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Wednesday, October 5, 2016 Vol. 11 No. 361
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CREBA SEES HOUSING LACK BALLOONING TO 6.5M UNITS IN 4 YRS
DAR told to rethink land-conversion ban
T
INSIDE
By Catherine N. Pillas
@c_pillas29
he real-estate industry warned the government that the country’s housing backlog could easily balloon to 6.5 million units by 2020, from the current 5.5 million units, if the moratorium on the conversion of agricultural lands being pushed by the Department of Agrarian Reform (DAR) is implemented.
Taking leisure up a notch at Tagaytay Highlands
property
I keep saying this
5.5M units The estimated housing backlog in the country today
This, Chamber of Real Estate and Builders’ Association (Creba) President Charlie V. Gorayeb said, is because the DAR-proposed moratorium will delay the rollout of housing developments by at least four years. “Even if the ban [on the conversion Continued on A2
BMReports
E1
PHL yet to unearth full extent of narcopolitics
Right in Manila’s mélange of action
Teddy Locsin Jr.
free fire
I
N a debate about which political system killed more people—communism or democracy—Sartre sadly said to Camus: We are reduced to throwing bodies at each other as arguments. Meaning, we cannot excuse our misdeeds by citing the worse misdeeds of our accusers. Yet, we are at it again because we have no choice but to throw at those who criticize us for the corpses on our streets, the mountains of corpses in bombed-out cities and communities wiped out to take out a terrorist. (The most recent drone strike in Afghanistan to take out a terrorist or two.) And so to Western accusations I answer: Continued on A11
Miners confident Lopez’s conditions easy to hurdle
A
property
E1
Property developers as advocates for change
property
E2
Boho in a Solo
Rounded-up male residents prepare to be transported to a police station in the continuing “war on drugs” campaign of President Duterte at a slum community in Tondo on September 30. AP/Bullit Marquez By Rene Acosta
@reneacostaBM
& Manuel T. Cayon
Mindanao Bureau Chief @awimailbox
property
E3
D
Conclusion
AVAO City and Manila— Genocide is a word now being associated with the Philippines. On September 30 a statement by the United Nations special adviser on the prevention of genocide,
Adama Dieng, “expressed alarm at public comments by President Duterte, in which he reinforced a campaign to kill millions of drug addicts in the Philippines, and compared it to the massacre of millions of Jews by Hitler during the Holocaust in Nazi Germany during World War II.” The statement, Dieng said, “qualified as deeply disrespectful of the right to life of all human beings.” “He reminded that the Holocaust
was one of the darkest periods of the history of humankind, and that any glorification of the cruel and criminal acts committed by those responsible was unacceptable and offensive,” the statement said. “He added that such statement was also undermining the efforts of the international community to develop strategies to prevent the recurrence of those crimes, to which all countries around the world should be committed to.” Continued on A2
Mining audit in the world’s top nickel supplier that’s threatened mass closures may see producers prevail, with companies signaling their confidence shutdowns can be avoided, as they race to remedy problems flagged in the nationwide Philippine checkup. Futures dropped. Nickel Asia Corp. said its Hinatuan Mining Corp. unit, among those slated for closure unless it fixes shortcomings, remains in operation a week after the audit’s findings, and it’s expected to stay that way, according to a statement on Tuesday. Separately, OceanaGold Corp. said its Didipio copper-gold mine is also still in business, and talks with officials have been constructive. “I am highly confident that our Didipio operations will continue to operate without interruption,” OceanaGold President and CEO Mick F. Wilkes said in an exchange release on Tuesday. Talks include discussions with Environment Secretary Regina L. Paz Lopez, who’s led the checkup, and the company said it was sticking with full-year production guidance for the site. The government said last week that three-quarters of the nation’s mines fell short in the audit ordered by President Duterte, with 20 mines facing suspension on top of 10 already halted. The prospects of significant interruptions to the flow of minerals, especially nickel ore, have helped to lift prices in a market that already faces a deficit. The country accounts for about a quarter of global mined nickel supply.
‘Not be suspended’
“We remain confident that HMC’s operation will not be suspended,” Nickel Asia President Gerard H. Brimo said in a statement, using the initials for Hinatuan Mining Corp. The social and environmental standards being employed at the project are the same standards, as the company has at its other local operations, which haven’t been targeted for shortcomings, he said. Nickel lost as much as 1.1 percent to $10,235 a metric ton on the London Metal Exchange, and was at $10,315 at 4:25 p.m. in Manila, paring its gain this year to 17 percent. Prices surged to as much as $10,900 on September 27, as Lopez presented the list of mines recommended for suspension. The country’s top miners’ group said on Tuesday while there remains a real threat to many companies’ existence, the one-page letters from the environment department to members detailing grounds for suspension often listed administrative matters. These ranged from “small violations” of the mining act to insufficient treeplanting, Ronald S. Recidoro, vice president for legal and policy at the Chamber of Mines of the Philippines, said in an interview.
‘Bend backward’
More difficult to address within the permitted weeklong timeframe were so-called social-acceptability findings, according to Recidoro. “How do you solve that in seven days?” he said. “Right See “Miners,” A2
Banana growers need more time to meet S. Korea’s standards By Jasper Emmanuel Y. Arcalas
M
@jearcalas
anila should negotiate with Seoul to postpone the implementation of stringent standards on fruit imports for at least a year to ensure that Philippine banana growers and exporters would not incur huge losses. The Pilipino Banana Growers and Exporters Association (PBGEA) warned that Seoul’s imple-
mentation of a stringent maximum residue limit (MRL) on fruit imports next year could cause exporters to lose a lion’s share of the South Korean banana market. “Once the zero MRL is implemented on January 1, 2017, there are no ifs and buts about it. That’s why it’s important for the government to understand the urgency of the matter,” PBGEA President Alexander N. Valoria told the BusinessMirror. Valoria said the government
PESO exchange rates n US 48.3010
It’s important for the government to understand the urgency of the matter.”—Valoria should initiate a bilateral talk with Seoul to retain the status quo on MR L standards until 2018. This, he said, will allow the Philippine banana industry to prepare for full compliance with the new measures.
“The government should reach out to South Korea, because they will not talk to the private sector,” he said. MRL is the maximum concentration of a pesticide residue to be legally permitted in food
commodities and animal feeds, according to the Food and Agriculture Organization (FAO). The MRL standards are guided by the Codex alimentarius, or more commonly known as the “food code,” which details specific limits for every chemical compounds found in pesticides known and used in the global market. The food code, which is reviewed annually to adapt according to market need, is a global standards set and assessed by the
FAO and the World Health Organization (WHO) to ensure food safety. In April 2013 South Korea’s Ministry of Food and Drug Safety (MFDS) announced that it would adopt a positive list system (PLS) on MRLs, and would do away with the traditional food code. The transition from Codex to PLS would mean that South Korea will only keep its own MRL standards, while any chemical ingredient that is not registered and See “Banana growers,” A2
n japan 0.4754 n UK 62.0426 n HK 6.2283 n CHINA 7.2421 n singapore 35.3879 n australia 37.0469 n EU 54.1599 n SAUDI arabia 12.8806
Source: BSP (4 October 2016 )
A2 Wednesday, October 5, 2016
BMReports BusinessMirror
www.businessmirror.com.ph
PHL yet to unearth full extent of narcopolitics Continued from A1
Words are powerful. And this has not escaped Dieng. “The special adviser on the prevention of genocide called upon [Mr.] Duterte to exercise restraint in the use of language that could exacerbate discrimination, hostility and violence, and encourage the commission of criminal acts which, if widespread or systematic, could amount to crimes against humanity.” The statement said Dieng also requested the Philippine Commander in Chief “to support the investigation of the reported rise of killings in the context of the anticrime and anti-illegal-drugs campaign targeting drug dealers and users to ascertain the circumstances of each death.”
Public shaming
SHORTLY after he was announced as the winner in the May presidential elections, Mr. Duterte said he wanted two police generals to resign before he takes his oath of office, “or they will be publicly
shamed.” The list grew to five generals. And when the unsolved killings mounted against suspected drug offenders and criminals, the number of people who “surrendered” jumped to half a million and currently to more than 700,000, leading the existing jails and rehabilitation centers in the country bursting at the scams. After the “surrenderees” were required to reveal the names of their contacts, authorities built a matrix of personalities in the government and the private sector said to be involved in the illegaldrugs trade. According to Davao City Chief of Police Senior Supt. Michael John Dubria, one barangay captain initially did not appear on their list. “But as those who surrendered squealed on others, his name appeared,” Dubria said, referring to Artemio Jimenez, Talomo village chieftain, who was shot by stillunknown assailants on September 16. Investigations indicated that the killing was related to illegaldrugs trade. Dubria said Jimenez turned
negative in a barangay random drug test, but “those people around him” tested positive for drugs. “This [did] not mean that he [was] not into drugs.”
Still common
DUBRI A’S mistah ( batchmate at t he Phi l ippine Mi l itar y Academy) and Philippine National Police (PNP) Senior Supt. Armando de Leon said, however, there was no indication in his current assignment that criminals have been using profits in narcotics trade to fund the candidacies of town mayors. “What is still common is for candidates to spend money to discredit their opponents paint them in a bad light,” said de Leon, the PNP’s provincial commander of Compostela Valley. “What we know about narcopolitics is our basic definition of any politician or government official who is either using drugs or directly involved in the drugs trade.” De Leon said during his assignment at the administrative section in the PNP’s national headquarters
in Camp Crame, “the drug syndicate is already very well into establishing contacts within the police and the barangay officials and to anybody who [the criminals] thought would help [in their] operation.” He initially thought the illegaldrugs trade became widespread only in the late-1990s. De Leon said he saw the extent of the narcotics syndicates’ operations when Mr. Duterte began his war on drugs.
Funding terrorism
PNP Senior Supt. Edilberto Leonardo, chief of the regional Criminal Investigation and Detection Group (CIDG), said the government would probe allegations that some politicians named on the list of illegal-drugs trade may have funded the September 2 bombing in Mr. Duterte’s hometown. The crude bomb, according to Leonardo, was fashioned out from two different mortar rounds, killed 15 persons and injured 69 others in a night market on Roxas Avenue, Davao City. The bomb, he said, was tucked inside a backpack and placed below
DAR told to rethink land-conversion ban Continued from A1
of agricultural lands] is only two years, there is a gestation period from buying the land, to developing it, to introducing it into the market. So if the annual demand is at 250,000 housing units, at the end of four years, we’ll have another million on top of the 5.5 million housing backlog,” Gorayeb told the BusinessMirror. The DAR is now reportedly crafting an executive order to operationalize the moratorium, aimed at protecting prime agricultural lands for food security. This will definitely put to waste all the public-private efforts to significantly cut the housing dearth in the country. “Housing backlog can balloon to 6.5 million units in four years if DAR’s moratorium is followed,” Gorayeb said. Creba Cha ir man Noel M. Cariño said that, with the recent pronouncement of the DAR, developers will be hard-pressed to comply with the “ balanced housing requirement” provided
under the Urban Development and Housing Act (UDHA). The UDHA provides that all subdivision developers should build socialized housing equivalent to either 20 percent of the total project area or cost of their main developments, as a way to encourage them to provide housing for the underprivileged. “Economic and socialized housing” refers to housing units that are within the affordability level of the average- and low-income earners, which is 30 percent of the gross family income as determined by the National Economic and Development Authority. Developers’ availment of incentives, given by the Board of Investments, also depends on their compliance with this requirement. “We’re very concerned because it appears that the moratorium is absolute. What will happen now in terms of ongoing projects and, at the same time, the inventory of land? There’s that housing compliance requirement, but there’s no certainty of inventory of land to
be used,” Cariño said. Citing studies, Cariño said less than 5 percent of the total land inventory in the Philippines, numbering to some 29 million hectares, is allocated for community settlement. “Land for built-up settlements is less than 5 percent of the total land area in the country, the bulk is in agriculture. That alone will show you our problem,” he added. Considering that the total housing backlog is now at 5.5 mi l lion, and annua l housing production is only at 200,000, the proposed moratorium will only exacerbate the dilemma, as developers will face additional delay in rolling out projects. Moreover, the blanket moratorium goes against the comprehensive land-use plans (CLUPs) crafted by local government units (LGUs) to chart the land use of their territory. “CLUPs have already been in place classifying or zoning these lands by LGUs for different purposes. LGUs through CLUPs are cognizant that the utilization of these land has already ceased to
be agricultural,” Cariño said. On a broader scale, the proposal for a two-year ban on land conversion of agricultural lands may dampen economic activity as not only housing projects are affected, but also commercial and office developments. “Let me emphasize that we are supportive of the objective of President Duterte’s social aspect of the redistribution, but we’re very concerned of the effect on the overall well-being of the investment and other economic activities,” Cariño said. Creba is appealing to the DAR to allow submitted applications for land conversion to proceed. The group said it will seek dialogues with the agency and has spoken to Housing and Urban Development Coordinating Council chief , Vice President Maria Leonor G. Robredo, to air their position on the issue. “We want to come up with a proposal on how to rationalize their objectives vis-á-vis other stakeholders. We want to come up with a win-win solution,” Creba chairman said.
one of the plastic chairs set in a row for an open-air massage service. Leonardo said the CIDG has filed multiple and frustrated multiple-murder charges against one male bomber and eight other unnamed persons. Asnar Albani, regional director here of the Philippine Drug Enforcement Administration, added that the agency “is closely looking at the capability of drug personalities, including politicians, to finance operations like this bombing here.” Albani said during the regular Wednesday news briefing at the Royal Mandaya Hotel, Davao City, Mr. Duterte has named at least 12 mayors in Mindanao, the bulk of them in the “LaMag [Lanao and Maguindanao] provinces.” “We are [also] looking at the pattern of [the bombings] here, because these also have signatures,” he explained. “We are looking at the narcoterrorism angle.” However, Albani said the police have “so many suspects”. Albani said narcopoliticians and drug personalities who were
Miners. . .
Continued from A1
now, we will exert all efforts to work with the government. If we can bend backward to fix perceived issues, we will do it.” Other miners have said they will probably prevail, too. Canada’s TVI Pacific Inc. said last week its Agata nickel mine, which was recommended for suspension, remains in operation and the company is confident it’ll be able to address concerns raised by Lopez. On Friday Marcventures Holdings Inc. said the audit findings are defensible and can be reversed.
“publicly shamed ” are some of the suspects. They “are the major players, and we would be investigating on their capability to finance this incident,” Albani said, referring to the bombing. He admitted, however, that authorities were already “monitoring” some of the persons they suspect were involved in the bombing weeks before September 2. “This time we, all our men across Mindanao, are coordinating as part of the tracking team,” Albani said. “We would be looking if they have participation in this bombing.” He said terrorism and narcotics have become deeply intertwined “that in the foxholes of the [terrorist] Abu Sayyaf Group, soldiers have found drug paraphernalia.” This new information is now only being revealed by authorities after the bombing, and may be a confirmation that Mr. Duterte’s war on drugs continues to escalate in words and in deeds. Hopefully, the words and deeds would exclude “genocide”.
While Deutsche Bank AG raised the possibility this week that nickel may surge to as much as $14,000 a ton in the event of a significant wave of mine closures in the Southeast Asian nation, the bank cautioned that “the magnitude of the rally will, of course, depend on the final outcome” of the environmental audit. Outlining three potential outcomes for the loss of nickel supply, the bank said in a report there may be symbolic closures totaling 50,000 tons of contained nickel, a more significant scenario with losses of 200,000 tons, and a third possibility, with shutdowns preceding a total ban on unprocessed ore exports. Bloomberg News
Banana growers. . . recognized by the MFDS would automatically be assigned an MRL of 0.01 parts per million (ppm). T his mea ns t hat a ny pro duce that has a pesticide residue exceeding 0.01 ppm will not be allowed to enter the Korean market. “The small growers are at risk as they don’t have the flexibility to shift to other chemicals to undertake the alternative operations to mitigate the results of not using a particular chemical in operations,” Valoria said. The MFDS said at least 39 out of the 44 MRLs for recognized chemicals used in bananas would be converted into the 0.01-ppm MRL regime. However, exporters could apply for the establishment of new MRLs or a change of MRL for particular chemical compounds found in pesticides used in their respective agriculture sectors, according to MFDS. For toxicity-data testing, Seoul charges a fee of 30 million KRW (equivalent to P1.31 million) for the establishment of MRL, while an exemption or change of MRL would cost 10 million KRW (P436,000). As for residual-data testing of chemical compounds, the South Korean government charges 5 million KRW (P218,000). MFDS would release the new and specific MRL results for chemical compounds applied for change or exemption of MRL after 210 days. MFDS said it would take at least a year for the establishment of an MRL for unrecognized chemicals. Valoria said companies have already submitted a number of chemicals for testing. MFDS, he added, has already assigned MRLs for these chemicals. However, he said there are more chemicals that are awaiting the approval of the MFDS, including a “crucial” chemical compound called Chlorpyrifos, which fights and controls scale insect
Continued from A1
infestation in bananas. “There are several chemicals awaiting decision, but in our mind as far as the banana industry is concerned, Chlorpyrifos is the single most important remaining one,” Valoria said. “The Korea-MFDS advised us that they will still render a decision on that [Chylorpyrifos] some time later in 2017,” he added. Currently, Seoul ’s MRL for Chlorpyrifos is at 2.0 ppm, which is based on the Codex, according to MFDS data. Chlorpyrifos is included in the number of chemical compounds that would be assigned an MRL of 0.01 ppm starting next year. For Roehlano M. Briones, senior research fellow of the Philippine Institute for Development Studies, Manila could file a case against Seoul before the World Trade Organization (W TO) if bilateral talks between the two countries break down. “We have to figure out why they changed their minds about the MRL measures. Because if they don’t have any technical finding supporting the change or any scientific basis then we file a complaint,” Briones told the BusinessMirror. He noted that the as a body, the WTO does not usually react on trade issues unless there’s a “blatant” violation of agreements or a membercountry files a complaint. T he Ph i l ip pi ne s accou nt s for more than 90 percent of bananas being imported by South Korea annually. Philippine exporters shipped a total of 212,083 metric tons (MT) of bananas to South Korea valued at $80.99 million in 2015, according to data from the Philippine Statistics Authority (PSA). PSA data also showed that South Korea accounted for 12.31 percent of total Philippine banana exports last year.
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Wednesday, October 5, 2016 A3
New tourism slogan to be launched during Manila hosting of Miss U
I
By Ma. Stella F. Arnaldo
@Pulitika2010 Special to the BusinessMirror
T is “broke” after all. This was the assertion of officials of the Department of Tourism (DOT), who cited a Nielsen Media report that indicated the slow conversion of the “It’s More Fun in the Philippines” branding campaign into increased visitor arrivals.
In a press briefing on Tuesday, Tourism Secretary Wanda Corazon T. Teo also said the new Philippines brand and slogan will be launched “during the Miss Universe” beauty pageant, possibly by January 13, when the candidates from 97 countries start arriving in the country. Coronation night will be on January 30 at the Mall of Asia Arena in Pasay. Tourism Undersecretary for Administration and Special Concerns Katherine de Castro said the agency is currently speaking with a media and advertising company to come up with the new tourism slogan. She declined to identify the company, “as we’re still revising our target markets for the campaign,” so the DOT has yet to sign a contract with the firm. Citing the Nielsen Media assessment report regarding the “More Fun” campaign, she said, “for the European market, 65 percent like the campaign but only 26 percent intend to visit the Philippines.” For North America, she added, while “72 percent like the campaign, only 45 percent intend to visit the Philippines.” De Castro added that they “literally discovered the study only last week, so we now have to revise some target markets for the new campaign. It [the study] was kept from us. It was never released.” Teo underscored that the More Fun brand was launched in 2012 and that by now, this should have encouraged more visitors to tour
the country. “2012 was a long time ago; it’s time to launch a new campaign,” she said, adding that in her recent trips to key markets abroad, she managed to get immediate commitments for tourists to come to the Philippines. Last year about 5.4 million foreign tourists traveled to the Philippines, up almost 26 percent from the 4.3 million arrivals in 2012, the first year of the More Fun campaign. Asked to comment on the expense involved in launching a new brand campaign and slogan considering the agency’s lower budget for 2017, de Castro said, “we’ll be using funds from 2016.” The DOT chief also disclosed that Budget Secretary Benjamin E. Diokno assured her that “if we have savings for 2016, we can use these [to augment our] 2017 budget.” Under the Duterte administration’s proposed National Expenditure Program for 2017, the DOT budget was cut by 32 percent to P2.5 billion, despite the higher arrivals targets of 6.5 million foreign tourists and 73.3 million domestic tourists next year. De Castro said the Miss Universe beauty pageant will likely bring in some 110,000 visitors to the Philippines for January 2017 alone. “Beauty-pageant experts say each candidate brings as many as 1,100 supporters. Considering we are expecting about 100 candidates,” she said there would be an
increase in foreign arrivals. She averred that usually the candidates also bring their families and arrive before the pageant proper so they can tour the host country. Destinations that would be featured during the different pageant portions are Cebu, Batangas, Siargao, Davao, Vigan, Palawan and Legazpi. The candidates will also be taken on a tour of the Walled City of Intramuros. Meanwhile, the DOT brought up the Nielsen Media report to respond to concerns that “if the More Fun campaign ain’t broke, why fix it?” Tourism stakeholders interviewed by the BusinessMirror recently appealed to the DOT to keep the current brand campaign and slogan “as it has not yet reached it maximum potential.” They added that the agency should just “build on the momentum” already earlier generated by the slogan and just “enhance it.” (See, “Stakeholders to DOT: Let’s keep ‘It’s More Fun…’ tourism slogan” in the BusinessMirror, September 15, 2016.) Advertising experts also said a
Tourism Secretary Wanda Corazon T. Teo (second from left) shows the mission order she signed for the cleanup of Intramuros as part of the Walled City’s rehabilitation plans. Teo also updated the media on developments in the Miss Universe beauty pageant to be held in January 2017 and the creation of a new tourism slogan. With her are (from left) Tourism Assistant Secretary for Administration and Special Concerns Gwen Javier, Undersecretary for Administration and Special Concerns Katherine de Castro, and Assistant Secretary and Tourism Spokesman Frederick Alegre. Image courtesy DOT
good slogan such as It’s More Fun in the Philippines could work for decades, likening it to the “Just Do It” brand campaign of sports-apparel company Nike. They added that the slogan could still be used but “with
different executions.” (See, “Advertising experts weigh in on ‘More Fun’ slogan,” in the BusinessMirror, September 20, 2016.) Advertising firm BBDO Guerrero conceptualized the More Fun
slogan and brand campaign at a cost of P5.6 million. But media placements and advertising spots over 4.5 years cost the DOT and its marketing arm, the Tourism Promotions Board, about $61 million (P3 billion).
Cabinet embarks on damage-control Duterte set to sign PHL’s ratification mission with investors, intl media By Cai U. Ordinario & Catherine N. Pillas
T
@cuo_bm c_pillas29
he President’s economic team will meet with investors and the international media during the International Monetary Fund (IMF)-World Bank Meetings this week, according to the National Economic and Development Authority (Neda). This developed as two other members of the Cabinet sought to placate the 27-member European Union (EU) bloc, whom President Duterte reportedly-cussed following the issuance of a statement condemning the rising incidence of drug-related killings in the country. “When we talk to foreign investors, we talk about business and economic stability. We don’t talk about those things [like alleged extrajudicial killings]. We look at the long term. We don’t base our decisions on short-term...[incidents]… Now is the time to really come to the Philippines,” Trade Secretary Ramon M. Lopez said at the sidelines of the first European Union-Philippines Business Summit on Tuesday. For our part, he added, “It is imperative we enhance our trading relationship through an FTA [free-trade agreement] with the EU to ensure the continued market access in goods, services and investments.” Palace Spokesman Ernesto C. Abella said that businesses are looking for economic stability, which, he said, is a “separate issue” from that of the administration’s campaign against drugs. Socioeconomic Planning Secretary and Neda Director General Ernesto M. Pernia recently told reporters that the economic team wants to emphasize that the country’s situation is “much less problematic” in reality. “[We will meet with the credit rating agencies] and also the media because we want to counter the adverse media reports coming out,” Pernia said. “I just met with two representatives from Moody’s and one from Goldman Sachs [recently]. They were quite amazed or surprised that they observed [that] it’s not what people are saying outside in the international media, the situation here is much less problematic than portrayed in media,” he added. Pernia also belied reports that investors are leaving the country, as he blamed the reported flight of “hot” money with the strengthening US dollar. The Neda chief said even local businessmen, including members of the Makati Business Club and the Philippine Chamber of Commerce and Industry (PCCI), are “less concerned” about the economic situation. Pernia said even embassies have not lost faith in the Duterte administration, saying that foreign governments and their businessmen are keen on working with the Philippines through the provision of official development assistance or investments.
I just met with two representatives from Moody’s and one from Goldman Sachs [recently]. They were quite amazed or surprised that they observed [that] it’s not what people are saying outside in the international media, the situation here is much less problematic than portrayed in media.” —Pernia
“The macroeconomy is robust, continues to be robust and the government is focused on reducing inequality and poverty and its instruments are the zero to 10-point agenda, including peace and order, which is number zero, and that, by itself, will also attract investors in addition to improving investment climate with better infrastructure and reducing red tape, reducing corruption and the war on drugs is really aimed at promoting peace and order,” he said. British Ambassador Asif Anwar Ahmad told reporters at the signing of the agreement on Project Repeal on Tuesday that allowing the economic team to spread the word about the administration’s economic policies could allay investor jitters. Ahmad said the Philippines “has a great story to tell” and there are a lot of economic opportunities still in the country, despite the negative comments made by the President. He added that the British government agrees with every single point of the Duterte government’s 10-point economic agenda. “What I told the President was that its time that you allow Secretary Mon [Ramon] Lopez, Secretary Sonny [Carlos] Dominguez and others to travel abroad to explain the economic plans of this country so the confidence building actually continues from the last administration to the new one,” Ahmad said. The British ambassador said there are a lot of positive things that are going for the country right now. This includes solid macroeconomic fundamentals, a young population and efforts to address infrastructure gaps. He added sectors, such as tourism, hold great potential in the country, as well as expanding trade relations through the export of agriculture and nonagriculture goods.
of WTO-TFA
T
he Philippines is set to give its nod to a World Trade Organization (WTO) agreement aimed at facilitating the flow of goods among signatories and forcing governments to improve their customs administration. Trade Undersecretary for Industry Development and Trade Policy Ceferino S. Rodolfo said the long-awaited Trade Facilitation Agreement (TFA) is just awaiting “clearance and approval” from the Chief Executive. The “instrument of acceptance” of the TFA has been transmitted to the Office of the President. The document has to undergo domestic ratification before it is signed by the head of government and concerned government officials before submission to the WTO. Approving the instrument of acceptance means the WTO member-country has agreed that the WTO founding treaty, the Marrakesh Agreement, has been amended to include the TFA. Approval of the TFA is being targeted by year-end, depending on the finalization of the implementing rules and regulations of the Customs Modernization and Tariffs Act (CMTA). The TFA has gone through a tedious process of approval in the previous administration, with the Bureau of Customs (BOC) and the Department of Finance reportedly holding back approval because of commitments under the WTO agreement. The level of commitments (or “technical measures”) on border-related procedures and obligations contained in the TFA was deemed problematic by the BOC in the previous administration. The TFA contains 40 technical measures related to transparency of laws, rules and procedures, fairness in borderagency decisions and streamlined clearance procedures. However, given the passage of the CMTA in the previous administration, the approval process has moved forward. “That’s easy because we already have the CMTA and its implementing rules and regulations is being worked on,” Rodolfo said. Special provisions contained in the TFA allow developing and least-developed countries to choose measures they will prioritize for implementation when the TFA comes into force, as well as those that they may defer to a later date. In a previous interview with the BusinessMirror, the DTI conceded that the revival of the preshipment inspection scheme on certain types of cargo, which again provoked the ire of the business community, may be an obstacle to the Philippines’s ratification. The scheme, however, has not been raised by this administration. The DTI earlier committed to submit its instrument of acceptance to the WTO during its Apec hosting, but missed its self-imposed deadline. The TFA text was concluded in December 2013 as part of the wider “Bali Package”. Since its conclusion, the WTO has moved to insert the text into the WTO’s founding agreement, or the Marrakesh Agreement, through a protocol of amendment. WTO members must then submit their protocol of formal acceptance of the amendment to ratify the TFA. For the TFA to come into force, two-thirds of the WTO membership must ratify the agreement through submission of their “instrument of acceptance” to the WTO. The agreement will then be binding only to those who have agreed to it. Catherine N. Pillas
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Editor: Max V. de Leon • Wednesday, October 5, 2016 A5
Ma in Indonesia shows ‘explosive’ net sales growth
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n a testament to the rising consumer potential of the world’s No. 6 emerging market, Indonesia’s President Joko Widodo has tapped for guidance the king of Chinese e-commerce: Jack Ma.
Jokowi, as Indonesia’s leader is known, further intensified the buzz surrounding his country’s $2-billion e-commerce market with a stop at Jakarta’s sprawling Mangga Dua bazaar last month, buying an iPad from a store belonging to Web retail giant Bhinneka.com. Indonesia has an e-commerce market that McKinsey & Co. says can be one of the fastest-growing in the world, part of a digital economy adding $150 billion a year to GDP by 2025. All the more reason for Widodo to turn to Ma, founder of Alibaba Group Holding Ltd., to advise his administration on how to supercharge online retailing in the country. “It does have that potential and I think that part of it boils down to also Indonesia, as a culture, being incredibly consumptive,” said Adrian Li, managing partner of Convergence Ventures, which backs early-stage tech start-ups in Indonesia. “By some estimates, for example, you’ve seen Indonesia and the adoption of e-commerce grow even faster than some of the peers in China.” Indonesia’s urban consuming class—individuals with disposable income of more than $10 a day—is growing by about 5 million a year to reach 86 million by 2020 amid rapidly expanding access to the Internet, according to McKinsey. Online sales could reach 7 percent to 8 percent of the total retail market by 2020 from about 1 percent currently, it estimates. The central bank projects e-commerce transactions will almost double to $4.6 billion this year.
‘Explosive growth’
Southeast Asia’s biggest economy with a population of 255 million is experiencing “explosive growth,” said Ali Potia, a Singapore-based partner with McKinsey and head of the company’s Asia Consumer Insights Center. The value of e-commerce could increase by as much as $15 billion over the next three years alone, the company estimates. Jokowi turned to Alibaba’s Ma after touring the company’s headquarters in Hangzhou, China, in early September. He told his ministers last week that Indonesia could become the biggest digital economy in Southeast Asia and he is “ordering that implementation be accelerated because if it’s done not immediately, then we will be left behind.” Ma has already established a foothold in Indonesia, where 100 million people are hooked up to the Internet—a figure growing at a rate of more than 10 percent a year—and 40 percent of mobile users have a smartphone. Alibaba made its biggest overseas acquisition in April with a $1-billion investment in the online emporium Lazada Group SA, which is based in Singapore and sells clothes and electronics in six Southeast Asian nations.
$2B
The size of Indonesia’s e-commerce market
Online retailing Go-Jek is another example of the transformative nature of e-commerce. Starting out as a ride-hailing app, it now offers vendor-todoor delivery of everything from concert and movie tickets to massages and even pedicures and cream baths via its “Go-Glam” button. “If you look at where Go-Jek is today—bear in mind this is a company that’s less than 3-years-old—the number of deliveries and transactions it’s able to do per month, that’s also significant,” said Convergence Ventures’ Li. “Again, it’s on a par with some of the fastest-growing start-ups you’ve seen in China.” Unlike the US, Li added, and similar to China about a decade ago, traditional retailers in Indonesia don’t have a national footprint where people in smaller cities can purchase the types of goods and services others can buy in the major metropolitan areas of Jakarta or Surabaya.
Infra challenge
“With the penetration of e-commerce, they now are able to buy those things,” he said. “Increasingly, we see with large branded retailers coming online—Alibaba purchasing Lazada, Matahari Mall, JD.com—people become more and more comfortable with transacting online. There is less and less of a trust issue.” Still, challenges remain, particularly with infrastructure. The archipelago of more than 17,000 islands lacks reliable electricity supply and warehousing facilities, while poor road, rail and air networks hamper transportation, driving up costs and delaying delivery of goods and services. Widodo has made infrastructure investment key to his economic program, as he seeks to boost growth to 7 percent during his term. The government is forecasting expansion of about 5 percent for this year. E-commerce growth is also restricted because of low credit-card and technology usage. Internet penetration in 2015 was just 34 percent, according to McKinsey. “E-commerce operators in Indonesia will need to sharpen their focus on building sustainable, cost efficient operations that have a clear path to profitability,” McKinsey’s Potia said. “This will require other parts of the ecosystem—such as logistics, payments, mobile Internet—to keep up, as well.” Bloomberg News
US warships in first visit to Vietnam in 21 yrs
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wo American warships stopped in Vietnam’s Cam Ranh Bay this week for the first time since the two nations normalized relations 21 years ago, the US Navy said on Tuesday. Submarine tender USS Frank Cable and guided-missile destroyer USS John S. McCain made the visit on October 2 as part of naval engagement activities between the United States and Vietnam, the navy said in a statement. Other military sealift ships have visited in the past, it said. The visit is part of recent US efforts to enhance naval ties with Vietnam as it seeks to counter China’s assertiveness over disputed territory in nearby waters. Beijing has reclaimed thousands of acres of land in the South China Sea and increased its military presence in recent years, raising concern from Vietnam and other claimants. “It sort of speaks to the growing substance of this US-Vietnam defense and security relationship,” said Collin Koh, a research fellow at the S. Rajaratnam School of International Studies in Singapore
who studies maritime security. “I think we have seen in more recent years that Vietnam is sliding more toward countries like Japan and the US for obvious reasons that China has risen and grown more assertive.” The US and Vietnam last week announced the start of its seventh annual naval engagement. The drills beginning in Danang will include maritime exercises focused on communications through the code for unplanned encounters at sea, and a search and rescue operation, according to a statement by the office of the US Commander Logistics Group Western Pacific. Cam Ranh Bay, located about 220 miles (354 kilometers) north of Ho Chi Minh City, has been of strategic significance to the world’s powers for more than 100 years. Built by the French in the 19th century and later occupied by Japan during World War II, Cam Ranh Bay was offered to the US by its ally South Vietnam in 1965.
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Wall Street watching as US High Court tackles insider trading
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EON SEs Irsching-5 in Bavaria, Germany GomaPix/Getty Images/Bloomberg
European utilities get lifeline worth billions after slump
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lectric utilities, hurt by plunging commodity prices and antipollution programs, are being thrown a high-tech lifeline.
After losing about half their value since 2007, European power companies are pivoting away from fossil fuels, where profits have all but evaporated amid subsidized competition from renewable energy. By moving electricity grids into the digital age, utilities can get low-risk, government-regulated rates for distributing their power, as well as new revenue from running more efficient networks or providing household battery-storage and electric-vehicle systems. European power networks will spend as much as €62 billion ($69 billion) on digitizing grids through 2025, an investment that could almost double utilities’ dividend yields to as much as 9 percent, according to Goldman Sachs Group Inc. Smart-grid expenditure is already up, rising 10 percent worldwide to a record last year, Bloomberg New Energy Finance data show. “Investing in digitization is highly profitable,” said Alberto De Paoli, chief financial officer of Enel SpA, Europe’s biggest utility by market value, which began installing smart meters in Italy at the turn of the century. “This super cycle is something that we’re already seeing.”
€62B
The amount that will be spent by European networks on digitizing grids through 2025
Installing smart meters removes the cost of physically visiting customers. Other benefits inc lude prevent ion of power theft, allowing trade in surplus renewable generation and better management of supply and demand. Enel’s initial 2 billioneuro investment in smart meters was repaid in four years, the Rome-based company said. Enel wou ld need to spend about €17 billion to install smart meters, provide software and upgrade electricity substations in a digital revamp for its 62 million customers from Italy to Brazil, according to Goldman. Such an upgrade would boost the asset base on which governments will allow the utility to make a fixed, or regulated, return. Those figures are “not so far from reality,” said Enel’s De Paoli.
“The future is coming faster than everyone expects.”
Car power
That future includes allowing customers to offset power costs by trading it. In Denmark and the United Kingdom, Nissan Motor Co. and Enel are testing how electric cars and vans access the grid. Owners can charge batteries in periods of low demand when prices are cheap, and sell power back to the network when rates increase. Such cutting-edge technology still faces hurdles. In the UK, government plans to install smart meters in every home and business by 2020 have stuttered amid component delays. Privacy concerns about use of the data generated by the meters and technical glitches also dog progress. “This may not be the boon that it appears to be at first glance,” James Sprinz, an analyst in New York at Bloomberg New Energy Finance, said by phone. “Europe has struggled to transition from smart-grid pilot projects to actually installing them as normal business practice.” RWE AG, Germany’s biggest power producer, is splitting off its grid, retail and renewable assets into a company called Innogy, where infrastructure investment will make up more than half of the new unit’s capital spending. The utility estimates that regulated electricity and natural gas assets in Germany rose 9 percent in the latest respective five-year regulatory periods, totaling about €9.7 billion in 2015. That growth
may be completely eliminated as future government reviews cut guaranteed return rates, in some instances to about 5 percent annually from 7 percent, Innogy has said. Estimated allowed returns exceed the cost of capital and range from 5.3 percent on a pretax basis in France to 6.5 percent in Spain, Alberto Gandolfi, an analyst at Goldman in London, said in an e-mailed research note. “Besides some efficiency gain requirements, costs tend to be a pass through,” he said.
Upward Spiral
So, dividend yields at European utilities are largely “safe” and will advance to 7.4 percent by 2025 from an estimated 4.8 percent this year, Gandolfi said. There’s a “blue sky” chance they will hit 9 percent. Even as grids fight to stay relevant as low-cost batteries cut the need for centralized networks, utilities that move with the times can thrive, said Jemma Green, chairman of Power Ledger Pty Ltd. Her Perth, Australia-based company is starting trials of power trading platforms using blockchain technology, the cloud-based ledger system that’s also grabbing the attention of RWE and Fortum Oyj in Finland. “It’s the opposite of the death spiral,” Green, a former environmental risk manager at JPMorgan Chase & Co., said by phone. “I call it the upward spiral. There are opportunities for all the incumbent players.” Bloomberg News
Japan’s top mine builders pursue deals for commodities recovery
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second Japanese miningequipment maker is positioning itself for a recovery in commodities, after Hitachi Construction Machinery Co. followed its larger competitor Komatsu Ltd. in announcing what would be its biggest-ever acquisition. Hit ac h i Const r uc t ion, t he world’s top maker of giant excavators, has offered A$689 million ($529 million) to buy Australian component maker Bradken Ltd. In July Komatsu agreed to purchase US-based rival Joy Global Inc. for a record $2.89 billion, signaling its optimism that demand for diggers and loaders will rebound after years of declining commodity prices. “Miners have put the brakes on too hard,” Shinji Kuroda, an analyst at Credit Suisse Securities (Japan) Ltd., said by phone from Tokyo. “So the rebound will come at some point even if commodity prices continue to slump. The current size of demand for machines and parts has fallen below sustainable levels. The time for a recovery is coming.” Tokyobased Hitachi Construction said
on Monday it’s offering A$3.25 a share, or a 34-percent premium on Bradken’s closing price on Friday. The Newcastle, New South Walesbased firm saw its stock surge 32 percent in Sydney to A$3.20 after its board recommended the deal. The acquisition will enable Hitachi Construction to supplement its parts business for mining equipment and boost earnings, according to a statement. Nomura Securities Co. reckons the deal is likely to boost profit by about a tenth. Bradken “appears to have a degree of competitiveness and profitability, raising the possibility of relatively stable profits, as and when sharp corrections in demand for mining machinery come to an end,” Katsushi Saito, managing director of Nomura Securities, said in a note dated October 3. “The number one priority will be to successfully complete the restructuring process at Bradken.” Bradken, founded in 1922, produces goods from excavator parts to mineral crushing equipment. It announced in August it would streamline units and
consider divesting non-core businesses. Nomura calculates the deal will boost Hitachi Construction’s earnings per share by about 10 percent for the financial year through March 2018. The purchase will create synergies worth more than ¥20 billion ($196 million) in five to six years, Hitachi Construction’s CEO Yuichi Tsujimoto told a briefing. While the company doesn’t expect a demand recovery for mining equipment this fiscal year, it sees mid- to long-term growth in the sector, he said.
Metals prices
Metals prices, as measured by the London Metals Exchange index of six contracts, entered a bull market last week, as an improving economy in China, the top consumer, and supply constraints caused by miners chopping production begin to reverse five years of losses. “Demand for mining equipment could show double-digit growth in 2017,” Credit Suisse’s Kuroda said. And while the market won’t retur n to prev ious record levels, “the percentage growth could be big,” he said.
Hitachi Construction plans to start a tender offer for Bradken for six weeks from mid- to lateOctober, according to its statement. The Australian company last year rejected a A$428-million offer from Koch Industries Inc. and Pacific Equity Partners, saying it didn’t ref lect its value. Hitachi Construction will use funds on hand, as well as bank borrowing to finance the acquisition, which includes Bradken’s debt of A$288 million. It will also provide an interim A$450-million credit facility if existing debt provisions are affected by the change in control, according to a statement from the Australian company. The deal is subject to regulatory approvals. The Japanese company, half owned by conglomerate Hitachi Ltd., is Japan’s No. 2 maker of construction and mining equipment and has the biggest share globally of giant excavators used in mines. Its stock gained as much as 1.8 percent in Tokyo and traded 1.1 percent higher at ¥2,034 yen as of 1:19 p.m. Komatsu, behind only Caterpillar Inc. of the US in the sector, declined 0.2 percent. Bloomberg News
all Street figures accused of insider trading are keeping a close eye on a United States Supreme Court appeal by a Chicago grocery wholesaler trying to overturn his conviction for buying stock based on information leaked by a relative. The justices will consider their first insider-trading case since 1997 on Wednesday, when they hear Bassam Yacoub Salman’s case. It tests whether someone can be sent to prison for making trades when the insider who provided the tip wasn’t looking to make any money. A victory for the government would be a boost for prosecutors and the Securities and Exchange Commission, restoring some of the legal leverage they lost in 2014 when a federal-appeals court in Manhattan set new requirements for insidertrading convictions. T hat r u l ing , which involved hedge-fund managers Todd Newman and Anthony Chiasson, undercut US Attorney Preet Bharara’s eightyear crackdown on Wall Street cheating and led to more than a dozen insider-trading convictions being thrown out. After the Supreme Court refused to review the decision, Bharara said it created an “obvious road map for unscrupulous investors.” Defense lawyers and their clients now want the Supreme Cour t to reinforce the Newman ruling and apply part of it nationwide. Salman’s supporters include Mark Cuban, owner of the Dallas Mavericks basketball team, who was cleared by a jury of insider-trading allegations in 2013 and says in court papers that prosecutors need to be “reined in” to protect innocent traders. Among those watching the case closely are former Goldman Sachs Group Inc. director Rajat Gupta, hedge-fund manager Doug Whitman and Galleon Group Cofounder Raj Rajaratnam. All are trying to overturn their convictions on related grounds.
Family tips
Prosecutors said Salman and a partner earned more than $1.5 million in profits through trades based on inside information, including a tip about the 2007 acquisition of Biosite Inc. The government said the tips originated with Maher Kara, then a Citigroup Inc. investment banker, who gave it his brother, who in turn passed it on to his brother-in-law, Salman. The Supreme Court case centers not on Salman’s conduct, but on Kara’s motivations. Salman contends prosecutors needed to show that Kara received a concrete benefit in exchange for the leak. A San Francisco-based federalappeals court disagreed, saying Salman could be convicted even if Kara gave his brother the information as a gift. T he d isag reement is a product of the unusual way that insider trading has come to be classified as a crime. Federal securities-fraud statutes don’t specifically mention insider trading, but in 1983 the Supreme Court said prosecutions could be based on an insider’s breach of a duty to the company’s shareholders. That ruling, however, wasn’t
clear about what government lawyers must show. Justice Lewis Powell’s opinion said that, for a breach to occur, the insider must receive a “personal benefit from the disclosure, such as a pecuniary gain or a reputational benefit that will translate into future earnings.” At another point, Powell said it was enough if an insider “makes a gift of confidential information to a trading relative or friend.” Salman argues that courts should interpret criminal laws strictly, particularly when Congress hasn’t mentioned the particular crime.
Scalia’s absence
He lost potentially his strongest Supreme Court ally when Justice Antonin Scalia died in February. When the court rejected Whitman’s appeal in 2014, Scalia issued a statement suggesting he would define insider trading narrowly based on a legal doctrine that “requires interpreters to resolve ambiguity in criminal laws in favor of defendants.” Fellow conservative Clarence Thomas joined his statement. The Obama administration is urging the court to uphold Salman’s conviction. Requiring a showing of a concrete benefit would let people with special access “reap instant, no-risk profits at the expense of stockholders, free from securities-law liability,” acting US Solicitor General Ian Gershengorn argued in court papers. A ruling favoring the government would only partially undo the Newman ruling’s impact on Wall Street. The government won’t be able to revive cases that have already been dismissed—like the one against SAC Capital Advisors LP’s Michael Steinberg. And the Supreme Court isn’t taking on a key part of the Newman ruling: its requirement that prosecutors prove the person trading on the information knew that it came from an insider who received a personal benefit. Critics of the government say the court should issue a long-needed rebuke.
Prosecutors ‘overreaching’
“Prosecutors have been overreaching in many cases for more than 30 years,” said former Wall Street Journal reporter R. Foster Winans, who served nine months in federal prison after being convicted of securities, wire and mail fraud. Scalia’s absence, however, makes a sweeping victory for defendants less likely, said Christine Chung, a former federal prosecutor who is now in private practice and represents Rajaratnam. The high court is still shortha nded more t ha n seven months after Scalia’s death. “With Justice Scalia gone, and the more liberal side of the court likely to resist cutting back on insider trading prosecutions, it’s unclear that the court will have an appetite to impose a dramatic limit,” Chung said. The case could divide the court along ideological lines. At the same time, recent white-collar crime cases have unified the court to some degree, as when the justices in 2010 narrowed the scope of a federal fraud law in the case of Enron Corp.’s Jeffrey Skilling. Bloomberg News
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Pence’s critical role: Trump’s emissary to evangelicals
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ES MOINES, Iowa—Mike Pence musters all of his Midwestern earnestness as he describes Donald Trump as “a man of faith.” He says the Republican nominee is “a man I’ve prayed with and gotten to know on a personal level.” The description, in an interview with The Associated Press (AP), stands in sharp relief to Trump’s public profile over much of his career: a twice-divorced former playboy who has boasted of his sexual exploits, flaunted his wealth, used crass insults and made sweeping generalizations about whole races. Getting tens of millions of wh ite eva ngel ica ls to accept Pence’s portrait of Trump is critical to Republican hopes for capturing the White House. It’s not a question of whether Trump will win more of the white evangelical vote than rival Hillary Clinton. He will. But Trump needs to win that vote by overwhelming margins and with a high turnout. S l i g ht c h a n ge s i n lo y a lt y could decide the outcomes in critical states, including North Carolina, Florida, Ohio, Pennsylvania and Virginia. So Pence, the vice-presidential nominee, is on a mission across America’s Bible Belt to persuade evangelicals to put their faith in Trump. Raised Catholic, but now a protestant evangelical, Pence is the ideal emissary. While Trump has wavered on abortion and samesex marriage, Pence’s conservative credentials are impeccable. And while Trump has been shaky on religion, Pence’s evangelical beliefs and political persona are deeply intertwined. His signature line: “I’m a Christian, a conservative and a Republican—in that order.” Pence’s language and mannerism are familiar to Christians who call themselves “born again.” T he Indiana governor quotes Biblical passages freely and was at ease, telling Colorado pastors last week of his college conversion, recalling that he was “overwhelmed with gratitude” that “Jesus had died for all the sins of the world, [and] somewhere in there he died for me.” Republicans hope that gives him credibility as Pence insists Trump is a “good man who will make a great president.” “Evangelicals have to be convinced that you’re at least a good person, even if you aren’t all-in on the lifestyle,” says Tim O’Donnell, a 64-year-old independent in Colorado Springs, Colorado, who came to hear Pence at a recent round-table with church leaders. O’Donnell said he remains unsure about whether can vote for Trump. Most evangelicals, he explained, “aren’t going to vote for Hillary,” but some “just aren’t comfortable voting for Trump either.” White evangelicals cast about a quarter of 2012 ballots. Nearly eight in 10 of them voted for Republican Mitt Romney over President Barack Obama. A recent AP-Gfk poll showed Trump garnering about seven in 10 white evangelicals, with the rest split between Clinton and Libertarian Gary Johnson. Trump has attempted some outreach to black
evangelicals, an overwhelmingly Democratic group, as well. Trump aides point to their candidate’s strong showing among white evangelicals on his way to the Republican nomination. Trump has backing from many evangelical leaders, including Jerry Falwell Jr., president of Liberty University, the nation’s most high-profile evangelical college. But the Republican nominee has been criticized by others. Some Southern Baptist Convention leaders dislike his opposition to admitting Syrian refugees to the United States. And Pence’s schedule, heavy in recent weeks with visits to churches and social conservative groups, suggests the Trump campaign knows it has work to do. Trump and Pence emphasize the policy promises Republicans typically offer white evangelicals: Supreme Court justices and other federal judges who oppose samesex marriage and abortion rights, an expansion of “school choice,” and unyielding support for Israel in the Middle East. Trump has added a new incentive, pledging to strike down a federal prohibition on churches engaging in explicit political activity. Trump is a Presbyterian who says he “loves my church” and tells of being influenced by the famous pastor and author Norman Vincent Peale. But he raised eyebrows last year at an Iowa forum year when he said he’d never explicitly sought God’s forgiveness. He’ll only occasionally read scriptural passage from notes— and in January, drew mockery for reading from “Two Corinthians,” rather than “Second Corinthians.” Pence says the distinctions are merely stylistic. “I think it’s fairly obvious to people that we express ourselves differently,” Pence told AP. “Our experiences are different. But I think we come from the same place.” Pence said he believes “people hear [Trump’s] sincerity” and “his commitment to the causes they cherish,” and that will be enough. The Rev. Mark Harris of Charlotte, North Carolina’s First Baptist Church says Pence’s consistency should give evangelicals confidence. Harris, who previously supported Mike Huckabee and then Texas Sen. Ted Cruz before backing Trump, adds another factor: preventing a Clinton victory. “We wish we had somebody that checked all the boxes, who fits the profile,” Harris said. He said evangelicals would like to see someone who can get something done, “even if he “isn’t the greatest spiritual leader.” Still, that hasn’t convinced Michael Farris, a leading national advocate of the home-schooling movement and a Trump critic. Farris welcomed Pence recently to the Home School Legal Defense Association’s national convention in North Carolina. Pence told AP he privately made his case to Farris. But afterward, Farris reaffirmed on his Facebook page that he won’t endorse Trump. Following the presidential debate on Monday, Farris ratcheted up his argument. Trump, he posted, “should step aside and let Mike Pence take on Hillary.” AP
In this November 3, 2015, file photo, Democratic presidential candidate Hillary Rodham Clinton shakes hand with a supporter during a town, hall meeting in Coralville, Iowa. Polling by Gallup shows that 92 percent of Americans—including overwhelming majorities of both men and women—would vote for a woman for president if they felt she was qualified. AP/Charlie Neibergall
Young adults prefer Clinton on income gap, divide on jobs
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ASHINGTON—Young adults are more likely to trust Hillary Clinton than Donald Trump on handling wages, income inequality and personal finances, but they’re divided on which candidate would better handle job creation, a new GenForward poll shows.
Young Hispanics, blacks and Asian-Americans favor Clinton on all four economic issues, but young whites are more likely to favor Trump on both job creation and their personal finances. GenFor ward is a sur vey of adults age 18 to 30 by the Black Youth Project at the University of Chicago with the Associated Press-NORC Center for Public Affairs Research. The first-of-itskind poll pays special attention to the voices of young adults of color, highlighting how race and ethnicity shape the opinions of a new generation. T hings to know about what young people think ab out t he e conomy a nd t he presidentia l campaig n:
Income inequality
The GenForward poll shows that young adults under 30 are more likely by a 29 percentage point margin to say they trust Clinton than Trump to handle income inequality, a major element of Vermont Sen. Bernie Sanders’s primary campaign earlier this year that received overwhelming
1,851 The number of American young adults polled by the GenForward panel
support from young people. That preference crosses racial and ethnic lines, with young AfricanAmericans saying Clinton would be better on income inequality by a 50-point margin, AsianAmericans by a 43-point margin, Latinos by a 39-point margin and whites by an 18-point margin. Most young adults say efforts to reduce i ncome i nequ a l it y have not gone far enough over the last eight years. Young people from each racial and ethnic background are also more likely to say Clinton than Trump can best handle increasing wages, by 22 points overall: 10 points among whites, 33 points among
Latinos, 35 points among AsianAmericans and 46 points among African-Americans.
Young whites conflicted
Young Americans are divided over who would better handle job creation. Overall, they are split nearly evenly, with 36 percent saying they think Clinton could better handle the issue and 35 percent saying Trump could. But young whites are 20 points more likely to say Trump could better handle job creation than Clinton. Young AsianAmericans and Latinos are more apt to trust Clinton than Trump by about the same margin, while young blacks prefer the Democrat over the Republican by 45 points. A similar divide emerges on which candidate young people trust more to improve their personal financial situation. Overall, young people are more likely to trust Clinton than Trump, 32 percent to 23 percent. But while young African-Americans, Asian-Americans and Latinos are significantly more likely to trust the Democratic nominee, young whites are slightly more likely to trust the Republican, 32 percent to 25 percent. Three in 10 young adults, including similar percentages across racial and ethnic lines, say they trust neither candidate on improving their personal financial situation. The results reflect overall support for the two candidates. While young people of color are much more likely to say they’re supporting Clinton than Trump in the presidential race, young whites are about equally divided between support for Trump and Clinton. That’s not a new development—exit polls
show that young whites were more likely to support Republican Mitt Romney than Democrat Barack Obama four years ago.
What’s important?
Young people are largely united on which economic issues they want to hear the presidential candidates talking about. When asked to choose which issues they found most important, top issues included reducing student debt (32 percent), increasing job growth (30 percent), increasing wages to keep up with the cost of living (28 percent) and reducing the gap between rich and poor (26 percent). About three in 10 young blacks and Latinos, but only about half as many whites and Asian-Americans, said raising the minimum wage was among their top issues. Young whites were especially likely to say protecting the future of Social Security is among their top economic issues, at 26 percent. The poll of 1,851 adults age 18 to 30 was conducted from September 1 to 14 using a sample drawn from the probabilitybased GenForward panel, which is designed to be representative of the US young adult population. The margin of sampling error for all respondents is plus or minus 3.8 percentage points. The survey was paid for by the Black Youth Project at the University of Chicago, using grants from the John D. and Catherine T. MacArthur Foundation and the Ford Foundation. Respondents were first selected randomly using address-based sampling methods, and later interviewed online or by phone. AP
Experts: No clear criminal case over Trump’s tax disclosure
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EW YORK—Donald Trump tax documents were published without his permission in The New York Times, but that doesn’t necessarily make for a clear-cut criminal case against the newspaper or its source. For one thing, it’s not clear who did the divulging—the Times says it received the documents anonymously in the mail. And legal experts say the newspaper itself should be on solid First Amendment grounds if it used newsworthy, accurate information and did
nothing illegal to get it. “When you’re in an election and you’re looking at candidates’ tax returns, I don’t think it’s dangerous” legally for the Times, said media lawyer James Goodale, the Times’s general counsel when the federal government sought unsuccessfully in 1971 to stop the newspaper from publishing the “Pentagon Papers,” a classified military study showing that the US had secretly expanded the Vietnam War. Trump’s lawyers have threatened “prompt initiation of appropriate legal action” of
their own over Saturday’s story, which said the businessman had declared $916 million in losses in 1995. The deduction was so big he could have forgone paying federal income taxes for 18 years. The Times said on Monday it hadn’t heard further from Trump’s lawyers. “Our job is to report on matters of public concern, and that’s what we did here,” the newspaper said in a statement. “Nothing could be more central to the First Amendment than our right to publish, and the public’s right
to know, important information about presidential candidates.” Trump has built his campaign around his business acumen and financial success, while bucking a 40-year-long custom of presidential candidates releasing their income-tax returns. His campaign told the Times he had paid hundreds of millions of dollars in various forms of taxes, had a duty to his business, family and employees “to pay no more tax than legally required” and had gained a unique understanding of the tax code.
Trump himself has raised questions about publicly disclosing information rival Hillary Clinton has kept private. He urged Russia in July to find e-mails that Clinton deleted from her personal server, saying they were private, when she was secretary of state. Trump later said he was being sarcastic. The Times published the first page of Trump’s 1995 Connecticut, New Jersey and New York state tax returns and said his former accountant had authenticated them. AP
In this October 3 file photo, Republican presidential candidate Donald Trump speaks during a campaign rally, in Loveland, Colorado. AP/ Evan Vucci
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Deaths, riots in Bangalore show threat to India’s water
In this September 9, 2016 photo, US Secretary of State John Kerry (left) and Russian Foreign Minister Sergei Lavrov shakes hands at the conclusion of a news conference following their meeting to discuss the crisis in Syria, in Geneva, Switzerland. The deal crafted by the US and Russia to halt the Syrian civil war and focus efforts on rooting out extremists in the country is rife with legal and liability questions that are fueling Pentagon skepticism about military cooperation between the two powers, senior US officials said. Kevin Lamarque/Pool via AP
Syria peace efforts plunge as US C suspends talks with Russia
Cauvery water demonstration in Bangalore on September 12 Manjunath Kiran/AFP via Getty Images/Bloomberg
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ASHINGTON—International efforts to end the fighting in Syria have been dealt a serious blow, with the United States suspending direct contacts with Russia on halting the war, and chilly relations are turning even frostier after Russia put a hold on a plutonium disposal deal with Washington.
The two decisions, announced in their respective capitals just hours apart on Monday, were ostensibly unrelated but underscored deep mistrust and rising tensions between the former Cold War foes, who are increasingly at odds on a number of issues, particularly Syria and Ukraine. The moves further reduce areas of Washington-Moscow cooperation, yet their most immediate impact may be the potential death blow delivered to halting attempts to revive a moribund cease-fire in Syria, get desperately needed humanitarian aid to besieged communities and begin negotiations on political transition that could mean the ouster of President Bashar al-Assad. The Obama administration said it decided to cut off discussions on Syria because Russia had not lived up to the terms of last month’s agreement to restore a tattered cease-fire and ensure sustained deliveries of humanitarian aid to besieged cities, such as Aleppo, which has been under bombardment from Russian and Syrian forces. White House Spokesman Josh Earnest said: “What’s clear is that there is nothing more for the United States and Russia to talk about with regard to trying to reach an agreement that would reduce the violence inside of Syria and that’s tragic.”
“This is not a decision that was taken lightly,” State Department Spokesman John Kirby said in a statement. “Unfortunately, Russia failed to live up to its own commitments and was also either unwilling or unable to ensure Syrian regime adherence to the arrangements to which Moscow agreed.” Kirby’s statement said that Russia and Syria are pursuing military action in violation of the cease-fire agreement, and pointed to their targeting of hospitals, as well as the September 19 air strike on a United Nations humanitarian aid convoy. The US accused Russia of bombing that convoy, a charge both Russia and Syria have denied. Russia intervened on behalf of its close ally Syria on September 30 last year, joining Assad’s bombardment of both anti-Assad rebel groups and militant groups, such as the Islamic State and Fatah al-Sham Front, an al-Qaeda spinoff formerly known as the Nusra Front. Russia is interested in propping up Assad in part because Russia’s only naval facility outside the former Soviet Union is on the Syrian coast. If it had been implemented, the
cease-fire deal would have created a joint US-Russian center to coordinate military and intelligence operations. President Barack Obama had overruled Pentagon objections to such cooperation and Secretary of State John Kerry made the offer. According to a senior US official, the Pentagon has ordered troops who had been deployed to set up the joint implementation center—fewer than 20—to return to their bases. The official was not authorized to discuss the matter publicly, so the person spoke on condition of anonymity. The suspension will not affect communications between the two countries aimed at keeping their planes from bumping into each other over Syria. And, US officials said that, despite the suspension of talks with Russia, they would continue to work for a truce and aid deliveries to Syria in other gatherings, including the International Syria Support Group, a collection of nations that includes Russia. In Geneva the UN special envoy for Syria Staffan de Mistura said he was disappointed by the suspension of talks but stressed the UN would continue to work on both the humanitarian aid and political fronts. In Moscow the Russian Foreign Ministry issued a statement, expressing “deep disappointment” about the US move and blasting Washington for the failure to separate the rebels from al-Qaeda’s branch in Syria. “Washington’s decision reflects the inability of President Barack Obama’s administration to fulfill the key condition for the continuation of our cooperation in overcoming the Syrian crisis,” the statement said. “Or, perhaps, it never had an intention to do so. We are under a growing impression that in its
This is not a decision that was taken lightly.”—Kirby
striving for a much-desired change of power in Damascus Washington is ready to ‘make a deal with the Devil’ and forge a union with terrorists, who want to turn history backwards and enforce their inhuman norms by force.” The ministry added that “the stakes are high,” and warned that the “White House will bear the blame if Syria come under new blows by terrorists.” The US had agreed to separate the rebel groups but noted it was an extremely slow process. The US has relatively few personnel on the ground in Syria and even the moderate rebels have said they are frustrated with the pace of US help. The suspension in Syria talks was announced just hours after the Kremlin said Russian President Vladimir Putin had signed a decree halting a joint program with the US on the disposal of weapons grade plutonium. The decree cited the “emerging threat to strategic stability as a result of US unfriendly actions,” as well as Washington’s failure to meet its end of the cease-fire deal. It said, however, that Russia will keep the weapons-grade plutonium covered under the agreement away from weapons programs. Under the agreement, which was expanded in 2006 and 2010, Russia and the US each were to dispose of 34 metric tons of plutonium, enough material for about 17,000 nuclear warheads. When it was signed in 2000, the deal was touted as an example of successful cooperation between Washington and Moscow. The Russian Foreign Ministry said the US has “done all it could to destroy the atmosphere encouraging cooperation.” It cited US sanctions on Moscow over its annexation of the Crimea region of Ukraine and North Atlantic Treaty Organization’s deployment of forces near Russian borders. The White House and State Department voiced disappointment with Russia’s decision to opt out of the program. AP
8 admit sham marriages, crime reports in immigration scam
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ACK SON, Mississippi—Tarunkumar and Sachin Patel wanted to find a way so that more of their friends and business associates from India could get permanent legal status to remain in the United States. But they admitted on Monday their plans were federal crimes. Now they and up to 17 others face prison time. The men said in 2011 they arranged four sham marriages between their friends and American women the two Patels had met. The two are business acquaintances. Then in 2014, Tarunkumar Patel said he began bribing a Mississippi police officer to create false crime reports
in an effort to immigration authorities to grant them special visas for victims of certain types of crimes. The Patels, former Jackson officer Ivory Harris and lawyer Simpson Goodman pleaded guilty on Monday in federal court in Jackson to conspiracy charges, as did two of the men who benefited from the fake police reports. T he Pat e l s a nd G o o d m a n face up to 10 years in prison, having pleaded guilty to both marriage fraud and the policereport fraud. A seventh defendant pleaded guilty on Friday, and more guilty pleas from others in the scheme are scheduled this month. Nine-
teen people were indicted in two linked cases in April. The 50-year-old Tarunkumar Patel, who operates a store in a poor area of Jackson, said he arranged the first marriage when a friend came down from Massachusetts. That friend, Virenda Rajput, met a woman who was a frequent customer of the store. “My friend told me, ‘I want to marry her,’” Tarunkumar Patel told US District Judge Henry T. Wingate. And they did. The woman took Rajput’s name, becoming Javona Shanice Rajput. But Virenda Rajput returned to his own job in Massachusetts, coming back to Jackson only once every two or three months.
“They were married just for the convenience of getting the citizenship,” said Patel ’s lawyer, Ross Barnett Jr. “That was the No. 1 purpose.” Sachin Patel persuaded another woman with whom he had worked at an Indian restaurant to marry a friend in 2013, and two more marriages were arranged in 2014. The Patels said they paid the women money on behalf of their friends, although not very large sums. Tarunkumar Patel said the most he ever gave Javona Rajput at one time was $300. Tarunkumar Patel was also the prime mover in the fake police reports, approaching Harris, who visited the store often as part of his beat. AP
offee farmer Bose Mandanna has watched tempers flare in the southern India state of Karnataka as fast-growing cities encroach on increasingly scarce water supplies. His beloved Cauvery—a river that originates less than an hour’s drive from the 69 year-old’s home in the Talakaveri Mountains—is at the center of a water sharing spat between Karnataka and neighboring Tamil Nadu. Those tensions spiraled into violence last month that saw two people killed and property worth millions torched in Karnataka’s capital Bengaluru, also known as Bangalore. The Cauvery’s catchment covers 81,155 square kilometers (50,427 miles) across four states. The dispute over how much water each can access is an issue not just for farmers, but for big technology companies in the area, such as Google, Infosys Ltd. and International Business Machines Corp. It also presents a challenge for Prime Minister Narendra Modi in trying to get states to resolve protracted, economically damaging disagreements. “We are from the same country and we can’t use our own water,” Mandanna said. “The Cauvery’s water flowed from Talakaveri nourishing farms through the state.” Now, he said, Tamil Nadu is asking for water not just for their farms, but to service the demands of their industrial towns, like Hosur, as well. The Cauvery dispute—now more than a century old—is just one of six long-running, interstate water feuds being heard by judicial tribunals. Settling them and establishing an integrated water regulator to resolve future disagreements is something Modi’s government has struggled to make progress on. “There’s a fundamental flaw in the way we manage our rivers,” said Himanshu Thakkar, Delhi-based coordinator for the South Asia Network on Dams, Rivers and People. The lack of a transparent mechanism to resolve disputes combined with gaps in basic information about water flows means “it’s one state’s word against another’s.” Rising urban populations and the hard-rock geology of southern India that makes water tough to draw are complicating factors in the feuds, Shashi Shekhar said, the senior-most bureaucrat in India’s water ministry.
‘Whole basins’
“People talk about availability of coal and power for setting up business in India,” Shekhar said. “No one really talks about what a risk water is. We need to manage our rivers as whole basins instead of leaving it to individual states.” The issue takes on greater urgency when the rains don’t come. Drought-like conditions in 2014 and 2015 affected 11 Indian states. While monsoon rains this year have been better, concern lingers about whether the country’s reservoirs provide enough of a buffer against swings in the weather. The Bangalore violence began
after residents protested against an order from India’s highest court to share 12,000 cubic feet per second of Cauver y water with Tamil Nadu. The ensuing uproar cost the city 250 billion rupees ($3.75 billion), according to the Associated Chambers of Commerce & Industry of India.
Releasing water
After initially defying Supreme Court orders to release water, the Karnataka state assembly onMonday passed a resolution to release 6,000 cubic feet per second until October 6 to help Tamil Nadu farmers irrigate their farms. It instructed the federal government to form the Cauvery Management Board, something Modi’s administration has contested. Krishnaraja Sagara reservoir on the Cauvery, which helped transform the dry-land farms of millet into sugarcane in Karnataka and to paddy fields in Tamil Nadu, is at 31 percent of capacity. The reservoir supplies water to Karnataka’s biggest cities, Mysore and Bangalore. India has failed to set up an integrated water regulator since independence in 1947, with the federal government playing a limited role beyond funding projects and advising in disputes. India is one of the world’s biggest users of groundwater, and the World Resources Institute estimates more than half of the nation faces high water stress.
Economic impact
“Corporates should be concerned. The violence over water has ensured that the economic signposts are being affected,” according to Damandeep Singh, director at CDP India, which says it holds the world’s largest database of corporate-related water information, collected via disclosures from companies, such as Coca-Cola Co., Ford Motor Co. and Nestle SA. The mostly agrarian dispute over Cauvery’s water transformed with India’s growth, starting in the 1990s when the nation launched a series of economic reforms. Two agreements signed in 1892 and 1924 were disregarded by both Karnataka and Tamil Nadu as populations soared. Farmers planted water-intensive sugarcane and paddy farms, while the growing industry led cities, such as Bangalore, Mysore and Hosur, to spread across both states, further increasing demand on the river’s water. “Bangalore’s growth has come from the auxiliary energy of the Cauvery river,” said A. Damodaran, a professor at the Indian Institute of Management in Bangalore. “The sprawl of the city is at the cost of huge water scarcity,” he said. “It’s the same story across Indian cities when it comes to water.” Back near where the Cauvery originates, Mandanna believes the government needs to take stronger action. “Unless the government steps in, I don’t see what solution there can be to this violence.” Bloomberg News
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Editor: Efleda P. Campos • Wednesday, October 5, 2016 A9
PHL forwards MSME agenda in global arena A G
A change of mindset
ENEVA, Switzerland— Forwarding the Department of Trade and Industry’s (DTI) advocacy to bring small businesses in the front and center of global and regional trade, the Philippine Mission to the World Trade Organization (PMWTO) organized a session in the WTO Public Forum 2016, dubbed “Towards an MSME [Micro Small and Medium Enterprise] Marketplace: Growing Global MSMEs for Inclusive Development.” Before the key trade officials at the WTO, Trade Undersecretary Nora K. Terrado identified four areas of focus for the integration of MSMEs in international trade. These include improving MSMEs’ access to information, strengthen-
ing MSMEs’ absorptive capacity, developing global MSMEs, and facilitating cross-border trade through the creation of networks and links. The model highlighted the importance of transparency, data gathering, innovation, in-
clusive finance, logistics and ecommerce in the development of global MSMEs. “Support for MSMEs would have to be undertaken in a comprehensive manner that also entails discussion of cross-cutting issues, such as funding for developing and least-developed countries, as well as a mechanism for a continued discussion on MSMEs within the existing framework of the WTO,” Terrado said. The Philippine session represented many developing countries’ MSME interaction— an open square in a town where businesses and enterprising individuals interact with each other in a mutually reinforcing environment. The discussion facilitated exchange of ideas, and stimulated open discussion to further enhance and develop collective practical tools for MSMEs worldwide. “Within the four corners of the WTO and the existing agreements, the session aims to delve further on existing WTO rules, which provide opportunities for MSMEs that we should all be aware of. The session also explores practical tools that will help address the challenges and opportunities identified,” DTI
Special Trade Representative Jose Antonio Buencamino said as moderator of the session. Terrado was joined by prominent speakers in the field of trade, namely, David Shark, deputy director general of the World Trade Organization; Marancha Gonzalez, executive director of the International Trade Centre; Anabel Gonzalez, senior director for Trade and Competitiveness of the World Bank Group; Steve Beck, head of trade finance of the Asian Development Bank; and Carlos Grau Tanner, director general of Global Express Association. The Public Forum is WTO’s flagship event that provides a unique platform for heads of state and leading global businesspeople, academics and non-governmental organizations to come together and discuss some of the major trade and development issues of the day. The 15th edition was held from September 26 to 29, with the theme “Inclusive Trade,” which aims to examine how the WTO can foster SMEs’ participation into the global market. With 100 parallel sessions, the forum generates over 40,000 hours of discussions and attracts over 2,000 participants.
Supporting digital transformation of MSMEs By Agnes Perpetua R. Legaspi
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Business Beyond Borders
One agreed key deliverable is the Apec MSME Marketplace, a Philippine initiative to create a virtual marketplace for MSMEs that will facilitate business matching and provide information about international trade-standards and regulations, as well as on trade promotion assistance packages provided by Apec economies. It is intended to be a networking platform, as well as feedback mechanism on how challenges faced by MSMEs seeking to participate in global trade may be addressed. This is a vital initiative resulting from the recommendations of the “Apec Projects on Business Matching and Internship Consortium for Global Value Chain Integration” and the “Facilitating SME Trade through Better Understanding of Non-Tariff Measures for the Agriculture, Food Processing and Handicrafts Sector,” which the Philippines implemented in Atlanta, Georgia and Iloilo City, the Philippines. Ahead of the Apec SME Working Group meetings in Peru in September, the first coordination meeting of the recently organized Technical Ad hoc Group (TAG) on the Apec MSME Marketplace took place at the Lima Convention Center on September 5. The TAG was chaired by Director Jerry Clavesillas of the Bureau of Small and Medium Enterprise Development, also the focal Philippine representative to the Apec SME Working Group. The Export Marketing Bureau (EMB) represented the Philippines during the meeting and, together with other Apec economies, discussed and approved the implementation plan for the Apec MSME Marketplace, which was then endorsed to the Apec SME WG and reported at the Apec SME Ministerial Meeting. It is now imperative MSMEs should embrace the digital economy and leverage the use of existing technologies. With the implementation of the Apec MSME Marketplace, it is foreseen that more Apec MSMES will be able to access global trade opportunities and eventually participate in cross-border export transactions, addressing the issue of SME internationalization using the Internet.
Foreign Trade Service Corps
MARKET DEVELOPMENT UPDATES
DDRESSING nontariff measures (NTMs) is undeniably a pressing issue for Philippine exporters. The NTM survey conducted by the ITC, in cooperation with the Department of Trade and Industry (DTI), has identified product certification, private standards, fumigation requirements, rules of origin, testing requirements and labeling requirements as among the top burdensome NTMs faced by Philippine exports. What could also be found very interesting from the survey is the observation that “for the preponderant majority of interviewed Filipino exporters, the general perception is that anything “required” by the client is something that is nonnegotiable and should generally not be considered as “burdensome regulation.” The mindset is that any exporter who is unable to either comply with such basic requirements or find some (informal) way to surmount them should simply not be in the business of exporting. We need to start working on changing this mindset, particularly for our micro, small and medium enterprises (MSMEs), which comprised 79 percent of interviewed companies for the survey. The average international trade transaction is subject to a number of procedural and documentation requirements and, indeed, there are regulations that may be more traderestrictive than necessary. This may entail requirements that are too complex, duplicative documentation and inefficient procedures, all resulting in high transaction costs and delays.
A global marketplace thriving on standards
Assistant Director, DTI-EMB
HE thrust of many governments to integrate micro, small and medium enterprises (MSMEs) into the global trade economy has never been more evident than with the commitment of Asia-Pacific Economic Cooperation (Apec) membereconomies through the “2015 Boracay Action Agenda [BAA] to Globalize MSMEs” adopted by the Ministers Responsible for Trade (MRT) and the Apec Iloilo Initiative: Growing Global MSMEs for Inclusive Development adopted by SME ministers.
By May Niña Celynne P. Layug
IN line with its commitment to providing quality service to its key stakeholders, Johnson & Johnson (J&J) recently launched its expanded, world-class Global Services Site in Manila. This site houses three significant service-delivery functions— human resources, finance and procurement—catering to J&J affiliates across the world. This endeavor will continue to bring in jobs for the country and position the Philippines globally as a country with excellent talents and delivering services that can ultimately touch the lives of billions of people worldwide. The launch was led by J&J’s Global Services Manila Site and Contact Center Lead Ron Ravalo (inset), together with J&J leaders and valued partners (rom left): One J&J Philippine President and Managing Director Jeffrey Go; DTI Export Marketing Bureau Director IV Senen Perlada; J&J EVP and Chief Human Resources Officer Peter Fasolo; J&J Vice President for Global Services Erin Champlin; Parañaque City Mayor Edwin Olivarez; and Rep. Gus Tambunting.
J&J launches Global Finance Services Center facility in PHL
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ohnson & Johnson (J&J), a leading consumer, health-care and pharmaceutical manufacturer in the world, has recently launched its Global Finance Services (GFS) Center facility in Parañaque City, according to the Department of Trade and Industry’s Export Marketing Bureau. The center will provide high-quality and cost-effective transactional processing and financial reporting services for J&J’s global governance, executed at global, regional and country levels. GFS will provide the human-resource and procurement-services requirement, aside from finance services requirement of J&J branches in Asia, the US and EMEA (Europe, the Middle East and Africa), as well as Australia. J&J has GFS centers in other countries such as China, Prague, Saõ Paolo in Brazil, India and the US. GFS in Manila is projected to be the biggest J&J GFS center in the world. The opening of GFS is aligned with the strategies for export growth and development laid out in the Philippine Export Development Plan (PEDP) 2015-2017. The GFS services constitute interventions on goods and services that are aligned with the country’s comparative advantage. According to DTI-EMB Director Senen Perlada, PEDP extends a package of support to selected sectors that addresses their vulner-
abilities and strengthens their capacity to meet the challenges in the global market. Shared services centers (SSCs), such as the GFS, are one of these sectors. Perlada added that the Philippines is host to one quarter of all SSCs across the Asean region. According to the Philippine Statistics Authority (PSA), the “main driver of GDP growth was the services sector, which accelerated to 7.9 percent for the first quarter of 2016, from 5.5 percent of last year.” Perlada said services exports are estimated to increase between 9 percent and 10.3 percent this year, and between 9.9 percent and 12 percent in 2017,with growth being driven by the strategies for export growth and development laid out in the Philippine Export Development Plan 2015-2017. Perlada reported that total exports in 2014 reached $86.9 billion, with goods accounting for 71 percent, or $62.1 billion, while services made up 21 percent at $24.8 billion. With bolder initiatives and improved investments incentives plan, the DTI looks forward to attracting more companies and investors to the country. At present, many have opened their hubs in Manila, ref lecting the continued confidence of investors in the rich talent and services pool in the Philippines.
STANDARDS and certifications figured prominently as a burdensome requirement for Philippine exporters mainly because the global marketplace is now characterized by a myriad of international and country-specific standards, private standards and national certification systems that cover all sectors, from simple agricultural products to the most complex electronic goods. The phenomenon’s extent and development could be described by the following figures: The International Organization for Standardization (ISO) has about 246 committees with 4,900 work programs for various sectors and products. The ISO has issued about 21,000 standards as of to date. This is 6,000 more standards from the 15,000 reported by the WTO in 2005. A survey of national product standards in a selection of membercountries of the Organisation for Economic Co-operation and Development (OECD) identified a total of nearly 300,000 documents (Moenius 2005). This is expected to have multiplied in the span of 10 years. In 1975 there were only 20 Europe-wide standards, but by 1999, the number had grown to 5,500 (Moenius 2005). Private standards have been increasingly influential over the past decades. These are often coordinated by lead firms that use standards as one means to govern production processes and supply chains across the globe to ensure coherence between value chain partners. Other factors
driving the increase in importance of private standards are civil-society groups that address environmental and social impacts through private standards, which are also referred to as voluntary sustainability standards (VSS) (WEF & OECD, 2016). Based on studies from select countries, standards and certifications were found to also open doors for MSMEs. Certified products and services allow MSMEs to charge a price premium and increase profits, and can facilitate access to credit. Recently, voluntary certified markets have displayed double-digit growth rates, often surpassing conventional-market growth rates. MSMEs can move from niche to mainstream markets, and gain the status of a preferred supplier for multinational brands. Such medium- to long-term relationships are particularly positive for both buyers (often multinational enterprises) and suppliers (often MSMEs) (ITC 2015). In ensuring the trends in standards and certification systems do not become trade barriers and opportunities are identified for Philippine exporters, both government and privatesector stakeholders should continue to work together toward building a body of information on regulations specifically encountered by Philippine exporters. This information would contribute to the development of more targeted interventions. The WTO’s “e-ping-alert” system, available at http://www.epingalert.org/en, is a very practical tool for Philippine traders in monitoring developments on their export markets—both potential and existing. The system enables trade players, such as exporters, importers, producers and sector organizations,amongotherstohavetimely access to WTO members’ reports on new regulations and facilitate dialogue among the public and private sectors in addressing potential trade problems at an early stage. The advocacy programs of the Export Marketing Bureau (EMB), which include Doing Business in Free Trade Areas (DBFTAs), and the EMB-FTSCs joint publication of the NTM advisory are avenues for dialogue in understanding and addressing these regulations. The Standards and Conformance Portal, established by the Bureau of Philippines Standards (BPS), also make available information on technical barriers to trade (TBT) to domestic stakeholders and provides a weekly bulletin of foreign TBT notifications and listing of Philippine notifications to the WTO. Feedback and comments on NTMs could be sent to the EMB’s ntms@dti.gov. ph. For those specific to standards and a particular regulation from the e-ping alert system, comments and positions for forwarding to the country concerned can be e-mailed to the Philippines’s TBT enquiry point at bps@dti.gov.ph.
upcoming events Compiled by Louise Kaye G. Mendoza DTI-EMB Knowledge Processing Division
OCT 7-11
Event: Negosyo, Konsyumer, at Iba Pa (NKATBP) Venue: Palacio del Sur Marcian Convention Center Zamboanga City State Polytechnic College/ZamboEcoZone and Freeport Zamboanga City
oct 11
Time: 6-9 p.m. Event: QBO Open House Venue: QBO Innovation Hub, G/F DTI International Building, 375 Sen. Gil Puyat Avenue, Makati City
A10 Wednesday, October 5, 2016 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
Colombia needs a Plan B for peace
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o widespread dismay, Colombians voted on Sunday to reject an agreement that might have ended Latin America’s longest-running armed conflict—a decades-long insurgency that has taken more than 220,000 lives, displaced more than 10 percent of the country’s people and inflicted enormous economic damage. The upset underlines the risks of government by referendum—as if further proof of those hazards were needed. The important questions for Colombia now are these: What went wrong, and what happens next? Many Colombians apparently felt that the deal struck by President Juan Manuel Santos and the Revolutionary Armed Forces of Colombia (FARC) rebels was too generous to the insurgents. Rather than punishing the widely detested group, the proposed agreement guaranteed it political representation. Such concessions when conflicts are wound up are always hard to swallow, but are often the lesser evil—as in this case. The alternative to coming to terms with the rebels was not victory, but more years of violence. Colombia’s army has been capturing and killing FARC revolutionaries for half a century, yet the war has ground on. Despite some recent gains, a military end to the conflict was not in sight. Setting aside 10 seats out of 272 in Colombia’s parliament for two terms was an affordable price to pay for peace. And it’s unclear, in fact, that most Colombians disagree. The turnout for the referendum was low—roughly two-thirds of the electorate stayed home—and the margin of victory for the No side was narrow. Hurricane Matthew didn’t help, depressing turnout in areas that had earlier helped Santos win reelection. Official complacency also played a part: Prereferendum signing ceremonies and hoopla featuring the likes of Bono, Ringo Starr and numerous heads of state may have led Colombians to think their votes didn’t matter. The result is hard to read for another reason. The underlying politics is complicated—no simple matter of elite opinion clashing against populist anger, or of FARC’s victims on one side against the blithely unaffected on the other. The No voters included wealthy landowners, led by ex-President Alvaro Uribe, whose families and fortunes have suffered in the fighting and whose economic interests were threatened by the agreement’s provisions. At the same time, in some of the areas that had suffered the worst FARC massacres, the rural poor voted overwhelmingly for peace. The fact remains, an agreement reached after four years of talks, with the widespread support of the international community, is now in limbo. Santos has reached out to leaders of the No campaign and ordered his negotiators back to Cuba, which hosted the talks and helped to broker the deal. For now, the FARC’s leaders have pledged to maintain a cease-fire. There’s hope the agreement can be modified and revived. If so, the government would be wise to seek a way for the legislature to consider it without another popular vote. With or without another referendum, though, any revised agreement will need to be sold more effectively to a country paying closer attention. Colombia has many other problems to address, from a burgeoning cocaine trade to a yawning budget deficit. Economic inequality, a forbidding geography, and the vast gap between those who live in the cities and the countryside all cry out for attention. Without a peace agreement, healing those divisions will be not just difficult but impossible. Bloomberg Editorial Since 2005
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Commemorating the National Housing Month Susie G. Bugante
All About Social Security
A
s far as personal milestones and bucket lists go, purchasing a house ranks high in anyone’s list of life goals. Buying one’s own home demonstrates courage and reflects a solid longterm commitment to invest in the future, given the sheer amount of funds, discipline and sacrifice often required to fully pay for the residential property. Purchasing your own house is certainly a source of immense pride and joy.
In line with the National Housing Month this October, the Social Security System (SSS) invites its members, as well as the general public who are keen on purchasing their own house and lot, to consider those listed as SSS-acquired assets, which were obtained by the pension fund through foreclosure and dacion en pago, or payment in property. Various types of SSS-acquired assets are for sale, including standalone lots and residential lots already with existing housing structures, such as bungalows, duplexes and three-door apartments. These
SSS-acquired assets are sold on “as is, where is” basis, which makes it a must for interested buyers to carefully inspect their targeted housing property before making their decision. SSS-acquired assets are available for sale to Filipino buyers of legal age who are below 65 years old, including those who are not SSS members. The selling prices are based the properties’ fair market value. The down payment is set at 5 percent and 10 percent for properties with a selling price of P500,000 and below, and over P500,000, respectively.
The applicable interest rates depend on the length of the payment term preferred by the buyer. These interest rates range from 6 percent for a payment term of one to five years, 7.5 percent for six to 10 years; and 9 percent for 11 to 15 years. Buyers are given a maximum of 15 years to pay for the SSS-acquired asset. However, the payment term should not go beyond the buyer’s age of 65 upon the date of maturity, which means that the property must be fully paid by then. Cash sales come with a 10-percent discount on the selling price, while those paying by installment are required to issue post-dated checks. SSS cautions interested buyers that several of its acquired assets for sale have illegal occupants, who, despite the best efforts of SSS, blatantly refuse to vacate the property. Based on SSS experience, there have been successful instances of occupants consenting to leave the property after peacefully negotiating with the buyers. In consideration, SSS offers buyers an additional 10-percent discount upon showing ample proof that they have fully taken possession of the property from the illegal occupant.
Those looking for SSS acquired properties in the National Capital Region (NCR) can inquire at the SSS Asset Management Department (AMD) at the fifth floor of the SSS main office along East Avenue in Quezon City. They can also contact AMD at 9206401 local 5123 and 5125, 4359877 and 435-9875. For properties outside the National Capital Region, SSS members and other potential buyers can get in touch with the SSS Housing and Asset Management Section nearest them. These are in SSS branches in major cities across the country, such as Baguio for Northern Luzon; Tarlac for Central Luzon; San Pablo for Southern Luzon; Naga for Bicol Region; Cebu for Western Visayas; Bacolod for Western Visayas; Cagayan de Oro for Northern Mindanao; Zamboanga for Western Mindanao; and Davao for Southern Mindanao.
For more details on SSS programs, members can drop by the nearest SSS branch, visit the SSS web site (www.sss.gov.ph), or contact the SSS call center at 920-6446 to 55, which accepts calls from 7 a.m. on Monday all the way to 7 a.m. on Saturday. Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante.bmirror@gmail.com.
Searching for the truth in Trump’s 1995 tax return
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By Timothy L. O'Brien | BloombergView
udy Giuliani has tried to make it easy for anyone who might be perplexed about his friend Donald Trump’s incometax maneuvers. All you need to know, Giuliani said on Sunday on CNN, is that the tax code is complex and Trump is a “genius” for figuring out how to navigate it.
Giuliani was trying to help viewers understand the New York Times’s revelation that Trump may have used $916 million in business losses to legally lower his federal income taxes—or avoid paying them at all from 1992 to 2010. “The man’s a genius,” Giuliani said. “He knows how to operate the tax code to the benefit of the people he’s serving.” “Operate the tax code” is a fun, Trumpy locution, but this has nothing to do with genius. If it did, Trump would have already released his returns in full so the public could have a transparent look at his brilliance. As I’ve noted before, I’ve seen Trump’s tax returns—in conjunction with an unsuccessful libel suit he filed against me in 2006 for my book TrumpNation. While I can’t write specifically about what I saw, I can say that the returns would give voters useful and tangible insights into Trump’s actual track record as a businessman, philanthropist and taxpayer. But Trump has chosen not to release his returns. And I doubt he ever will, because they would reveal that the career he boasts so much about is built on sand. That’s just one reason the 1995 tax return anonymously sent to the Times is so valuable. It refutes Giuliani’s argument in big numbers (numbers that even the Trump campaign does not dispute).
Most of the $916-million loss that Trump claimed for 1995 is probably derived from about $900 million in bank loans taken out in the mid- to late -1980s that he had personally guaranteed and that he used to wildly overpay for hotels, airlines, yachts, barren land and other trinkets. Trump couldn’t afford to buy any of these with his own money, he lacked the good judgment and foresight to pay the right price for almost everything he bought, and once he bought all of it, the interest payments on the loans quickly became unmanageable. Corporate bankruptcy ensued. None of these things are hallmarks of a great business operator or dealmaker, two of the central themes that Trump, Giuliani and the rest of Trump’s supporters have gestured toward when flogging Trump's resume and suitability to occupy the Oval Office. “This is a guy, who, when lots of businesses went out of business in the early 1990s, he fought and clawed back to build another fortune, to create tens of thousands of more jobs,” another Trump surrogate, Chris Christie, told Fox News on Sunday, discussing the Times’s report. “This is actually a very, very good story for Donald Trump.” No, it’s not. The $900 million in loan guarantees reflected in the 1995 return expose
decision-making so poor, it almost forced Trump into personal bankruptcy. His bankers’ forgiveness and loans from his father’s estate helped him escape that fate, but his fumbling ultimately led to years of corporate bankruptcies, job losses and investors getting pummeled. But Trump isn’t that financially sophisticated. In my interviews with him, he had trouble explaining such basic real estate concepts as “cash flow.” And in the present campaign, he has dropped alarming howlers about how he might manage federal finances as president. His eyes tend to glaze over when complex numbers come into play. Trump’s own former accountant, Jack Mitnick, told the Times that it was always Trump’s exwife Ivana who asked probing questions about the couple’s taxes. Trump himself, Mitnick said, was disengaged, and less detail-oriented than his father, Fred. Trump’s accountants probably used losses on the sale or write-down of assets that Trump purchased with the $900 million in loans to help generate the enormous business loss reported on his 1995 tax return. Whatever minimal financial dexterity and tax savvy is reflected in those moves is theirs, not Trump’s. In addition to making the “genius” argument, Giuliani said that Trump had a “fiduciary obligation” to his bankers and others to take the $916-million writedown. But by 1995, Trump’s beleaguered bankers were already well on their way to separating themselves from him for good. They would have had no interest in how Trump handled his personal income taxes. Giuliani also tried to put the tax issue in perspective by noting that Trump had
no need to release tax records because he had already disclosed enough through filings made earlier this year with the Federal Election Commission (FEC). “We know that he made $680 million last year from his 104-page financial disclosure form which describes considerably more about his finances than the tax return,” Giuliani said. Well, that’s another nonstarter. The FEC forms that Giuliani cites, released earlier this year, actually claim Trump had $557 million in income last year. And the $557-million figure is sketchy, because the FEC forms are based on Trump’s self-produced estimates of revenue ranges for his businesses. They offer none of the crucial detail that income tax returns provide. In the FEC reports, Trump and his team also apparently conflated business revenue with the income he draws from the businesses. So Trump’s actual income is likely to be a fraction of what’s in the FEC forms—which brings us back to that 1995 return. In addition to the $916-million deduction, it contains two other disclosures of interest. The bulk of Trump’s 1995 income came from $7.4 million in interest and dividend payments and just $3.4 million in business income. Those would be enviable amounts for most people, but it’s not the kind of money you would expect a leading real estate and casino business to produce. It’s now been more than two decades since the 1995 return was filed. In that time, Trump has become an international celebrity and made his riches a fixture of his presidential campaign. But how much has his business operation really improved?
Opinion BusinessMirror
opinion@businessmirror.com.ph
France’s next culinary triumph: Better food labels
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f only people could tell at a glance the nutritional content of the food they buy and eat, they could easily improve their diets. Obesity and diet-related health problems of all kinds would fall significantly. Or they would, public-health officials believe, if a perfectly clear and simple food label could be devised. The US Food and Drug Administration has recently updated its label—to highlight the calorie count and number of servings included, and provide a daily value for added sugar. It is now looking into regulations on which foods can be promoted as “healthy.” The United Kingdom, since 2013, has had prominent red-amber-green traffic-light labels showing whether the food is low, medium or high in calories, fats, sugar or salt. Early data suggests that, as a result of the voluntary program, British shoppers are buying less of salty and fatty products, such as Parma prosciutto and brie. But is there a better way? France aims to find out—by experimenting with four new color-coded labels. This is a promising approach to figuring out how best to help consumers, and it would work even better if France would extend the study beyond its intended 10-week run. The public experiment is part of a broad effort to reverse France’s rising obesity rate. That stands at 24 percent, which, while not as high as America’s 36 percent, is a burden on the French health-care system. The government has banned free refills of sugary drinks at restaurants. And now 2 million labels will appear at some of the nation’s major supermarkets, including giant chains Carrefour and Casino. The “Nutri-Score” design rates a product’s overall nutrition from A for best to E for worst. The “SENS” format conveys how much a product can healthfully be eaten, from a green for “very often” to purple for “occasionally in small quantities.” The “Nutri-Repère” design uses a bar chart to illustrate the product’s percentages of daily recommended allowances. And the “RNJ” scheme uses color-coded symbols, along with numbered amounts and daily percentages for calories, fats, saturated fats, sugars and salt. Even before the trial begins, there’s reason to suspect that the first two label designs paint with too broad a brush, by attempting to encapsulate complicated (and sometimes debatable) nutritional information into a single grade. The last two have more promise, presenting as they do information that in the United States, for example, is available only in small print on the back of packages. But in the relatively short time frame, the experiment may demonstrate little beyond how shoppers respond to the labels. Studying their effect on people’s dietary habits would take years. Unsurprisingly, the French plan already has plenty of critics on the continent. Politicians and food companies, particularly in Mediterranean nations, make a reasonable case that the labeling systems are biased against products with healthful fats such as olive oil, nuts and fish. Groups representing chocolate and soft-drink makers have lobbied hard to get the European Union (EU) to ban the labels. (To its credit, Nestlé, the largest food company in the world, supports adopting some form of nutrient-profile system.) And some watchdog groups complain that industry representatives were too much involved in designing the labels. But France should be applauded for trying to find the best possible way to inform consumers about what they eat. Just as US states test policy changes—on issues ranging from education standards to carbon emissions to marijuana legalization —France will become an EU lab for innovation on nutrition, at least for a couple of months. Bloomberg View
Insurance-holding company systems Atty. Dennis B. Funa
INSURANCE FORUM
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ollowing the 1969 adoption by the National Association of Insurance Commissioners (NAIC) of the Model Insurance Holding Company System Regulatory Act (Model Act) to regulate “insurance-holding company systems,” Presidential Decree 612 (Insurance Code of the Philippines), dated December 18, 1974, adopted the same regulation in the Philippines. Today, that regulation remains unamended under Title 20 (Holding Companies), Sections 290 to 306 of the Amended Insurance Code. Essentially, the regulation seeks to ensure that controlling persons do not enter into transactions with affiliates that are beneficial to the controlling group, while detrimental to the insurance company. It seeks to regulate transactions by and among affiliates, known as “related party transactions,” transactions that are potentially not “arm’s length” and, therefore, ripe for self-dealing, requiring a higher degree of scrutiny given their related party nature. The regulation governs the relationships and activities within insurance holding company systems and regulates certain activities of “persons” or entities that are affiliated with insurance companies and not otherwise subject to such regulation. To carry out these objectives, a series of safeguards have been imposed, which includes the registration of the controlled insurer; approval of acquisitions; and prior approval or prior notice to the Commission of certain transactions, examinations and reportorial requirements. The primary features of the regulation of insurance holding company systems under the Amended Insurance Code are hereunder discussed. At the onset, acquisition of control of an insurer is subject to: a) prior written notice of intent to acquire
control; and b) prior written approval of the Commissioner (Section 302). The Commissioner may disapprove such acquisition to protect the interests of the people (Section 302 [b]). He may take actions (Section 306) against the retention of control if found violative of the Code (Section 302 [c]). Control has been vaguely defined in Section 290 (b) as “the possession directly or indirectly of the power to direct or cause the direction of the management and policies of a person.” A presumption of control exists “if any person directly or indirectly owns, controls or holds with the power to vote 40 percent or more of the voting securities of any other person” (Section 290 [b]). The presumption may be modified by facts to the contrary (Section 292). The 40-percent presumption of control exists only as a mere trigger to put into effect the safeguards of the insurance-holding company system. It does not establish or create control as it is understood under the relevant provisions of the Corporation Code. All controlled insurers are required to be registered with the Commission within 30 days after becoming a controlled insurer. Such registration should be amended within 30 days after a change in
the identity of the holding company (Section 294 [a]). Moreover, the controlled insurer must submit certain information on the holding company (Section 294 [b]). Among its reportorial requirements, controlled insurers should file reports on information that could affect its operations (Section 295). Although not expressly stated, it is in effect an enterprise risk report. The holding company and the controlled insurer is also subject to examination by the Commissioner “if he has cause to believe that the operations of such persons may materially affect the operations, management or financial condition of any controlled insurer with the system and that he is unable to obtain relevant information from such controlled insurer” (Section 296). There are affiliate transactions that are subject to prior approval by the Commission. These are: sales, purchases, exchanges, loans or extensions or credit, or investments, involving 5 percent, or more, of the insurer’s admitted assets as of the last December 31 (Section 299). There are also affiliate transactions subject to 30 days’ prior notice to the Commission. These are: a) sales, purchases, exchanges, loans or extensions of credit, or investments, involving more than one-half of 1 percent, but less than 5 percent of the insurer’s admitted assets as of the last December 31; b) reinsurance treaties; c) rendering of services on a regular or systematic basis; or d) any material transaction, which the Commissioner determines may adversely affect policy-holders or stockholders (Section 300). Finally, every insurer must disclose the identity of controlling person or persons who has/have taken any action to acquire control of the insurer (Section 302 [e]).
Rationale
AS the first model text on “insurance-holdingcompany”wasadopted
Clinton’s former prosecutor endorses her for president By Eli Lake | BloombergView
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wenty years ago, Michael Chertoff was near the top of the Clintons’ enemy list. He was the lead Republican counsel on the Senate Whitewater Committee, one of the first of many congressional investigations into Hillary Clinton. Clinton later cast the only vote in the Senate against him when he was nominated in 2001 to head the Justice Department’s criminal division. She was also the lone no vote against Chertoff in 2003, when he was nominated to the US Court of Appeals for the third circuit. All of this, though, was before the Republican Party nominated Donald Trump as its presidential candidate. This has shaken the party of Reagan. Chertoff, a lifelong Republican, will now be voting for the Democrat in November. Over the weekend, Chertoff— the former secretary of Homeland Security—told me his decision came down to national security. “I realized we spent a huge amount of time in the 1990s on issues that were much-less important than what was brewing in terms of terrorism,” he said. For Chertoff, Clinton “has good judgment and a strategic vision how to deal with the threats that face us.” Whitewater has not come up much in this election season. But it was the Benghazi of the 1990s. Just as the Benghazi investigation begat a congressional probe into Clinton’s e-mail server, the Whitewater investigation led Congress to President Bill Clinton’s affair with Monica Lewinsky. So it’s significant that an investigator from that era is now in Hillary Clinton’s corner. “People can go back decades and perhaps criticize some of the judgments that were made,” Chertoff said. “That is very, very insignificant compared to the fundamental
Whitewater has not come up much in this election season. But it was the Benghazi of the 1990s. Just as the Benghazi investigation begat a congressional probe into Clinton’s e-mail server, the Whitewater investigation led Congress to President Bill Clinton’s affair with Monica Lewinsky. So it’s significant that an investigator from that era is now in Hillary Clinton’s corner.
issue of how to protect the country.” Just as Chertoff doesn’t think Clinton’s dodgy friendships from her Arkansas days disqualify her from the presidency, he says the same thing about Clinton’s use of a private e-mail system. It was a mistake, he said, but “she did not intentionally endanger national security.” Trump, on the other hand, lacks the temperament and knowledge base to be president. Chertoff has made his views on the Republican nominee known before. Last month, he was one of the 50 former senior Republican national-security officials to sign a letter warning Trump would be a dangerous commander in chief. But many of those former officials have not crossed over to publicly endorse Clinton. Chertoff says he made the decision to go public for Clinton after watching the debate last week. “Trump’s sense of loyalties are misplaced,” he said. “Some of our North Atlantic Treaty Organization allies sent troops overseas, at the same time he is defending Russia and trying to dismiss what is widely acknowledged to be Russian intrusions into the databases of our political parties and political figures.” Chertoff said this amounted
to “making enemies of your friends and cozying up to your adversaries.” For Chertoff, it’s also a question of Trump’s impulse control. “This issue came up at the debate about Miss Universe,” he said. “Not only did he seem at the debate to lose his temper, but to get up at 3:30 a.m. and reach for your smartphone is to me a hysterical reaction. If you’re president, the button you reach for is not the Twitter button; it’s the nuclear button.” Chertoff ’s relationship with Clinton began to heal after he was nominated to be the second secretary of Homeland Security, in 2005. Clinton voted for him that time. Chertoff said that, while he was secretary, he found Clinton to be “clear-eyed and tough on nationalsecurity issues.” Chertoff said he expects Clinton will be different from President Barack Obama when it comes to Middle East policy. “There are things Obama did that I disagree with, not to have a no-fly zone and a safe zone in Syria, for example,” Chertoff said. “My understanding from having talked to her and seeing what she has said publicly is that she would have been tougher on that.” Chertoff’s decision to endorse Clinton puts him on the opposite side of one of his earliest political patrons. In 1983, Chertoff was hired as a prosecutor by then-US Attorney Rudolph Giuliani. Together they waged a devastating legal war against the five mafia families of New York. The success of those prosecutions laid the groundwork for Giuliani’s successful campaign to become mayor of New York. Today Giuliani is one of Trump’s closest advisers. Chertoff told me he has not talked to Giuliani about Trump. “People make their own decisions,” he said. “I can’t get into someone else’s head.”
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by the NAIC in 1969, the New York legislature also adopted the first holding-company law in the world through Article 15 of the New York Insurance Law also in 1969. Its provisions were substantially similar to that of NAIC’s. In December 2010 NAIC amended the Model Act in response to the 2008 financial crisis. The principal features of the NAIC Model Act are: a) no person may acquire control of an insurer unless prior to the acquisition such person files a disclosure and receives the regulator’s approval; b) requirement for a controlled insurer to register as a “holding company system” and the submission of certain information on a regular basis; c) requirements of the standards of fairness and reasonableness in transactions between insurers and their affiliate entities or in related-party transactions; and d) regulation of large dividends (e.g., extraordinary dividends) made by stock-controlled insurers. Secondarily, a controlled insurer may be required to produce books and records to determine compliance. And, under the Amended Model Act, the regulator has the power to examine the affiliates (not the controlled insurer) to obtain information. A “holding company system” is defined as “two or more affiliated persons, one or more of which is an insurer.” “Affiliates” include “persons that directly or indirectly control, or are controlled by, or are under common control with, the person specified. “Control” refer “to possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person.” Generally, insurance regulators are only authorized to supervise insurers at the individual entity level,
“but lack the legal authority to supervise a noninsurance affiliate or any affiliate domiciled and operating outside of the state.” Accordingly, “inherent limitations of state law constrain any particular state regulator from conducting oversight over or obtaining information regarding the operations of a multijurisdictional insurance group, such as a large, complex global insurance firm.” Consequently, it was deemed that there is a need for insurance regulators to have the indirect authority to seek information concerning a noninsurer parent or affiliate. In a way, the Model Act indirectly regulates groups by requiring advance approval of transactions between insurance companies and their affiliates. This is in the absence of a groupwide supervision which involves direct regulation over holding companies and other nonregulated entities. There are three forms of group supervision: direct, indirect and hybrid. Direct supervision would entail licensing and regulation of holding companies, noninsurance operating companies and insurers. Indirect supervisions focuses on regulating the relationships among regulated insurers with other members of the group. After the 2008-2009 financial crisis, the need to regulate insurance holding company systems became driven by “the need for regulators to assess the enterprise risk within a holding company system and its impact or contagion upon the insurers within that group.” This crisis saw how the insurance giant AIG was shook to its core because of the “activities of a relatively obscure London-based noninsurance subsidiary trading derivative securities.” In December 2010 NAIC approved changes to the Model Act to include reports on material risks within the entire holding company system that could pose an “enterprise risk” to the insurer.
I keep saying this Teddy Locsin Jr.
Free fire Continued from A1
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ccording to Dana Frank in The New York Times, on March 2 of this year an elite unit of US-trained Honduran special forces shot dead the indigenous peoples’ rights and environmentalist activist Berta Caceres, for opposing the Agua Zarca hydroelectric project, one of the biggest of its kind in Central America. On June 21, the Guardian reported: a Honduran soldier testified that his US-trained death squad was given a hit list that included Berta Caceres. The soldier deserted rather than obey the order to kill. Now that’s a credible witness. On the other hand, Edgar Matobato testified that he personally killed 50 out of 1,000 killings in which he took part. The killing so outraged the US Congress that a “Berta Caceres Human Rights in Honduras Act” was filed in the US Congress to stop further US-sponsored training of death squads. To stop the bill, Obama offered a set of toothless initiatives because bare gums have no grip. In 2009 the military ousted the democratically elected president. Honduras “turned into a sewer of government corruption, rampant criminality and gang violence. The incumbent president, a key backer of the coup, threw out—a third?— of the Honduran supreme court. He stole $300 million from the National Health Service” to fund his presidential and his party’s campaigns. But he did not take money from drugs. He established a 3,000-strong Special Action Force with the special mission to trample on the Honduran constitution and to kill small
According to Dana Frank in The New York Times, on March 2 of this year an elite unit of US-trained Honduran special forces shot dead the indigenous peoples’ rights and environmentalist activist Berta Caceres, for opposing the Agua Zarca hydroelectric project, one of the biggest of its kind in Central America. farmers and land-rights’ activists. The six authors of the Caceres law say, “As long as the US continues to fund Honduran security forces without demanding justice for those threatened, tortured and killed, we have blood on our hands.” In response, the US State Department has repeatedly certified that everything condemned by the Caceres law never happens, so the special training continues. Tawag dyan, “plastic na pantastic.” When we were children, we complained, “Why is yours bigger than mine?” referring to ice cream. When we were older, we bragged, “Mine is bigger than yours,” regarding something else. But when we grow into adults we say, regarding the numbers of people our countries kill, we say, “Ours is smaller than yours.”
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Naia redevelopment project gets 7 takers
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By Recto Mercene
@rectomercene
O sooner had the Duterte administration announced the redevelopment of the 30-yearold Ninoy Aquino International Airport (Naia), seven conglomerates have expressed their desire to participate in the P74.6-billion PublicPrivate Partnership (PPP) Program.
The latest to join the fray was the Lucio Tan-dominated Asia’s Emerging Dragon Corp. (AEDC), which announced on Tuesday that the company is “participating in the bidding, because it believes in the growth potential of the Naia, given the company’s past experience of pushing for Philippine aviation development.” Tan owns Philippine A irlines (PAL) and built the Centennial Terminal, or Terminal 2, of the Naia complex. It will be AEDC’s second attempt to redevelop the country’s biggest airport 24 years after it was edged out of the plan to build the third terminal by Philippine International Air Terminals Co. Inc. (Piatco). The scandal-ridden airport project, which had Germany’s Fraport as partner, ran into series of difficulties that left Terminal 3 mothballed for over a decade.
The conglomerates that have announced their interest for the project include San Miguel Corp. (SMC), Ayala Corp., JG Summit Holdings Inc., Filinvest Development Corp., Megawide Construction Corp. and Metro Pacific Investments Corp. “AEDC will have a foreign partner in bidding for the project that would ‘improve the operational efficiencies’ of the four Naia terminals, both landside and airside, to meet International Civil Aviation Organization standards,” said the company’s president, retired Gen. Salvador Mison, in a statement. “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.” He said AEDC is confident it can provide viable solutions to the Naia’s
interterminal connectivity, as well as traffic congestion in the area. AEDC’s foreign partner is expected to provide the technical expertise in its long-term proposal. The National Economic and Development Authority (Neda) approved last month the Naia redevelopment project purposely to upgrade the country’s main gateway airport. President Duterte convened the Neda Board on September 14 to approve several infrastructure projects. The Naia redevelopment excludes any proposal to improve air-traffic services, according to the Neda. The concession period is for 15 to 20 years, including the design/ construction period.
Ramos’s idea
The idea of a new passenger terminal came from then-President Fidel V. Ramos in 1993, when he convinced the six Chinese taipans to pool their resources and finance the construction of a new international airport at the site of the former Philippine Air Force compound. AEDC emerged from this brainstorming, which included Tan, Henry Sy Sr., Alfonso T. Yuchengco, George K. Ty, Andrew Gotianun and John L. Gokongwei Jr. In 1994 AEDC submitted an unsolicited proposal to build and operate the Naia Terminal 3, but during the Swiss challenge, a consortium led by People’s Air Cargo (to be later known as Piatco, offered
ANG: “If San Miguel were allowed to do the airport, I will invite Manny Pangilinan, and Ayala and Shoemart [SM Group]. All of them are welcome to be partners.”
higher concession payments to the government, which AEDC was not able to match. After the failure of AEDC against Piatco, Tan bought the shares of his partners so that now, he is the sole owner of the company.
Ang’s proposal
San Miguel President Ramon S. Ang is the original brain behind a new airport, which he proposed to construct on a reclaimed portion of Manila Bay. It would be located between the Sangley Point Airport and the Entertainment City on Macapagal Boulevard. However, Ang’s proposal was t u r ned dow n by t he Aqu ino administration, which decided, finally, that a new airport would be built, complementing the existing airport facilities in Sangley Point, Cavite. Sangley, used to be one of several American military bases in the country that include Clark, Subic, Mactan, Poro Point and others, and was the former headquarter of a squadron of the US Navy’s submarine-hunter P3 Orion. As soon as the Duterte administration took over in June this year, Ang revived his proposed $10-billion airport on Manila Bay to solve air congestion and signal the Phi l ippines is ser ious about boosting tourism and trade. Ang said the plan would showcase a world-class international airport, earlier estimated to cost $10 billion but could be built for less, as well as a possible, unprecedented alliance with the country’s biggest conglomerates that would include Manuel V. Pangilinan’s group, Henry Sy’s SM Group and Zobel-led Ayala Corp. SMC’s proposed airport would eventually replace the old Naia that is now operating beyond its intended capacity. The new airport would sit on 1,600 hectares of mainly reclaimed land in Manila Bay and was proposed two years ago to the
outgoing Aquino administration. SMC was careful not to offer to build the project due to the administration’s bias against unsolicited proposals and instead shared plans for a potential public bidding. Even then, the project never materialized.
‘Return to the table’
Ang told members of the media that the Duterte administration told him to renew his proposal and said: “So I’ll do this and will ask them to call for a public bidding. I’ll present all the designs.” “If San Miguel were allowed to do the airport, I will invite Manny Pangilinan, and Ayala and Shoemart [SM Group]. All of them are welcome to be partners,” Ang added. “But as the major partner, I will invite Manny Pangilinan.” For its part, Ayala Corp. managing director Rene Almendras said the company is studying the project and talking to both local and international firms which could serve as partners should it decide to bid for the project. “We are definitely looking at it. I’ve actually been traveling. I met a few foreign partners abroad. Yes, we are looking. So there’s many people who will be looking. We want to make sure we put a good team. It’s a complex project,” Almendras said. Last week Metro Pacific Investments Corp. Chairman Manuel V. Pangilinan said the infrastructure conglomerate is also looking to bid for the Naia project. Japan International Cooperation Agency (Jica), which has been tapped by the Department of Transportation and Communications as adviser on infrastructure, suggested, following a feasibility study, to make Sangley Point in Cavite as alternate site. Although Clark has often been mentioned as the logical replacement to the Naia, its distance of close to 100 kilometers from Manila was deemed too far for most Metro Manila residents since it lacked efficient mass transportation access. This also posed problems to some passengers, who had to connect to local or international flights, since the Naia has the majority of the international- and domesticflight operations. Studies have shown that alternate international airports should not be farther away than 60 miles from the original airport, citing some alternate airports, like in
Canada, that have failed because of lack of airlines willing to transfer their operations. “There’s really no other choice,” Ang said. He said Sangley could cost up to $20 billion to build, while SMC’s Manila Bay airport would require an equity of about $2 billion to $3 billion. “We have experience to do the reclamation.We have dredging machines, everything is complete,” Ang added. Today, SMC the private operator of Caticlan Airport, the gateway to Boracy Island. In 2014 it made an unsuccessful bid for the Mactan Cebu International Airport, with partner Incheon Airport of South Korea. The Pangilinan-led Metro Pacific Investments Corp., the SM Group and Ayala also bid for the Cebu Airport PPP project that was eventually won by Filipino company Megawide Construction Corp. and India’s GMR Infrastructure. Jose Ma. K. Lim, president of Metro Pacific, said they were open to SMC’s offer if the government decision is to adopt Ang’s proposal, “we would consider it,” Lim was quoted in news reports as saying.
The project
The Naia’s redevelopment concession period is for 15 to 20 years, including the design and construction period. The Department of Transportation expects to begin PPP procurement upon Neda Board approval, and to award and sign a concession agreement by September 2017. T he Na i a , wh ic h h a s t wo 11,000-foot long runways, is currently operating at maximum capacity with 40 landing and take-off per hour, blamed too many aircraft in operations. The limit in “events per hour,” is the total number of take-off and landing per hour. This could be increased to 55, according to NATS, the United Kingdom company bidding for the Naia’s air traffic-control system. The Naia has another shorter and narrower runway, which runs across the main runway like an “X”, and used only when the taking off aircraft is facing Manila Bay, or when runway 06-24 is free of contrary traffic. Modern airport designs have two or three parallel runway, either one or two could be exclusively used for landing and the other one for take-off.
Intramuros to resettle informal settlers to Bacoor By Ma. Stella F. Arnaldo
Special to the BusinessMirror
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HE Intramuros Administration (IA) is right on track in its rehabilitation work on the walled city, and plans to resettle close to 2,000 families of informal settlers by mid-2017. In a news conference on Tuesday, Merceditas de Sahagun, chief for finance and administration of the IA, said the “resettlement of informal settlers has been ongoing for the past six months.” She added that the agency has also signed a memorandum of agreement with the National Home Mortgage and Finance Corp., “which will take charge in choosing the socialized housing developer where the informal settlers will be relocated.” The relocation site, she added, is in Bacoor, Cavite. Asked for the total number of families to be resettled, Sahagun said some 891 families have already been “censused” while another 1,100 families are due to be surveyed for census purposes. She said those who will work as e-trike drivers in Intramuros will be resettled within the city. “We have a two pronged resettlement, program; a site and in-city resettlement, and the other one is a rental housing program which will cater to the heads of informal settlers so they can be here in Intramuros while doing their jobs here.” The IA official added that Tourism
Infrastructure and Enterprise Zone Authority (Tieza), a unit of the Department of Tourism, funded the resettlement of 1,000 informal-settler families at a cost of P410 million. Tieza has also funded several restoration projects in the walled city, such as the comprehensive rehabilitation of Fort Santiago; reconstruction of the San Ignacio Convent, which would be the new Intramuros Museum; and the underground cabling of Aduana Saint Tieza will also be funding the forthcoming rehabilitation and equipping of the Almacenes Reales in Fort Santiago, which will become the new Visitors Center. Total Tieza funding amounts to P900 million. Former IA administrator, Marco Antonio Luisito Sardillo III, started the restoration and rehabilitation program. A new IA administrator has yet to be appointed by Malacañang. For her part, Tourism Assistant Secretary Gwen Javier said the restoration of Intramuros will continue to be based on the master plan developed in 1992, with the help of the Spanish government. She outlined several activities and events to boost the awareness for Intramuros, and increase visitor arrivals to 1.03 million by 2017. For one, the Philippine Clam Shell Pavilion, which used to be the site of many cultural shows and activities will be rehabilitated. For Christmas, there will a tree-lighting
ceremony on November 18, as well as a chorale competition involving various schools. There will also be weekend regional street festivals, food festivals and regular cultural shows. Javier said the Department of Tourism (DOT) will also help “revitalize” a program to encourage schools to bring their students to Intramuros. An agreement has been signed with D’Creative Adventures, which will develop tour packages for these school trips. Other activities eyed for Intramuros are an International Auction Event on October 10, a car show at the Maeztranza, and a noontime show through school auditoriums. Javier said a cobranding project with Beep cards and Visa credit card is also in the works. These cards “will be given to tourists upon their arrival in international gateways,” and will help standardize the rates of Kalesa tours in the Walled City. The cobranded cards, which will feature photos of Intramuros sites, will also be sold in over 500 stores nationwide. The DOT official said it’s hoped that this cobranding card project will also feature other destinations in the country. During the media briefing, Tourism Secretary Wanda Corazon T. Teo also signed a mission order to start the cleanup of Intramuros. The cleanup drive will involve schools in the city, private partners and other attached agencies.