encouraging or assisting another attack on the Indian army in Kashmir by jihadist groups, or even a terrorist attack in an Indian city,” he said, adding that Islamabad’s denial “helps Pakistan save face, and so reduces the risk of serious escalation.”

Modi’s government has been examining further diplomatic responses, though those, too, are unlikely to have broader economic fallout. India led a boycott of the South Asian Association for Regional Cooperation last week, leading to the November summit’s postponement. Modi is examining a water treaty that governs rivers flowing from India to Pakistan and whether to revoke the “Most Favored Nation” trading status it granted to Pakistan in 1996—an act that was not reciprocated.

Worsening ties between Pakistan and its South Asian neighbors will likely push Islamabad even closer to China, according to Eurasia Group’s Riser-Kositsky.

Beijing is pursuing a $45-billion investment that traverses parts of Pakistan-controlled Kashmir. But China will also probably push for tensions to be defused.

“It’s in China’s interest for the region to stay stable and it’s impossible for China to take sides at the moment,” said Sun Shihai, president of the official Chinese A ssoc i at ion for Sout h A si a n Studies in Beijing. “China used to support Pakistan’s stance on Kashmir but now it believes the area is a disputed territory and both India and Pakistan need to sort out their problems via peaceful dialogue.” Bloomberg News

Low turnout nullifies Hungary ballot on EU refugee quotas

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UDAPEST, Hungary—Low voter turnout invalidated Hungary’s referendum on European Union (EU) refugee quotas, even though citizens voted overwhelmingly in support of the government’s opposition to any future, mandatory EU plans to relocate asylum-seekers.

The government claimed a “sweeping victory,” but analysts said the result was an “embarrassing but not tota l ly catastrophic defeat” for Prime Minister Viktor Orban. “We can be proud that we are the first and, so far, only member-state of the European Union” to hold such a referendum, Orban told supporters after the results were known. “Hungarians were able to give their direct opinions on the issue of immigration.”

Orban, who did not mention at all that the referendum was officially invalid, said he would present a proposal to amend the Constitution reflecting people’s intentions.

Orban, a right-wing populist, has challenged the EU’s refugee policy, arguing that allowing the influx of larger numbers of Muslim migrants into Europe threatens Hungary and Europe’s Christian identity and culture.

“The [European] Union’s proposal is to let the migrants in and distribute them in mandatory fashion among the member-states and for Brussels to decide about this distribution,” Orban said.

“Hungarians today considered this proposal and they rejected it.

Hungarians decided that only us Hungarians could decide whom we want to live with.”

“The question was ‘Brussels

43.9% The percentage of turnout at the referendum, but which requires at least 50 percent plus one of Hungary’s 8.27 million voters to make the exercise valid.

or Budapest’ and we decided this issue is exclusively the competence of Budapest,” the prime minister said.

With 99.98 percent of the votes counted, more than 3.25 million voters—or 98.3 of those who cast valid ballots—backed the government. But turnout stood at 43.9 percent, the National Election Office said.

At least 50 percent plus one of Hungary’s 8.27 million voters needed to cast valid ballots for the referendum to be valid.

Nearly 4 percent of the votes were spoiled—twice as many as in any of the other four referenda held since 1997—driving down the number of valid votes to 40.1 percent.

The referendum asked: “Do you want the European Union to be

able to prescribe the mandatory settlement of non-Hungarian citizens in Hungary even without the consent of Parliament?”

Orban’s Fidesz party claimed victory immediately after voting stations closed, with party Vice Chairman Gergely Gulyas saying it was a “sweeping victory for all those who reject the EU’s mandatory, unlimited quotas.”

At the same time, analysts said the relentless government campaign against the EU’s refugee relocation schemes had oversaturated citizens.

“Orban was able to dominate public discourse with an issue in which the majority was on his side,” said Tamas Boros, an analyst at Policy Solutions, a political research and consultancy firm. “But it seems he went too far and overestimated how much people’s opinions are transformed into votes.”

With a weak opposition in parliament and practically limitless campaign spending to promote the government position, the referendum’s lack of validity was considered distressing for the government.

“Considering there was hardly any countercampaign, that they spent some €50 million [$56.1 million] and everyone on the right took up the issues wholeheartedly, it’s an embarrassing but not totally catastrophic defeat for Orban,” Boros said. “It is his first national defeat since 2006, the first time in a decade that the prime minister cannot impose his will.”

Orban argued that “No” votes favored Hungary’s sovereignty and independence.

Orban, who wants individual EU member-nations to have more power in the bloc’s decision-making process, said he hopes antiquota referendums would be held in other countries.

The invalid result because of the

low turnout would make Orban’s quest to persuade Brussels to drop the refugee quotas more difficult.

“With an invalid result, it is harder for Orban to claim he holds all the aces” against Brussels, Boros said. “The EU will see that while there is a majority against the quota, it’s not the most important issue for Hungarians.”

Separately from the referendum, the Orban government is also suing at the European Court of Justice because of the EU’s 2015 decision to relocate 160,000 asylum-seekers from overburdened Greece and Italy. Under the original plan, 1,294 asylum-seekers would be moved to Hungary.

Polls show that the relentless campaign urging citizens to “send a message to Brussels” while associating migrants with terrorism has increased xenophobia in Hungary.

Several opposition and civic groups have called on citizens to stay home and boycott the vote.

Others urged casting invalid ballots that would not count in the final tally, but still could be interpreted as rejecting the government’s “zero migrants” policies.

Nearly 400,000 migrants passed through Hungary last year while making their way toward Western Europe. Razor-wire fences erected on the border with Serbia and Croatia, along with new expulsion policies, have reduced the numbers significantly this year.

Last month police reported either zero or just one migrant breaching Hungary’s border area on 13 different days.

Hungar y last year rejected over 80 percent of the asylum claims made in the country, one of the highest rates in the EU, according to Eurostat, the EU’s statistical office. The country granted asylum to 508 refugees, rejected 2,917 applications and had nearly 37,000 claims still being processed. AP

Brazil city votes a slap at prexy, Workers’ Party

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ãO PAULO—A millionaire businessman who used to tell people “You are fired!” as host of a reality TV show won the mayoral race in Brazil’s biggest city on Sunday, underscoring voters’ myriad beefs with traditional politicians and handing a stinging defeat to both President Michel Temer and the Workers’ Party that his supporters ousted.

Joao Doria, the former host of The Apprentice Brazil, won with 53 percent of vote after campaigning on the slogan “I’m not a politician, I’m a businessman.”

He beat out a crowded field that included incumbent Fernando Haddad, a key member of the Workers’ Party, and former Mayor Marta Suplicy, a new ally of Temer.

“I always believed this could happen, even when I started with 3 percent in the polls,” the mayor-elect said at a news conference. “Expect me to be a good manager. It is possible to make policy without being a politician. I beat a lot of politicians in this election.”

Doria, from the right-leaning Brazilian Social Democratic Party, had led in the polls going into the election but had not been expected to win the majority needed to avoid a runoff. His first-round victory in São Paulo, the engine of Brazil’s economy and a bellwether for the national stage, could have strong implications for the presidential election in 2018. São Paulo state Gov. Geraldo Alckmin, a stalwart Doria supporter, will likely benefit

as he eyes a presidential run.

Alckmin ran for president in 2006 and lost to then-President Luiz Inacio Lula da Silva, who backed Haddad and a number of other losing candidates in Brazil’s richest state.

Silva, who governed Brazil in 2003-2010, is also a presidential hopeful, though he is dogged by several corruption allegations related to the sprawling investigation into kickback scheme at state oil company Petrobras. “The Workers’ Party needs to go. I’m looking at the big picture,” said Helio Soares da Cunha, a 74-yearold retiree who supported Doria.

In Rio de Janeiro, Brazil’s second-largest city, Temer and Mayor Eduardo Paes suffered a big defeat as their candidate, Pedro Paulo

Carvalho, finished third. A runoff will pit two of their biggest adversaries: an evangelical pastor who is now a senator and a human-rights activist who has a seat in the state legislature. Sen. Marcello Crivella finished first with almost 28 percent of the vote, followed by Marcelo Freixo at almost 19 percent.

Both rejected the support of Temer’s and Paes’s party, the Brazilian Democratic Movement Party.

During the campaign for municipal posts across Brazil, opinion polls showed outsiders running well by promising to stamp out endemic graft and upend the politics-asusual that led Latin America’s largest nation to its largest political crisis since Fernando Collor was impeached in 1992. AP

A10 Tuesday, October 4, 2016 • Editor: Angel R. Calso

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Loudmouth

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conomists use the term volatilities to describe a world in which growth is uneven across economies such that central banks use a variety of weapons to boost expansion in their jurisdictions but often in conflict with the objectives of their neighbors. Japan and the European Union, for instance, are at the limits of their monetary-policy envelope on the matter of pushing prices high enough, so that credit is reinvigorated and growth is assured.

But in the United States, still the world’s biggest and most dominant market, the need for such a stimulus may not be there for long based on latest indications from US Federal Reserve Chairman Janet Yellen, who has indicated that the timetable for an upward adjustment in interest rates is not fixed. In other words, we have central bankers whose monetary-policy objectives run counter to one another. The result is a topsy-turvy world in which markets price loans and credit differently and exchange rates move accordingly, to the consternation of remittancedependent countries, like the Philippines and India, for instance.

In recent months, the Philippines and the local currency the peso bore the brunt of investors dumping the unit for dollars and bringing their investments elsewhere where they may not be subject to uncertainties generated in the main by a loudmouth chief executive. Now, a weak currency is not necessarily a bad thing and we have a horde of exporters who are just too happy to care that Malacañang has earned the ire of the Jewish community on comments over the massacre of millions. The same goes for the United Nations and its quibble with human-rights violations so callously disrespected in words, if not in deeds. There is now concern that unless the loudmouth is somehow taught to be more careful in his choice of words, then the country’s investors would leave in such volume as to make the Philippines destitute in terms of foreign investments. The economy needs foreign investments because the locals cannot or do not put up the capital the country needs to finance its own expansion.

Whatever view others take, we, at the BusinessMirror, like it that there is someone at the helm of the economy taking things as they come and making sure the $292-billion economic ship does not run aground. We like it that Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. is out there eyeing all the numbers and ensuring the seven-man Monetary Board that he heads as chairman crafts the appropriate policy response. That he does that successfully and without fanfare is best indicated by below-target inflation significantly lower than the 2-percent low end of the anticipated path at the moment.

Local output measured as the GDP has also accelerated, from 6.8 percent in the first three months this year, to 7.0 percent in the second quarter. In our book, this is proof that Tetangco, no matter the loud noises elsewhere in the economy, has remained the responsible adult in a room full of idiots throwing tantrums and other inanities that are only happily reported at 6:30 in the evening every day. We suggest he stays where he had been since 2005 when steered the puny $103.1 economy once called the sick man of Asia to a vibrant $292-billion baby behemoth.

The law, of course, prohibits Tetangco from assuming a third term.

But what the heck, we have a loudmouth President who, excuse us, reportedly wants him to continue what he is doing. That loudmouth has Congress at his beck and call so why not use that foul orifice with a chord for good?

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Continued from A1

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uring the period 1997 to 2004, the government implemented seven amnesty programs, which generated a total of P19.2 billion. Republic Act 9480, which lapsed into law in 2007, provided for a tax amnesty covering all national internal-revenue taxes for the taxable period 2005 and prior years.

The two problems I cited above defeated some of the primary objectives of a tax amnesty: to encourage timely tax payments and clear the paperwork at the Bureau of Internal Revenue (BIR).

The amnesty that the Duterte administration is now considering will, hopefully, address these problems. The proposed tax-amnesty program, which the Department of Finance (DOF) presented at a Senate tax forum last week, will be done through legislation, which will make it a one-time program for 25 years.

That means tax delinquents who are in the habit of coming out only when a tax-amnesty program is in

place will have to be prompt in tax payments to avoid penalties, including imprisonment.

The DOF’s new tax-amnesty program, which will be part of the government’s tax-policy reform program, will cover four areas: property taxes, estate taxes, regular taxes (income taxes and value-added taxes) and pending cases in court.

The DOF is looking at settlement through payment of a minimum of 40 percent as amnesty tax. The plan to legislate a final amnesty will be absolute in the sense that availment will clear all tax dockets at the Bureau of Internal Revenue, Bureau of Customs and in the courts.

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The DOF’s new tax-amnesty program, which will be part of the government’s tax policyreform program, will cover four areas: property taxes, estate taxes, regular taxes (income taxes and value-added taxes) and pending cases in court. The DOF is looking at settlement through payment of a minimum of 40 percent as amnesty tax.

The amnesty program will encourage delinquent taxpayers to set their records straight, but the other components of the tax-reform program provide for changes that should serve as incentives to all taxpayers to comply with their obligations.

The incentives are mainly in the form of lower taxes—as high tax rates is among the most common complaints of taxpayers. As part of the reform package, estate taxes will be lowered (from the current 20 percent to 6 percent of the value of the property being transferred), as well as transaction taxes on land, such as transfer tax, documentary-stamp tax and registration fees.

To offset the negative impact of such a move on revenue collection, the DOF plans to centralize and

The transition cycle continues John Mangun

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Tax amnesty

OUTSIDE THE BOX

L

et’s take a walk up the mountain so we can see the bigger picture. Things are getting a little crazy right now, and we need to put things in perspective.

Eighteen months ago, I wrote that we were heading into a “phase transition” period beginning in September 2015. This coincided with a turning point in Martin Armstrong’s Economic Confidence Model and about a 300-year political cycle. We are now one year into the transition period, with another year to go.

Phase transition is when something changes from one state to another, like liquid water into gaseous steam or solid ice. The change to steam is chaotic, like a pot of boiling water. The change to ice is slow and gradual. In this case, we are going through a breakdown of confidence in government due to disastrous economic politics that will be followed by a breakdown in the economic system about 2020.

As the transition develops, the world divides into “The Political Establishment” and “The People”. That is why the world has seen the rise of new leaders, such as Rodrigo Duterte; Nigel Farage, who was the face of the Brexit movement; and Donald Trump, among others. The current president of Taiwan—Tsai Ing-wen —is part of this group, breaking the dominance of the Kuomintang Party after more than 50 years with a landslide 56-percent victory.

In Germany there is the new Alternative for Germany (AfD) party and in Austria the Freedom Party of Austria (FPO). All these individuals and groups are described by the mainstream media and press as “right wing, nationalist and populist”.

As the transition develops, the world divides into “The Political Establishment” and “The People”.

That is why the world has seen the rise of new leaders, such as Rodrigo Duterte; Nigel Farage, who was the face of the Brexit movement; and Donald Trump, among others. The current president of Taiwan—Tsai Ing-wen—is part of this group, breaking the dominance of the Kuomintang Party after more than 50 years with a landslide 56percent victory.

On the other side are individuals and groups that represent the existing political establishment. In Austria—not exactly a “Third-World hellhole”—the FPO was so badly cheated in the recent election that the Supreme Court ordered a new election. In Germany Angela Merkel saw her political party come in third place (with the AfD in second) in her home state.

We are seeing longtime friendships ending over this political divide. Children are renouncing parents and vise versa. Press and media organizations are under tremendous criticism for both real and imagined

rationalize the valuation of properties, increase valuation closer to market prices and adjust valuation every three years.

The DOF has already submitted to Congress the proposal to reduce the maximum income-tax rates for individual taxpayers to 25 percent, from the present 32 percent. However, taxpayers classified as “ultrarich” will pay as high as 35 percent.

The proposal also provides for a shift to a simpler modified gross system.

I agree with Finance Secretary Carlos G. Dominguez III that the timing is right for tax reforms that will drive the country to a better tomorrow—economic growth is robust and investor confidence is high.

Overall, I believe that the tax-amnesty program has a good chance of generating additional revenues and encouraging taxpayer compliance because of the people’s confidence in the government. Public support is unprecedented, because the people see President Duterte as very sincere in implementing reforms.

After all, the best incentive for people to pay taxes is when they see that their taxes are helping to improve their lives and securing their families’ future.

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

(mostly real) political bias. And this is all necessary and beneficial.

A more than 2,000-year history shows this happening repeatedly.

Government creates economic policy to hold its power. The people become complacent, as the economic situation deteriorates. This is because as Roman poet Juvenal wrote in A.D. 100: “From when we sold our vote to no man, the People have abdicated our duties. For the People now restrains itself and anxiously hopes for just two things: bread and circuses.”

Note well that one cycle is political. Fifty people were killed in a stampede after the police broke up an antigovernment political protest in Ethiopia this past weekend. Yet, in eight of the last 10 years, economic growth has been over 10 percent.

Bottom line: this is all part of the political and economic cycle, and we must go through it because it is the only way to bring the global economic condition back to stability. In other words, do not take it personally any more than you would a typhoon.

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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Opinion

Pro-people tax policies

Metrobank’s pioneering Outstanding Teachers’ Award

BusinessMirror

Cecilio T. Arillo

database

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EMBERS of the House of Representatives have called on the Executive branch at the plenary deliberations on the P21.3-billion proposed Department of Finance (DOF) budget for 2017 to ensure its existing and new polices will result in better tax collection and more services for the people, especially the poor.

Rep. Raul Daza of the First District of Northern Samar said DOF policies should push for a more vigorous and direct intervention to alleviate the plight of the poor and other marginalized sectors, while Party-list Rep. Lito Atienza of Buhay, at the same time, urged the DOF to properly implement the new Customs Modernization and Tariff Act (CMTA), or Republic Act 10863, for better tax collection.

“The DOF should come up with more measures that will supplement its plan to provide additional subsidies to poor families to soften the effect of the excise tax, especially on oil,” Daza said, as Atienza urged the DOF to use the CMTA to address the lapse in the strict inspection of container vans at the ports, which causes a big loss in the collection of possible taxes.

The CMTA, signed into law on May 30, simplifies, modernizes and aligns with global best practices the country’s customs procedures, including import clearances and valuations, to expedite the release of goods, regardless of whether the owner is an individual entrepreneur or a large multinational company.

Rep. Luis Raymund Villafuerte of the Second District of Camarines Sur sponsored and defended the agency’s proposed 2017 budget, which is 16 percent higher than the current year’s budget of P18.4 billion, emphasizing the importance of reforming the tax system and funding the DOF budget in achieving the country’s development objectives.

“The DOF is proposing tax measures that would meet the expectations of the people in reducing poverty in the country,” Villafuerte said.

The DOF needs to generate an additional P1 trillion, or 7 percent, of GDP to fund President Duterte’s 10-point economic agenda.

For 2017, tax revenues are projected for the Bureau of Internal Revenue (BIR) to collect P1.8 trillion; the Bureau of Customs (BOC), P467.9 billion; and for nontax revenues, P166.5 billion.

The BIR’s proposed P8.6-billion budget for next year is the largest allocation among the DOF’s attached bureaus. The budget is apportioned to support the BIR’s personnel services funding requirements. The agency also allocated P3.5 billion for its information-technology projects. The BOC has a proposed budget of P3.6 billion, which is 38 percent higher than the current year’s budget. The Bureau of the Treasury’s proposed budget of P6.461 billion is 288 percent higher than this year’s budget due to the increase in capital outlays. The remaining attached agencies have a total budget of P387.6 million, representing an increase of 24 percent, or P76 million, from this year’s budget. The increase is due to the implementation of the second tranche of the salary-standardization law.

The other attached agencies of the DOF are the Insurance Commission, Philippine Deposit Insurance Corp.,

Cooperative Development Authority, Bureau of Local Government Finance, National Tax Research Center, Central Board of Assessment Appeal and Philippine Export-Import Credit Agency.

Other members of the House have started deliberating on House Bill 3408, or the 2017 General Appropriations Bill (GAB), with some of them raising questions about socialized housing, budget impoundment, poverty and unemployment, among others, during the debates.

Rep. Karlo Alexei B. Nograles of the First District of Davao City, chairman of the Committee on Appropriations, replied to the query of Atienza, who inquired if there is a provision in the proposed National Housing Authority budget for socialized housing for the poor, since this is one of the dreams of every Filipino family.

Nograles assured him that, instead of just a provision on mass housing, the GAB aims to empower the poor by providing jobs and training on entrepreneurial skills, such as through the Technical Education and Skills Development Authority, to give them the means to purchase their own homes.

On the issue on budget impoundment raised by Rep. Edcel C. Lagman of the First District of Albay, Nograles said that, with the collective wisdom of House members, the crafting of the 2017 national budget will be in consonance with present laws, guided by the Supreme Court’s rulings on controversial issues, like the Disbursement Acceleration Program and the Priority Development Assistance Fund.

Party-list Rep. Harry L. Roque of Kabayan noted that, despite the consistent increase of the budget by P400 billion in the last three years and an unprecedented economic growth in terms of GDP, poverty, hunger and unemployment rates have not improved at all.

Nograles said reducing the poverty rate requires many things, among them increasing expenditure in infrastructure; improving productivity by modernizing the agricultural sector; minimizing price increases; spending more on education; and streamlining government procedures to encourage investments, among others.

“The proposed budget aims to ensure that our limited resources are maximized toward making our government work better for our people, most especially those in the countryside who have felt forgotten and neglected,” he said, adding that the budget’s main purpose is for the poor to directly benefit from the fruits of growth.

The largest to date, 11.6 percent higher than this year’s budget, the 2017 budget is expected to fund socioeconomic services for education, health care, social welfare and other services, including an allocation of P552.7 billion, to revitalize the Public-Private Partnership Program as a complement.

To reach the writer, e-mail cecilio.arillo@ gmail.com.

Edgardo J. Angara

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2010 Stanford University research brief noted that ever since Finland topped the OECD’s Programme for International Student Assessment in 2000, much research has been devoted to studying how the country was able to turn around its nondescript education system into the world’s best in just two decades.

Among the factors identified, it was Finland’s excellent teachers that trumped everything else.

In Finland the teaching profession is held in high regard. Some note that primary-school teaching has become the most popular profession among Finnish youth today. In 2010 the Organisation for Economic Cooperation and Development (OECD) reported that some 6,600 students applied for only 660 slots available in Finland’s eight teaching universities.

At first glance, the teaching profession in the Philippines appears to enjoy similar prestige, given many students continue to be drawn to it. Commission on Higher Education data show that courses in the “education science

and teacher training” disciplines have remained in the past decade among the country’s top 5 courses in terms of college enrollment.

However, a 2015 University of the Philippines (UP) survey, published in the Asian Journal of Social Sciences and Humanities, found that Filipino school teachers feel they rank low in social status and occupational prestige compared to other professions, particularly doctors and lawyers. For the teacher-respondents, an indicator of this inferior social status is the meager social benefits they receive, including low salaries and diminished fame or social recognition.

Feeble FOI is unacceptable Ernesto M. Hilario

ABOUT TOWN

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rue to his campaign pledge to push the Freedom of Information (FOI) bill past the legislative mill, President Duterte even jumped the gun on lawmakers by issuing an executive order (EO) to this effect, but covering only the Executive branch of government. This was among his first official acts after assuming office on June 30.

Initial public approval of the EO soon turned to consternation, however, as it was soon revealed that it contained a total of 166 exceptions.

This renders the EO on freedom of information practically useless, as the government would only release to public the information that it wants us to get.

Here’s what our Constitution says on this issue: “The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.”

The troublesome portion here is the part that says, “subject to such limitations as may be provided by law.”

Can we expect Congress to pass a bill that would allow citizens access to government documents that would expose the under-the-table deals, indiscretions or perhaps even

outright criminal activities of some of its members?

A genuine FOI would be a powerful tool against graft and corruption, as it would expose the wrongdoing of leaders. But that could be asking for the impossible.

Sen. Grace Poe is tasked with pushing the FOI bill in the Senate. Last week, she said an ideal FOI should have five essential characteristics. First, it should have blanket coverage for all public information and that all official documents are assumed to be open to the public, unless expressly prohibited by the law. Second, it should have clearly defined exceptions. Third, it should create implementing mechanisms and agencies. Fourth, it should allow citizens access to actionable data, or data that is immediately usable or which can be used to intervene on an urgent concern. And fifth, it should impose a penalty on those who violate the law.

If the EO on freedom of information would be the template for what Congress would eventually pass, our worry is that it might contain

Tuesday, October 4, 2016 A11

Filipino respondents to a 2015 survey on the status of the teaching profession by Education International said teachers and education workers in the Philippines are generally underpaid and overworked. Thus, it is crucial that teachers’ salaries are raised to a level commensurate to their critical role.

But while imperative, raising teacher salaries is only one step.

Finnish teachers, in fact, receive a salary roughly equivalent to Finland’s national average. They are held in such high regard, in part, because of the rigorous screening and training process students have to go through to become teachers.

Would-be teachers are screened through a two-stage process, where both their academics and out-ofschool accomplishments are considered. They are asked to take a written exam; conduct a demonstration class; and undergo a rigorous interview to assess the strength of their motivation to become a teacher. These occur before they are even admitted to university. To be eligible for employment, all teachers in Finland are required by law to be master degree holders and expected to conduct research throughout their teaching career. In short, high professional standards raise

the public profile of Finnish teachers, underscoring how much training and expertise are needed to be a successful educator.

This may not be the case in the Philippines. In 2015 Philippine Business for Education (PBED) noted that in 2014, roughly 50 percent of the graduates of more than half of the country’s 1,200 teacher education institutions (TEIs) failed to pass the Licensure Examination for Teachers that year. PBED estimated that for every good-performing TEI, there were two TEIs that performed poorly. n n n Tomorrow, October 5, is World Teachers’ Day. October 5 marks, as well, the end of National Teachers’ Month in the Philippines, which started on September 5.

Among all philanthropies in the Philippines, the Metrobank Foundation is unique in giving recognition and monetary reward to exemplary teachers through its annual Search for Outstanding Teachers (SOT). Metrobank’s SOT is a pioneering award that started 31 years ago, way back in 1985. Unquestionably, Metrobank’s teachers’ award is the most coveted and prestigious teacher award in the country today.

If the EO on freedom of information would be the template for what Congress would eventually pass, our worry is that it might contain even more exceptions than the 166 in the EO. If that’s the case, we need an emasculated, feeble and toothless FOI like we need a hole in the head.

crimination” against former Moro fighters absorbed by the military after the 1996 peace agreement with the Moro National Liberation Front.

My question is: What kind of a peace agreement would it be if the NPA would insist on keeping their weapons after a negotiated political settlement has been reached?

If the NPA will refuse to surrender their weapons to a third party after a comprehensive peace agreement, doesn’t that defeat the purpose of peace talks in the first place?

Another possible sticking point in the peace talks is the frequent mention by the NDF side that it wants a “coalition government” where presumably its top leaders would be given high government positions after a peace agreement has been reached.

President Duterte has dismissed outright the notion of a “coalition government” with the NDF, precisely because the rebels are not negotiating from a position of strength. In fact, the CPP/NPA/ NDF forces are concentrated in only a few areas in the country and cannot claim a huge political mass base, nor armed strength on a par with those of the Armed Forces of the Philippines and the Philippine National Police, which can easily reach more than 320,000. The NPA? No more than 4,000 guerrilla fighters, according to military estimates.

Will the NDF insist that top communist leaders sit in the highest reaches of the bureaucracy as their reward in a “coalition government”?

If they will do that, I see the peace talks withering on the vine sooner than expected, even if they agree on social and economic, as well as political and constitutional, reforms.

even more exceptions than the 166 in the EO. If that’s the case, we need an emasculated, feeble and toothless FOI like we need a hole in the head.

What do the Reds really want?

Definitely, it will not be smooth sailing in the resumed peace talks between the government and the communist rebels.

I’m worried about the outcome of the peace talks because of the latest statement of the chief negotiator of the National Democratic Front (NDF), Luis Jalandoni, regarding the status of the New People’s Army (NPA).

As quoted in a news report, here’s what he said: “It is essential for us that the integrity and unity of the NPA remain under the command of the Communist Party of the Philippines [CPP].” The NPA could “cooperate” with the military “in the service of the Filipino people…. We are firm on that. No disbandment, no disarmament because the NPA has been serving the people in so many ways.”

Jalandoni said negotiators could consider “different possibilities of integration” by NPA combatants into the military. He cited cases of “dis-

What should and shouldn’t worry us about Deutsche Bank

By Mohamed A. El-Erian Bloomberg View

M

y Bloomberg View column last week focused on the headwinds facing the European banking system and the broader implications of Deutsche Bank’s fall from grace, including the decline in its stock price by more than half.

Let’s now take a closer look at factors that are specific to the bank, including what may happen, and what probably won’t, starting with the scary—but in my view implausible—prospect that Deutsche Bank’s woes could become a “Lehman moment”.

The phrase is derived from the traumatic effects of the 2008 global

financial crisis. A Lehman moment denotes a “sudden stop” to the global economy—that is, a simultaneous collapse in trade, investment and consumption. The proximate cause is the loss of trust within the financial system as institutions disengage, worried about “counterparty” risk in interactions with their peers. The means of transmission within the banking system become clogged, credit dries up, and even the most creditworthy borrowers have difficulty arranging simple trade financing.

These events are the economic equivalent of a heart attack. If it is not treated quickly, many other organs of the body lose their ability to function normally, spreading cascading failures throughout the system.

For both institutional and contextual reasons, Deutsche Bank is unlikely to provoke the 2016 version of a Lehman moment.

Yes, there are questions about the bank’s balance sheets, including the complicated valuations of “level 3” assets. But Deutsche Bank’s sources of funding are much more diversified and its balance sheet is significantly more robust that Lehman’s ever was.

Also unlike Lehman, Deutsche Bank has access to emergency funding at a central bank, in this case, the European Central Bank.

And it has internal means of generating capital (including through asset disposals and even a rights issue), even though the more such methods are used, the less attractive they are to

management and existing shareholders. Moreover, given its accumulated litigation reserves, the pressures would also lessen if, as was hinted at in some news reports at the end of last week, the bank reached a settlement with the US Justice Department that required it to pay far less than the original fine of $14 billion.

The environment is quite different, too. Deutsche Bank is not part of a growing storm making its way through the global financial system. Although some European banks remain fragile, others around the world have notably strengthened their capital cushions, are deploying more prudent liquiditymanagement approaches, and have made significant progress in cleaning up their liabilities. Importantly in

terms of systemic effects, this is particularly the case for US banks. But even if Deutsche Bank doesn’t threaten a Lehman moment, that doesn’t mean its troubles couldn’t have any systemic effects. There are at least four factors that should be kept in mind.

The saga deals yet another blow to the already frail reputation of the banking system. Understandably, it fuels the politics of anger, enticing some politicians to make statements that could undermine trust in the financialintermediation process.

By highlighting remaining gaps in the macroprudential architecture —that is, the regulatory and supervisory structure aimed at ensuring the safety and soundness of the financial system—Deutsche Bank’s travails also

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put central banks and regulators on the spot, yet again. This exposes them to greater threat of political interference at a time when there are already lots of questions and growing irritation at the European Central Bank’s use of negative policy interest rates and its balance sheet for large-scale asset purchases.

Renewed concerns about European banks are likely to be yet another headwind to the region’s already-tentative growth prospects. Expect European financial institutions to become more prudent as they place balance-sheet robustness ahead of making loans, especially when it comes to lending to small- and medium-sized enterprises.

History shows that such shifts cannot be easily compensated for by central banks and governments.

2nd Front Page BusinessMirror

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Tuesday, October 4, 2016

Alvarez: LGBT marriage to give dignity to gays, etc.

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By Jovee Marie N. dela Cruz

@joveemarie

o give “happiness and dignity” to the lesbian, gay, bisexual and transgender (LGBT) community, Speaker Pantaleon D. Alvarez on Monday said he would file a bill allowing same-sex marriage in the country.

Toyota’s $390 friend: Robot in car cupholder T

oyota Motor Corp. took one giant leap for robot-kind by launching the first humanoid into space to converse with astronauts. Now, it’s taking one small step toward commercializing robots for the masses.

Japan’s largest automaker will begin selling a 10-centimeter-tall (4-inch) talking robot called Kirobo Mini across Japan in early 2017. Priced at ¥39,800 ($390) and small enough to fit into a car cupholder, Toyota is billing Kirobo as capable of responding to human emotions while engaging in conversation and moving its head and hands.

Toyota will position Kirobo as a communication partner developed for companionship, just as surveys of Japanese consumers show a declining affinity for automobiles.

One poll by Japan’s automakers association released in April found about 30 percent of respondents under age 30 had no interest in cars at all.

The Toyota City, Japan-based automaker, will try to leverage Kirobo’s capabilities to help make driving safer. The robot may shout “Oops!” when its owner slams on the brakes, start speaking to perk up a sleepy driver, and offer praise once it’s arrived

home after a long drive. Kirobo connects via Bluetooth to a smartphone app costing users ¥300 per month.

$1-B bet

Toyota has pledged $1 billion in investment over five years toward an artificial intelligence and robotics institute that’s leading research efforts on areas, including autonomous driving. The funding going to the Toyota Research Institute is equal to what the company spent developing the first Prius hybrid, President Akio Toyoda said during a speech at the Paris Motor Show last week.

Kirobo will start selling in Japan roughly a year and a half after SoftBank Corp.’s Pepper robot, which initially cost ¥198,000 along with a ¥14,800-per-month service plan that gave users access to cloud-based voice recognition and an app store.

A larger version of Kirobo spent 18 months onboard the International Space Station on a journey that ended in February 2015. Before returning to Earth, Kirobo became the first robot to speak in space, conversing with Japanese astronaut Koichi Wakata.

Bloomberg News

19 hotels recognized for being‘PWD-friendly’

By Ma. Stella F. Arnaldo

@Pulitika2010 Special to the BusinessMirror

O

ALBANO

In a news conference, Alvarez said his staff is now drafting the bill legalizing same-sex union.

“I will sponsor it. The Constitution provides guaranteeing happiness of Filipinos, so why do we prevent them from being happy?” Alvarez said Under the 1987 Constitution, the State values the dignity of every human person and guarantees full respect for human rights.

However, the Family Code of the Philippines said marriage is a special contract of permanent union between a man and a woman entered into in accordance with the law for the establishment of conjugal and family life.

It also said marriage is the foundation of the family and an inviolable social institution whose nature, consequences and incidents are governed by law and not subject to stipulation, except that marriage settlements may fix the property relations during the marriage within the limits provided by the Family Code.

Alvarez, however, said his proposal only covers civil union.

“We are a democratic country and the beauty of democracy is we can argue and disagree but at the end of the day, it is the majority that prevails,” the House Speaker said.

“My proposal is about civil union. The Catholic Church is free to oppose it. This will cover the civil law and provision on properties [or conjugal ownership],” Alvarez said.

Asked why he is pushing the same-sex union, Alvarez said, “Due to the rising number of LGBT individuals, there’s a need to protect them.”

For their part, Senior Deputy Minority Leader Lito L. Atienza of Buhay and National Unity Party and Deputy Rep. Fredenil H. Castro of Capiz said the Philippine law defines marriage as a union between a man and a woman.

“We are very much bothered by Speaker Pantaleon Alvarez’s statement that he would sponsor a bill that would seek the legalization of same-sex marriage,” Atienza said.

“Marriage, as defined by law, is a union between a man and a woman. We are ready to defend the rights of anyone, especially those in the LGBT community. But marriage should exclusively be, as intended by nature, for a man and a woman. I am quite disappointed that the Speaker would make such a commitment. We thought all along that his priority is federalism and not same-sex marriage,” he added.

Atienza said he hopes that Alvarez will change his mind.

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My proposal is about civil union. The Catholic Church is free to oppose it. This will cover the civil law and provision on properties [or conjugal ownership].”—Alvarez

LD age, disability, or having small children should not be obstacles to traveling.

This was the message of the United Nations World Tourism Organization (WTO) and the Department of Tourism (DOT) during World Tourism Day on September 27, and last week’s celebration of Philippine Tourism Week.

At the same time, 10 hotels were also recognized for being “barrierfree” and friendly to persons with disabilities (PWD).

“People with disabilities, aged citizens, families with children and many more, find obstacles when they travel. As tourism is a human right, the sector should advance to ensure that all citizens enjoy seamless travel in an equal manner,” UNWTO Secretary-General Taleb Rifai said in his message in Bangkok during the official celebration of World Tourism Day this year, dedicated to the theme “Tourism for all: Promoting Universal Accessibility.” About 500 delegates from 60 countries participated in the twoday celebration, a news statement from the UNWTO said.

Similarly, at the “Breaking Barriers: Tourism Stakeholders Conference” held in Lyceum of the Philippines, Cavite, Tourism Assistant Secretary for Administration and Special Gwen Javier, spoke about the extreme difficulties that PWDs and the handicapped have to go through as a tourist.

“Every day, wheelchair-bound PWDs suffer from the unavailability of mechanical lifts on bus services, absence of access ramps and inaccessible bathrooms. Ironically, such hardship that they have to put up with, in many instances, defeats the purpose of having an enjoyable experience during a holiday,” she said.

She urged the tourism sector to work together to give PWDs, the handicapped and the elderly a “total tourism experience.”

Representatives from several tourism industry sectors also gathered for the “Accessible Tourism Pilipinas Forum” at the Diamond Hotel in Manila to celebrate World Tourism Day and Philippine Tourism Week on September 27.

Nineteen hotels were recognized for responding to calls for uni-versal accessibility. These are

As tourism is a human right, the sector should advance to ensure that all citizens enjoy seamless travel in an equal manner.”—Rifai (National Capital Region) Acacia Hotel Manila, Crimson Hotel Filinvest City Manila, Holiday Inn and Suites Makati, Hotel H20, Marriott Hotel Manila, Maxims Manila Hotel, New World Makati and Nobu Hotel at City of Dreams Manila; (Cordillera Administrative Region) Azalea Residences Baguio, Baguio Country Club Corp., The Forest Lodge at Camp John Hay and The Manor at Camp John Hay; (Calabarzon) Taal Vista Hotel; (Mimaropa) Daluyon Beach and Mountain Resort, and Isla Arena Beach Resort; (Zamboanga Peninsula) Garden Orchid Hotel; (Southern Mindanao) Marco Polo Davao, Park Inn by Radisson Davao and Pearl Farm Beach Resort.

Forum participants agreed to push for amendments to Batas Pambansa 344 of 1983, known as accessibility law. For one, resource speaker Architect Jaime Silva of United Arch. of the Philippines stressed the need to make the law more suitable to the needs of PWDs in the age of high technology.

Other resource speakers representing PWD groups were universal design expert Adela Kono and Dr. Jeana Manalaysay, who both noted the PWDs as a growing market for domestic tourism. The forum was jointly sponsored by the DOT and the National Council on Disability Affairs (NCDA).

In 2011 the DOT partnered with NCDA, an attached agency of the Department of Social Welfare and Development, to advocate tourism for all and make tourism sites and establishments more accessible to PWDs, the elderly, pregnant women and families with small children.

At the DOT office in Makati, Tourism Secretary Wanda Corazon T. Teo led the celebration of Philippine Tourism Week with trade See “19 hotels,” A2