Businessmirror october 05, 2017

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Thursday, October 5, 2017 Vol. 12 No. 357

Growth seen slowing as infra program drags

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By Cai U. Ordinario

@cuo_bm

he slower-than-expected implementation of the government’s infrastructure projects has forced the World Bank to cut its growth forecast for the Philippines this year and in 2018, although the country’s GDP expansion is still seen to outpace regional average.

6.6 percent

The World Bank’s latest GDP growth forecast for the Philippines this year, slower than its earlier projection of 6.9 percent In the East Asia Pacific Economic Update, the World Bank said it has tempered its growth forecast to 6.6 percent this year and 6.7 percent for 2018 from its April estimate of 6.9 percent for both years. See “Growth,” A2

DISABLED PASSENGER LIFTS Cebu Pacific is set to roll out disabled passenger lifts (DPLs) in key airports nationwide. DPLs would allow easier and more comfortable boarding experience for persons with reduced mobility on Cebu Pacific flights. Carmen Zubiaga, 59, a person with disability who travels frequently, tries a DPL for the first time at the Ninoy Aquino International Airport Terminal 3. Story on B3. NONIE REYES

Workers seek Senate to prioritize passage of bill P500 subsidy amending agricultural tariffs law as wage hike not enough By Jasper Emmanuel Y. Arcalas

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@alyasjah

s the new wage-hike order increasing minimum daily pay in Metro Manila by P21 takes effect on Thursday, a labor group has called on President Duterte to augment further the income of workers by approving the proposed P500 monthly subsidy for minimum-wage earners. See “Workers,” A2

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Two labor centenaries Rene E. Ofreneo

laborem exercens

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n 2019, or less than two years from now, the International Labor Organization (ILO) shall turn 100. The ILO was established by the war-weary Europeans and Americans as part of the Treaty of Versailles that formally ended World War I (1914-1918). The “Allied” winners—the United States, Great Britain and France —dictated the terms of the treaty, such as asking Germany, the big loser, to cede certain territories and demilitarize. Continued on A2

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»See A12

By Elijah Felice E. Rosales

business news source of the year

GOVT VOWS TO LIBERALIZE ALL PHL INDUSTRIES BY 2019

The role of the peso in stabilizing the economy

By Diwa C. Guinigundo

2016 ejap journalism awards

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@jearcalas

he Senate will tackle the amendment of a law that allowed the implementation of the quantitative restriction (QR) on rice once it concludes hearings on the proposed 2018 budget, Sen. Cynthia A. Villar said on Wednesday. Villar, who is also the chairman of the Senate Committee on Food and Agriculture, said discussions on amending Republic Act (RA) 8178 will begin right after the hearings on the proposed 2018 General Appropriations Act.

PESO exchange rates n US 51.1780

“We will pass a law [tariffying rice]. After our budget hearings next week, we will have a hearing on [R A 8178]”, the senator told reporters in an interview at the sidelines of the Asean Agriculture Summit 2017 held on October 4. Lawmakers must pass a law amending RA 8178, or the Agricultural Tariffication Act, which imposed the QR on rice, in order to remove the nontariff measure. Currently, only Sen. Ralph G. Recto has filed a bill seeking to amend RA 8178. At the House of Representatives, the Committee on Agriculture and Food has

formed a technical working group (TWG), which is currently crafting a substitute bill that would amend RA 8178. During a hearing last September 19, the TWG has decided to include a bound tariff rate of 400 percent for rice in the draft substitute bill. Rep. Gloria Macapagal-Arroyo of the Second District of Pampanga said a high bound rate would afford the government flexibilities in imposing rice tariffs. “We should just specify in the law that it will be a bound rate and just leave it to the President to determine the applied rate.” Continued on A5

he Duterte administration is keen on opening up all Philippine industries to foreign players by 2019 so the country can attract more foreign investments, according to the National Economic and Development Authority (Neda). Socioeconomic Planning Secretary Ernesto M. Pernia told reporters at the sidelines of the International Conference on the Sustainable Development Goals (ICSDGS) that this is possible, given that the administration expects constitutional amendments to be completed by next year. Pernia said this will greatly increase the country’s foreign direct investments (FDI) in the years to come. He noted that FDI could easily double once foreign players are allowed to invest in local industries. “We are not getting the FDI and also the infrastructure [investments] so if people, the investors, know that infrastructure is being attended to and then [restrictions in the] FINL [Foreign Investment Negative List are addressed, they will invest],” Pernia said on Wednesday. Pernia said the Neda already set the stage as it proposed a “more aggressive” Regular Foreign Investment Negative List (RFINL), which will allow a 100-percent foreign ownership in industries like construction. He said the Neda is also preparing a prospective executive order (EO) for the President’s approval to allow foreign ownership in industries at 49 percent to 100 percent. The proposed EO not only recommends the liberalization of all industries but also the 50-year lease of land to foreign individuals and companies.

EDILLON: “Yes [100-percent foreign ownership in construction], especially those involved in public construction projects. It’s pretty aggressive.”

“Yes [100-percent foreign ownership in construction], especially those involved in public construction projects. It’s pretty aggressive,” Neda Undersecretary for National Planning and Policy Rosemarie Edillon told the BusinessMirror. Economist Alvin Ang of the Ateneo de Manila University said the plan of the Duterte administration to open up all Philippine industries to foreign players will work and will allow inclusive growth. Ang said the top 50 richest Filipinos are invested in many protected industries like real estate and utilities. He also said in his BusinessMirror column last Friday that these industries do not generate as much employment as industries like agriculture. If these big-ticket industries will be opened to foreign competitors, he said these rich businessmen will be forced to look for other new or underdeveloped industries that foreign players may not be interested in. “In effect, if you want to make economic growth inclusive, private sector should give their share and invest,” Ang said in a phone interview on Wednesday. “The safety net is simply to ensure good governance, capacitated and strong bureaucracy and better implementation of rules,” he added.

n japan 0.4535 n UK 67.7494 n HK 6.5521 n CHINA 7.6879 n singapore 37.5784 n australia 40.0928 n EU 60.1137 n SAUDI arabia 13.6471

See “Govt,” A2

Source: BSP (4 October 2017 )

A2 Thursday, October 5, 2017

BMReports BusinessMirror

‘Claims vs BOC-CIIS men meant to destroy drug case’

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he former chief of the Bureau of Customs Intelligence and Investigation Service (BOCCIIS), Col. Neil Anthony Estrella, said he and his men are now being discredited via a smear campaign to weaken the drug case against broker Mark Taguba involving the seized 605 kg of shabu that were smuggled into the country in May. Estrella said Taguba himself admitted in Congress that he implicated the CIIS members in his payola

Govt. . .

Continued from A1

For his part, University of the Asia and the Pacific School of Economics Dean Cid Terosa said there are many pros and cons to liberalizing industries. Terosa added among the advantages is that it will make industries, products and prices more competitive, as well as provide more consumer choices and promote consumer welfare. He said companies and workers will benefit from technology transfers and skills upgrading. However, Terosa said local firms and

Growth. . .

Continued from A1

The Washington-based lender also said the economy is on track to post a growth of around 6.7 percent in 2019. “Although the Philippines continues to grow most rapidly among these [Asean] countries, it is expected that growth in 2017 and 2018 will be slower than projected in April,” the World Bank said. “The delay in the planned governmentinfrastructure program has contributed to slower growth in investment spending, thus softening the growth prospect for the year,” it added. The Philippine economy grew 6.4 percent in the January-to-June period. Based on World Bank data, the Philippines’s economic growth will be higher than the expected average in Developing East Asia Pacific region of 6.4 percent in 2017; 6.2 percent in 2018; and 6.1 percent in 2019. Compared to the average growth in Developing Asean countries, the Philippines will still grow faster since the group is projected to grow 5.1 percent this year and 5.2 percent in 2018 and 2019. The bank said, among developing Asean economies, Cambodia is expected to post the

exposé because they had linked him to the drug-smuggling case. “They must destroy our credibility to

weaken the case against Mark. That, aside from vengeance, is his motivation for his malicious lies against us.” Acting CIIS Intelligence chief Joel Pinawin had ascertained Taguba’s involvement as the broker of the contraband and, after locating him, presented Taguba to the National Bureau of Investigation (NBI) for interview. Estrella, likewise, belied the claim of Taguba that their company’s packing list of the shipment did not have the five metal cylinders or molds that contained the drugs. Hence, Taguba claimed in the Senate probe that the cylinders were never part of his cargo. Estrella said the original packing list furnished by the shipping company of the container brokered

by Taguba had itemized the five metal cylinders as part of the shipment. He also denied Taguba’s claim that CIIS personnel were given pay-offs. “If this were so, then why did we present him to the NBI for investigation on May 29, after his name came out as the shipment’s broker? He himself has said in Congress, the only reason he is accusing us is because he is involved in the drug case.” Pinawin said Taguba’s witness Mae, who claimed to be a bagman for the CIIS on behalf of Taguba, was the live-in partner of Ricky Carvajal, a columnist in Taguba’s newspaper Customs News. “The linkage is very clear. This witness is lying to further the interests of the Tagubas.”

industries could go out of business, which would lead to job losses and displacement of workers. He also expressed concern over the possible volatility that foreign investments will introduce in internal market conditions. Dr. Rene E. Ofreneo of the University of the Philippines said the disadvantages of allowing foreign players to invest in local industries far outweigh the advantages. As it is, the country’s RFINL is “very short”, and most of the country’s industries have been liberalized. “We have a very short negative list. The bone of contention is in ser-

vices, the media, education, transport, plus the land market. This will anger Filipino farmers,” Ofreneo told the B usiness M irror. The Neda is tasked to review and revise the country’s RFINL, which contains restrictions on foreign investments and the practice of professions based on the constitution and Philippine laws. The RFINL contains investment areas/activities where foreign-equity participation is limited by mandate of the Constitution and specific laws. It also consists of investment areas/ activities where foreign-equity participation is limited for reasons of de-

fense, security, risk to public health and morals and protection of smalland medium-sized domestic-market enterprises. The amendment of the list is headed by the Neda secretariat, as provided for under Section 8 of RA 7042, or the Foreign Investments Act of 1991, which states that amendments may be made upon the recommendation of the secretary of national defense or the secretary of health, or the secretary of education, endorsed by the Neda, approved by the President and promulgated by a Presidential Proclamation.

fastest growth in 2017 and 2018, while Lao PDR and Myanmar are expected to share the top spot with a growth of 6.9 percent in 2019. “We are still looking at base effects, especially in this second semester, because we had high growth in the second semester last year. But even then, they [World Bank] would be the first ones to say that we will still be among the top performers in the region,” National Economic and Development Authority Undersecretary Rosemarie Edillon told the BusinessMirror on Wednesday.

middle-income poverty rate of $5.5 per day in 2011 PPP, the country’s poverty rate is expected to drop to 54.3 percent in 2017; 53.5 percent in 2018; and 52.6 percent in 2019, from 55.2 percent in 2016. “It’s like a series of fortunate events, a confluence of good things. So first you have strong economic growth and then second [the government has] a ver y aggressive redistribution program, which is the CCT [Conditional Cash-Transfer Program],” Edillon said. Edillon noted that the CCT program was able to create cash economies in many areas that previously did not have “cash economies”. Through the CCTs, poor households are able to access various goods and services. She said this worked for poverty reduction despite the fact that the CCTs were only distributed to about 12 percent of those living below the poverty line. “That [CCT] really oiled the economic machineries there. This spurred economic activity in the area,” Edillon added.

China at 6.7 percent, the same pace as in 2016. For the rest of the region, which includes the large Southeast Asian economies, the Washington-based lender said growth in 2017 will be slightly faster at 5.1 percent in 2017 and 5.2 percent in 2018, up from 4.9 percent in 2016. Several external and domestic risks could impact this positive outlook. Economic policies in some advanced economies remain uncertain, while geopolitical tensions centered on the region have increased. Monetary policies in the US and the euro area could be tightened more quickly than expected. Many countries in the region have high levels of private-sector debt, while fiscal deficits remain high or are on the rise. “The recovery of the global economy and the expansion of global trade are good news for the East Asia and Pacific region and its continued success in improving living standards,” said Victoria Kwakwa, World Bank vice president for the East Asia and Pacific Region. “The challenge will be for countries to strike a balance between prioritizing shortterm growth and reducing medium-term vulnerabilities, so that the region has a stronger foundation for sustained and inclusive growth,” she added. To maintain resilience against risks, the report calls for a move away from measures aimed at short-term growth toward policies that address financial sector and fiscal vulnerabilities. These measures include strengthening supervision and prudential regulation in countries experiencing rapid growth in privatesector credit and debt; reforming tax policies and administration to help boost revenue collection; and being ready to tighten monetary policy if warranted by the pace of interest-rate increases in advanced economies. The World Bank said structural-reform priorities differ across countries. Sustained reforms of the state-owned enterprise sectors in China and Vietnam can improve growth prospects, while countries like the Philippines will benefit from continued improvements in public investmentmanagement systems to support expanding public infrastructure programs. The report also highlighted the potential that tourism development and deeper regional-integration offer to offset the risks of protectionism. Growth in tourism, if well managed, has the potential to yield substantial benefits to the region, including for the Pacific Island Countries. The Asean Economic Communit y offers one avenue for promoting further regional integration, including by further liberalizing trade in services and reducing nontariff barriers.

‘Series of fortunate events’

While the World Bank expects the Philippines’s economic growth to be slower this year and next year, the reduction in the country’s poverty rate is forecast to continue until 2019. World Bank data showed the country’s poverty rate, using the international poverty rate of $1.9 a day and 2011 Purchasing Power Parity (PPP), will slow to 5.1 percent this year, 4.5 percent in 2018 and 4 percent in 2019, from 5.8 percent in 2016. In terms of the lower middle-income poverty rate of $3.2 per day in 2011 PPP, poverty rate will slow to 24.2 percent in 2017; 22.9 percent in 2018; and 21.7 percent in 2019, from 25.6 percent in 2016. The report also stated that using the upper

Growth in the region

The October 2017 edition of the East Asia and Pacific Economic Update reports that the uptick in growth in 2017 relative to earlier expectations reflects stronger-than-expected growth in

Cai U. Ordinario

www.businessmirror.com.ph

Two labor centenaries Continued from A1

But why should a treaty ending the war include provisions for the formation of an agency engaged in setting international labor standards on wages, hours of work and workers’ rights? The standard answer given by the ILO founders, repeatedly echoed by ILO historians, is that universal and lasting peace can only be achieved through “social justice”. Were the treaty makers suddenly stricken by guilt over the poor living conditions of their workers, millions of whom were conscripted to fight and die in a lonely battle to redraw the boundaries of European nation states in the name of nationalism and imperialism? One explanation is the changing social and political complexion of early 20th-century Europe. Many countries were convulsing from below before and during the war. As Eric Hobsbawm, British historian, put it, “mass revolutions” were “erupting from below”, meaning class wars were raging within countries, that were waging war against each other. The class war was bared fully in the case of Tsarist Russia, a member of the supposedly winning Allied forces. Bankrupted by the war and exhausted by its huge battlefield losses, the Tsarist regime collapsed in February 1917 in a “revolution” triggered by a wave of workers’ strikes in Petrograd. The first strike involved around 90,000 women workers, who downed their tools, shouting “Bread”, “Down with the autocracy!” and “Stop the War!” Like in other European countries, these women replaced the men who were fighting at the front. At the time of the February Revolution, they were tired, hungry and angry. Most of the workers in Russian factories and barracks were organized by the Bolsheviks, the cadres of the emerging Russian Communist Party led by Vladimir Lenin, who issued a call for the formation of a workers-led Socialist government. The Bolshevik organizing efforts quickly spread in the various districts or councils called “soviets”. On November 7, 1917, the Bolsheviks took over the Winter Palace in what was hailed as the Great October Socialist Revolution (based on the old Russian calendar). This paved the way for the establishment of the Union of Soviet Socialist Republics (USSR). The Bolshevik-led Revolution a century ago shook Europe, America and the world to the core. As the American journalist John Reed wrote in the book Ten Days That Shook the World (1919), an alliance of radicalized workers and peasants took the helm of government of a big country for the first time in the history of the capitalist world. Moreover, the new wielders of political power were openly preaching a radical Marxist-Leninist ideology of liberation from class inequality and oppression in Russia and other countries, to the horror of the capitalist class outside Russia. The Bolshevik Revolution was clearly in the minds of those who drafted the Versaille Treaty on behalf of the Allied powers, especially for the US, which suffered the least damage from the war and which found itself the new leader of the Western world. The US government tightened its police network against Bolshevik infiltrators in America. At the same time, it promoted labor and social reforms not only to ease the plight of working people but also to stop the global spread of the Leninist ideas. Thus, it was not surprising that the Americans assigned the moderate labor leader, Samuel Gompers, head of the American Federation of Labor, as head of the Labor Commission that pushed for the establishment of a tripartite labor body that eventually became the ILO. He did a splendid job steering the body in designing a standard-setting international body. The ILO’s Preamble states that the Contracting

Workers. . .

Continued from A1

In a statement, the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) asked the President to approve its proposed subsidy for workers earning minimum wage. The ALU-TUCP said Duterte can source the funds from “unspent and unused budget for different government departments and agencies”. “It is important for workers to cope with the rising cost of living and meet the basic daily food needs of workers and their families because they are essential partners of employers and capitalists to helping and sustaining the country’s economic growth at a competitive level. Yet, the wealth created remains at the top, and it’s not trickling down,” ALU-TUCP Spokesman Alan A. Tanjusay said. Tanjusay added workers badly need the

Parties were “moved by sentiments of justice and humanity as well as by the desire to secure the permanent peace of the world...”

The Preamble states:

Whereas universal and lasting peace can be established only if it is based upon social justice; and whereas conditions of labor exist involving such injustice hardship and privation to large numbers of people as to produce unrest so great that the peace and harmony of the world are imperilled; and an improvement of those conditions is urgently required; whereas also the failure of any nation to adopt humane conditions of labor is an obstacle in the way of other nations that desire to improve the conditions in their own countries. The areas for labor reform identified by the ILO founders include the following: ■ Regulation of the hours of work including the establishment of a maximum working day and week; ■ Regulation of labor supply, prevention of unemployment and provision of an adequate living wage; ■ Protection of the worker against sickness, disease and injury arising out of his employment; ■ Protection of children, young persons and women; ■ Provision for old age and injury, protection of the interests of workers when employed in countries other than their own; ■ Recognition of the principle of equal remuneration for work of equal value; ■ Recognition of the principle of freedom of association; and ■ Organization of vocational and technical education, and other measures. Looking back, the formation of ILO was, indeed, a big advance for the working people of the world. The various ILO Conventions and Recommendations setting international standards for the above areas for labor reform have helped ILO member-states craft protective labor laws and regulations for the working people everywhere. In particular, the ILO core conventions on freedom of association, collective bargaining, nondiscrimination, prohibition of forced labor and elimination of extreme forms of child labor have been recognized globally as core labor rights. After the end of World War II in 1945, many of the progressive labor ideas aired during the founding of the ILO were strengthened in Western European countries, Canada, Australia, New Zealand and Japan. These countries became welfare states, that is, states with market-oriented economy and, yet, has a strong system of social and labor protection. Like in 1919 the development of these welfare states was partly a response to the growing Red threat—the expansion of the Communist influence in Eastern Europe, China and other countries. Ironically, there are no official celebrations of the Soviet centenary this year. The Union SovietySocialist Republics (USSR) was dissolved in the early-1990s, due partly to weaknesses in the centrally controlled “command economy” and the ensuing internal political dissensions within the Communist Party of the Soviet Union. There are debates whether Lenin and his successors, Josef Stalin and Mao Tse Tung in China, succeeded in establishing “true” socialism. This deserves a separate discussion. And yet, it is also ironic that there is so much social and labor unrest in Western Europe and other welfare states today. The “social contract” that trade unions thought were firmly established after World War I and World War II has been weakening, eroded by fiscal austerity pursued by many governments and the Race to the Bottom among global investors flying in and out in a borderless world of trade and investment. subsidy, as the recent wage hike of P21 is not enough to assist them with their everyday needs. “The P21 increase will not lift workers and their families from living below poverty. This 4-percent increase is very small compared to the recent increases in prices of electricity, water, LPG [liquefied petroleum gas] used in cooking and in the price of gasoline. This increase will not definitely close the widening gap between the rich and the poor. There is no shared prosperity here,” Tanjusay said. Wage Order 21 issued on September 14 by the Regional Wages and Tripartite Productivity Board-National Capital Region (RTWPB-NCR) increases the minimum wage in Metro Manila by P21. The wage hike will put the minimum wage at P475 a day for workers in the agriculture sector and P512 a day for workers in the nonagriculture sector. Estimates by the ALU-TUCP claim that more than 5 million workers are bound to benefit from the wage hike.

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Duterte signs law postponing barangay, SK polls to May By Elijah Felice E. Rosales @alyasjah

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resident Duterte has signed into law the bill postponing barangay and Sangguniang Kabataan (SK) elections, suspending for the second time the right of voters to elect their ground level officials. The President on Monday approved Republic Act (RA) 10952, moving barangay and SK elections to May 2018. Section 1 of RA 10952 states “that the barangay and SK elections on October 23 shall be postponed to the second Monday of May 2018”. Due to the postponement, subsequent synchronized ground-level elections shall be conducted on the second Monday of May 2020 and every three years thereafter. All incumbent barangay officials shall also remain in office on a holdover capacity, and can only be replaced until their successors are duly elected and qualified, or unless removed or suspended for cause. The law also extends the term of ex officio members of the Sangguniang Bayan, Sangguniang Panlungsod and Sangguniang Panlalawigan. Elections for ex officio positions in the sanggunians shall be held no later than July 31, 2018, under the supervision of the Department of Interior and Local Government. Under RA 10952, construction or maintenance of barangay-funded roads and bridges shall be prohibited for a period of 10 days before the date of election. Barangay officials are also disallowed to appoint or hire new employees, create new positions and promotions and increase salaries for a period of 10 days before the date of election. On the other hand, an amount of P6.09 billion is carried over as continuing appropriations and shall only be used for the conduct of barangay and SK registration and elections in May 2018. However, the Sangguniang Barangay shall not spend the Sangguniang Kabataan fund, unless it will be used for youth development and empowerment programs. Duterte has suspended the barangay and SK elections on the grounds of alleged officials making use of drug money to spin the results of the votation in their favor. However, the chairman of the National Youth Commission (NYC) believes the SK elections should be spared from the allegation, arguing ground level youth officials are not involved in narcopolitics. “The National Youth Commission is saddened over that news because it has been years since we last had an SK chairman and an SK council. It is difficult to not have youth representatives in the government because you are allowing old people to decide for the young people,” NYC Chairman and former child actress Cariza “Aiza” Y. Seguerra said in a previous news briefing.

Editor: Vittorio V. Vitug • Thursday, October 5, 2017 A3

Senators craft remedial legislation to penalize ‘irresponsible’ bloggers

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By Butch Fernandez

@butchfBM

he Senate Committee on Public Information and Mass Media is in the process of crafting remedial legislation covering social media (socmed), amid recent controversies triggered a blogsite criticizing lawmakers for “failure to sign” last week a resolution criticizing the wave of extrajudicial killings (EJKs) under the Duterte administration. While mainstream journalists have guidelines in writing the news, socmed bloggers do not have none, Sen. Grace Poe told

reporters after presiding over a public hearing on separate bills addressing the “proliferation of fake or misleading news and

false information” filed by Senate President Aquilino Pimentel III and Sens. Antonio Trillanes IV and Joel Villanueva. We d ne s d ay ’s he a r i n g w a s also prompted by manifestations made by Senate Majority Leader Vicente C. Sotto III and Sens. Manuel Pacquiao, Richard J. Gordon, Francis Pangilinan, Miguel Zubiri, Risa Hontiveros and Juan Edgardo Angara, following an article under the blog SilentNoMorePH criticizing the senators who failed to sign the anti-EJK resolution. Poe clarified after the hearing that the repor t that the senators mentioned refused to sign the anti-EJK resolution was “erroneous.” “It is not that they did not want to sign,” Poe said, adding that the senators did not know there was such a resolution. “Here, we see the power of bloggers who should

House subpanel proposal seeks to widen OSG powers, abolish PCGG and OGCC By Jovee Marie N. dela Cruz @joveemarie

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he House Subcommittee on Judicial Reforms has approved a substitute measure strengthening the Office of the Solicitor General (OSG), while abolishing the Presidential Commission on Good Government (PCGG) and the Office of the Government Corporate Counsel (OGCC). The subpanel approved the bill on Tuesday, in substitution to House Bill (HB) 350 by Rep. Romero S. Quimbo of Marikina, HB 547 by Rep. Evelina Escudero of Sorsogon and Party-list Rep. Rodel Batocabe of Ako Bikol Party-list, HB 3275 by Rep. Rogelio Neil Roque of Bukidnon, HB 4748 by Party-list Rep. Gary Alejano, of Magdalo, HB 5216 by Rep. Joaquin Chipeco Jr. of Laguna and HB 5233 by Speaker Pantaleon D. Alvarez, Majority Leader Rodolfo C. Fariñas and House Committee on Justice Chairman Reynaldo Umali. The substitute bill will be referred to the mother panel, the House Committee on Justice, for another round of deliberations. Rep. Vicente S. Veloso of Leyte, chairman of the Subcommittee on Judicial Reforms, said the substitute bill will transfer the powers and functions of the PCGG and OGCC to OSG. The measure also expands OSG’s powers and functions; increase compensation, benefits and privileges of its personnel; and its funding source and the effect of the abolition of the OGCC and PCGG. The OSG is the law office of the government, which represents the departments, bureaus, agencies and instrumentalities and its officials and agents in their official capacity, in any litigation, proceeding, investigation or matter requiring the services of lawyers. On the other hand, the OGCC is the principal law office of government-owned and -controlled corporations (GOCCs). Alvarez said in cases involving the recovery

The consolidation of legal services in the OSG will specifically promote the wiser and more prudent use of public funds since this will do away with the practice of the OGCC of billing client of GOCCs for legal services.”—Alvarez

and preservation of ill-gotten wealth, the OSG has been representing the Philippines since the creation of the PCGG in 1986. Also, Alvarez said that, despite the fact that these functions are not specifically spelled out in the OSG’s mandate, the OSG, as the primary law office of the government, continues to render legal services to GOCCs and the PCGG. In order to achieve economy, eliminate overlapping of functions, address the expanding needs of GOCCs for legal representation and enhance government efforts to recover ill-gotten wealth, Alvarez said, government legal services must be consolidated into one office. “The consolidation of legal services in the OSG will specifically promote the wiser and more prudent use of public funds since this will do away with the practice of the OGCC of billing client of GOCCs for legal services,” Alvarez said.

It is not that they [senators] did not want to sign [the resolution on EJKs]. Here, we see the power of bloggers who should have been responsible enough to first confirm the truth.”—Poe have been responsible enough to first confirm the truth.” Poe added that senators are not studying enactment of remedial legislation that will penalize those blogger purveying erroneous and baseless information The senator said the reported author of the blog, identified as Coco Dayao, did not even bother to explain why he snubbed the senate hearing, prompting some senators to send a warning he could be held in contempt for ig-

noring Senate summons. Poe confirmed that the witnesses who failed to appear during Wednesday’s hearing may be issued subpeonas to comple them to attend the next hearing. “For the others, I think we might have to send a subpoena order,” she said. Poe added the committee may also summon Google at Facebook, “not necessarily to regulate them but to know the processes involved in putting out blogs.”

Cimatu’s CA confirmation draws flak from environmental, anti-mining groups

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ollowing his confirmation by the powerful Commission on Appointments (CA), Environment Secretary Roy A. Cimatu on Wednesday vowed to institute reforms and pursue programs and projects to protect the environment and improve people’s lives. Cimatu, a former Armed Forces chief of staff, was appointed to the Department of Environment and Natural Resources (DENR) in June, after the CA rejected environmental advocate Regina Paz L. Lopez. Her confirmation by the CA was strongly opposed by the mining industry’s big players under the Chamber of Mines of the Philippines (COMP) for her anti-mining policies. COMP has welcomed Cimatu’s appointment “with guarded optimism,” and expressed hope that the 10-month “nightmare” under Lopez will finally end. In a news statement, Cimatu said the challenge is for him to prove that President Duterte and the members of the CA have made the right decision in placing their trust and confidence in his abilities to lead the DENR. Cimatu, during his first media appearance in June, admitted that he needs to study and learn the ropes in the DENR’s bureaucratic maze. As chief steward of the country’s environment and natural resources, Cimatu has the final say on the implementation of programs and projects, issue policies and guidelines, and render important decisions. The DENR is currently reviewing Lopez’s mine closure or suspension order affecting over two dozen large-scale operating mines, cancellation of 75 inactive Mineral Production Sharing Agreement (MPSA) and one Financial and/or Technical Assistance Agreement (FTAA) and the controversial ban on prospective open-pit mining projects for gold, copper, silver and complex minerals. According to Cimatu, his confirmation “gives him enough inspiration to carry out the seemingly gargantuan tasks of protecting the environment and ensuring sustainable use of the

country’s rich natural resources in the face of climate change and dwindling natural wealth of the nation.” Under his watch, Cimatu said the DENR will push for a people-centered agenda in pursuit of environmental protection and sustainable development. “It is high time that every Filipino, regardless of status in life, should have equal access to the benefits of a clean environment and sustainable natural resources,” he said. Meanwhile, Cimatu’s confirmation by the CA drew flak from environmental group Kalikasan-People’s Network for the Environment (Kalikasan-PNE). In a text message, Kalikasan-PNE national coordinator Clemente Bautista said the CA’s confirmation of Cimatu’s appointment validated the group’s suspicion that the CA approval could be nothing but a “political accommodation” to the Duterte administration. “In spite of Cimatu’s corrupt-laden and stained human-rights violations record as government official during [former President Gloria Macapagal] Arroyo’s regime, he was allowed to become the secretary. He has no whatsoever experience on environmental protection and natural resources management, but he was chosen, nonetheless, by President Duterte,” Bautista said. According to Bautista, the President’s choice of Cimatu, the rejection of Lopez and Cimatu’s appointment by the CA bode well for big miners, resource plunderers and environmental criminals. “As the environment policy and programs of Duterte remain anti-people and pro big business and foreign capitalists, we expect faster resource depletion and graver ecological degradation under President Duterte and DENR Secretary Cimatu’s term,” Bautista said. For his part, Jaybee Garganera, national coordinator of Alyansa Tigil Mina (ATM) said the group is not surprised, yet frustrated, by Cimatu’s confirmation by the CA. Jonathan L. Mayuga

DOJ starts preliminary probe into raps against Faeldon, other former BOC officials By Joel R. San Juan @jrsanjuan1573

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HE Department of Justice (DOJ) is set to start today (Thursday) its preliminary probe into the string of drug and criminal charges filed against former Bureau of Customs (BOC) Commissioner Nicanor E. Faeldon and other former officials of the bureau. Faeldon and his corespondents Customs Investigation and Intelligence Service chief Neil Anthony Estrella; former Director Milo Maestrecampo; intelligence officers Joel Pinawin and Oliver Valiente; Manila International Container Port district collector lawyer Vincent Phillip

Maronilla; Faeldon’s financé, lawyer Jeline Maree Magsuci; and employees Alexandra Ventura, Randolph Cabansag, Dennis Maniego, Dennis Cabildo and John Edillo, have been summoned to appear during the proceedings and answer the allegations against them. The preliminary investigation will be conducted by a panel of prosecutors chaired by Assistant State Prosecutor Aristotle Reyes. Faeldon is expected to appear in the hearing after being allowed by the Senate, where he is currently under custody. In its complaint, the Philippine Drug Enforcement Agency (PDEA) sought the indictment of Faeldon and his corespondents for alleged

conspiracy to import illegal drugs and protecting or coddling of drug traffickers under Republic Act (RA) 9165. The PDEA also accused them of obstruction of justice under Presidential Decree 1829 by “harboring or concealing, or facilitating the escape” of the persons behind the shabu shipment. Faeldon and other respondents were also accused of negligence and tolerance under Article 208 of the Revised Penal Code. Last, the PDEA also filed charges of corrupt practices of public officers under Section 3 of RA 3019 (AntiGraft and Corrupt Practices Act) for allegedly “causing any undue injury to any party, including the government,

or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence.” As this developed, Estrella— sought the immediate dismissal of the charges of conspiracy to import illegal drugs and protecting or coddling of drug traffickers under RA 9165 (Comprehensive Dangerous Drugs Act) filed by the PDEA against them. He denied as “baseless, and malicious mix of inaccuracies and half-truths” the serious allegations in the complaint filed by the PDEA. He said the PDEA’s charges have no factual basis as he vowed not to

surrender if the nonbailable cases proceed to the trial on court. “We will not allow ourselves to be jailed for this baseless accusations. We would rather become fugitives,” he said in an interview. Estrella admitted he was surprised by the complaint because his team that handled the case has coordinated with the PDEA throughout the operation. “In fact, the PDEA readily gave the BOC and the NBI [National Bureau of Investigation] a certificate of coordination that we were acting under them, and they themselves oversaw the operation for the controlled delivery and to safeguard the drugs along with the NBI,” he said.

The former Customs official also denied coddling or facilitating the escape of Richard Chen, one of the Chinese businessmen tagged in the shabu shipment. “How can there be coddling when we turned Richard Chen over to the NBI, which later on filed a case against him?” he argued. Estrella also denied the allegation of obstruction of justice, saying his team turned over all evidence they seized to the PDEA and the NBI. “Our mission was only to contain the drug shipment and we were able to do that. The Chinese government even lauded our effort so we don’t understand why are we the ones being charged now,” he told reporters.

Economy

A4 Thursday, October 5, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Amid AI ‘threat,’ govt urged to hike investment in education and training By Cai U. Ordinario

ncreased investments in education and employees are needed to boost online hiring in the Philippines and meet the threat of artificial intelligence (AI), according to Monster.com.

pational groups, software, hardware, telecom talent were most in demand with 4-percent year-on-year growth in online hiring in August. Human Resources and administration continued to exhibit the steepest decline across all occupational groups, at a 10-percent yearon-year decline. This is according to the latest Monster Employment Index (MEI), a monthly gauge of online job-posting activity in the Philippines, recording

In a news statement issued on Tuesday, Monster.com Managing Director Sanjay Modi cited data from the Department of Trade and Industry that AI could cut by as much as 45 percent to 50 percent, or some 1.2 million jobs, in the business-process outsourcing (BPO) sector. Modi said this is on top of the country’s employment challenges as indicated by the Philippine Statistics Authority (PSA) data, where 2.4 million Filipinos were jobless in July 2017. “The growing dependence on artificial intelligence and the rapid adoption of automation is posing a huge threat to numerous jobs in the country’s most promising BPO sector,” Modi said. “In spite of these challenges, universities, organizations and the technology sector should consider

The growing dependence on artificial intelligence and the rapid adoption of automation is posing a huge threat to numerous jobs in the country’s most promising BPO sector. In spite of these challenges, universities, organizations and the technology sector should consider this as a wake-up call and invest more in educating students and employees to adapt to the changing nature of business by stepping up training and developing programs.”—Modi

I

@cuo_bm

this as a wake-up call and invest more in educating students and employees to adapt to the changing nature of business by stepping up training and developing programs,” he added. The latest Monster online hiring data showed there was zero growth in August 2017, a slight improvement from the contraction posted in July 2017. Data showed the country’s retail industry exhibited the highest growth in online hiring in August, recording a 13-percent year-onyear increase. On the other hand, the education sector fared the worst, with an eight percent year-on-year decline, 3 percent up from the 11-percent year-on-year contraction reported in July. Looking specifically at the occu-

the industries and occupations that show the highest and lowest growth in recruitment activity. The MEI is a real-time review of millions of employer job opportunities culled from a large representative selection of career web sites and online job listings across the Philippines. Monster.com said the Index does not reflect the trend of any one advertiser or source, but is an aggregate measure of the change in job listings across the industry.

MGC, San Miguel Properties forge advertising partnership

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an Miguel Properties has recently chosen MacGraphics Carranz (MGC) as the exclusive operator for out-of-home (OOH) advertising platforms in a host of new locations under the ownership of San Miguel Corp. The partnership agreement grants sole rights to offer MGC clients outdoor advertising spaces in major high-traffic locations, including the South Luzon Expressway, Skyway, Star tollways and the new Ninoy Aquino International Airport Expressway. The media agency’s initial plans include supplying tollway streamers, bridgeway streamers, tollgate posters, column banners and lamppost banners. However, looking to add further value to these platforms, MGC is seeking to soon upgrade these spaces featuring top-of-the line LED billboards, light boxes and other new outdoor technologies that allow for increased ad vis-

Current high-visibility and high-impact MacGraphics Carranz billboards along the busy South Luzon Expressway

ibility and conversion. As one of the country’s top OOH provider, MGC provides clients with installation and dismantling of billboards, fabrication of signages and conceptualization of creative materials. Regarded as one of the more costeffective advertising means of creating awareness and driving brand

purchases, the OOH has been gaining increasing relevance with the growing business-process outsourcing (BPO) industry concentrated in urban centers, increasing traffic congestion and construction of new public infrastructure. The partnership adds to MGC’s list of ad-space locations, which currently include prime spots

along Edsa, the North Luzon Expressway, Ortigas Avenue, Shaw Boulevard and C-5. MGC also operates in multiple spots outside of Metro Manila and have initiated talks with some city mayors in the United States and other Asian countries for the development of OOH platforms.

LTFRB justifies approval of recent taxi-fare increase By Lorenz S. Marasigan @lorenzmarasigan

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aising taxi fares is a necessary push that will force taxi operators and drivers to improve their services all over the country, according to the Land Transportation Franchising and Regulatory Board (LTFRB). This was how the regulator justified its decision in approving the upward adjustments on taxi fares on Wednesday, while citing an upsurge of local and international pump prices as another factor for its decision. After its publication on a newspaper of national circulation, the flagdown rate of taxis will be adjusted by P10 to P40, P13.50 per kilometer, and P2 per minute of travel time. Hence, a passenger will have to pay P265 for a 10-kilometer ride with a travel time of 45 minutes. The new fare matrix is approved for cities and provinces around the Philippines, except for the Cordillera Administrative Region, which received an approval of a P5 increase

in flag-down rate to P35. Taxis in the said region were also authorized to charge P13.50 per km and P2 per minute of travel time. The current fare matrix is as follows: a P40 provisional flag down rate, P3.50 per succeeding 300 meters and a P3.5 charge for waiting time. The board decided to rule in favor of several consolidated petitions Prices of gasoline have increased over the course of the seven-year hiatus on permanent taxi-fare adjustments. “What convinced the board in resolving in favor of petitioners’ prayer for fare increase is the fact that the last increase was granted way back in 2010, or seven years ago. From the past decisions and orders of this board relative to fare adjustment, the prices of fuel was the major concern,” the decision read. According to the decision, average pump price from end-May to earlySeptember 2017 was at P43.44 per liter, which increased by “more or less 30 percent” from gasoline prices a year before. Unleaded gasoline was around P29 to P37 per liter during

the period under review. “Inflation and cost of living are equally important factors. The value of money seven years ago are way different to date,” it added. The regulator also noted the increased competition that resulted from the entrance of transportation network companies, which have put a dent on the revenues of taxi companies due to decreases in dispatched units. “Although the impact thereof was slightly and temporarily deterred by the steady performance of our economy, and the comprehensive plans and programs of the government to improve the traffic situation, and the coordinated effort of the key agencies of the government to alleviate the public land transportation sector, the need to adjust fare rates for taxi services is necessary for them to level up their service standards at part with new transportation modes,” the decision read. Taxi operators have been competing for passengers against the likes of ride-hailing app Grab and Uber

for quite a few years now. Tech-based transport operators price their fares based on what they call as “dynamic pricing”, which bases charges from demand, supply and traffic data. The agency noted that for taxi operators with phased-out model units or those that will file substitution of units, the new unit must comply with the Public Utility Vehicle Modernization Program of the government, and the Omnibus Guidelines on Planning and Identification of Public Road Transportation Services and Franchise Issuance. Under the modernization program for the public-transportation sector, operators are required to set up, among others, dash cameras, tracking devices, closed-circuit televion, and to provide free Wi-fi to customers. Before taxi drivers could charge their customers with the new fare matrix, their units must first undergo recalibration. They also have to pay the agency a filing fee of P510, and a legal research fee of P10 per case number.

news@businessmirror.com.ph

PHL allots ₧20 billion to keep tab on SDGs

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he Philippines is allocating around P20 billion to collect and process data for its annual surveys and monitor the achievement of the Sustainable Development Goals (SDGs) in the medium term. In an interview at the sidelines of the International Conference on the Sustainable Development Goals Statistics, (ICSDGS), national statistician Lisa Grace S. Bersales told the BusinessMirror the Philippine Statistics Authority (PSA) needs P4 billion every year to carry out its mandate and meet the data requirements for the SDGs. Bersales said this budget is already part of the medium-term expenditure framework created for the agency. The estimate, however, does not include the additional P2 billion needed to conduct the Census of Population and Housing survey in 2020. “For the Philippines, we actually don’t have an estimate yet [for SDG data needs until 2030], but based on the budget of the Philippine Statistics Authority, which is really the main source [of SDG data], we would need P4 billion a year,” Bersales said. In his speech at the ICSDGS, United Nations Assistant SecretaryGeneral and United Nations Development Programme Regional Bureau for Asia and the Pacific Director Haoliang Xu said around $1 billion a year is needed by developing countries worldwide to meet the data requirements for the global goals. Xu added these can be obtained through national budgets and official development assistance (ODA). However, he said developing countries only received a total of $338 million in ODA support for statistics. Based on data from Paris21, the total aid received by the world for statistics reached $1.81 billion, and 28 percent of this came from the World Bank. In the Asia and the Pacific, which includes the Philippines and other Asean countries, some $397 million was received. The top donors were the World Bank, which accounted for 28 percent of the total; the United Nations Population Fund, 15 percent; European Commission/Eurostat, 10 percent; the United Kingdom, 9 percent; and the Food and Agriculture Organization, 5 percent. However, he said that more than the financial requirements, achieving the SDGs will require “unprecedented amount of statistics at all levels”. He added filling these data gaps is the major challenge for na-

tional statistics offices worldwide. “Beyond financing, data gaps are one of the biggest challenges in monitoring SDG achievement. These data gaps particularly apply to measuring progress against the targets for the environment, climate change and governance. Indicators relating to these targets are not in place or are not collected regularly and methodologies for effectively collecting data against these indicators are largely still in their infancy,” Xu said. In the Philippines alone, Socioeconomic Planning Secretary Ernesto M. Pernia said out of 232 global SDG indicators, only 94 are readily available for the country to measure its progress. Around 11 of the 232 indicators are not applicable for the country but 127 indicators need to be updated and/or developed. Pernia added 59 indicators are not collected regularly and 68 indicators still do not have methodologies. “The challenge, in fact, extends beyond these numbers as many of the indicators require further data disaggregation,” Pernia said. Xu agreed and said the most difficult data to produce involves data disaggregation based on geographic location, sex, age, ethnicity, disability, sexual orientation or religion because these are often the hardest to reach. But Xu remained optimistic given the amount of data that is now available at people’s fingertips. Proof of which, Xu said, is the fact that data produced in the past two years alone is even greater that the data produced in the entire history of the human race. Bersales said the PSA will concentrate on collecting information obtained from administrative records, as well as forging public-private partnerships. She said some data could be generated by private research firms. She said the Social Weather Stations and/or Pulse Asia could be commissioned to generate certain surveys provided they adhere to standards set by the PSA. “There is an urgent need to mobilize the data revolution for everyone in order to monitor progress, hold governments accountable and foster sustainable development,” Xu said. The ICSDGS serves as a venue for knowledge sharing/discussion on the methodologies, addressing data gaps and use of other data sources given the numerous SDG indicators, including the demand for data disaggregation. Cai U. Ordinario

WB notes wrinkles in OFW no job placement-fee policy

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he implementation of the country’s “no placement fee” policy for all overseas Filipino workers (OFWs) remains inconsistent, according to the World Bank. In a Migration and Development Brief, the World Bank said placement fees paid by OFWs vary from as low as $5 in the Philippines to Saudi Arabia corridor, but as much as $100 for Philippines to Qatar job destination. “The enforcement of the no-fee policy seems to vary across corridors,” the World Bank said. “Anecdotally, recruitment agents, at times, circumvent the no-fee policy by imposing additional charges for training.” The World Bank also said the recruitment fees differ in terms of the gender of the OFW. Female OFWs in Saudi Arabia and Qatar pay lower recruitment fees compared to their male counterparts. The report stated that, on one hand, female OFWs in Qatar earn an average of $421 a month while the total recruitment cost reached $459. Other costs, which include placement fees, reach $101 per female OFW. On the other hand, female OFWs in Saudi Arabia earn $412 a month; total recruitment fee at $218; and

other costs such as placement fees, $5 per OFW. Male OFWs in Qatar, meanwhile, earn $712 a month and the total recruitment cost is $826. Male OFWs pay placement fees of $503. In Saudi Arabia male OFWs earn $569 a month and have a $583 total recruitment cost, while the placement fee for these workers could be as much as $290. “This could be indicative of the Philippines’s policy of exempting placement fees for its citizens hired to work abroad as domestic workers, caregivers and seafarers,” the World Bank said. Meanwhile, the bank estimates that remittances from OFWs expected to reach $32.8 billion, making the country the second top remittancereceiving country in East Asia and the Pacific. The World Bank said this indicates that OFW remittances will grow faster to register a full-year growth of 5.3 percent by year-end, slightly higher than the 4.5-percent increase posted in 2016. Among major remittance recipients, India retains its top spot, with remittances expected to total $65 billion this year, followed by China with $61 billion.

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Thursday, October 5, 2017

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Hog output in H1 valued at ₧113.7B

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By Jasper Emmanuel Y. Arcalas

@jearcalas

he value of the local hog sector’s production at current prices rose by 12.09 percent to P113.7 billion in the first half due to the increase in farm-gate price, according to the Philippine Statistics Authority (PSA).

In its report, titled “Swine Situation Report January-June 2017”, the PSA said the average farm-gate price of live hogs went up by nearly 11 percent to P104.55 per kilogram, from P94.22 per kg last year. “ The highest price was observed i n Ju ne at P111. 22 per k g , l ive weight and the lowest was in January at P95.73 per kg, liveweight,” the report read. In terms of volume, the sector produced some 1.087 million metric tons (MMT) of pork, slightly higher than the 1.076 MMT recorded in the first half of 2016. “Growth in production was noted in the first quarter of 2017 at 3.5 percent, while a decrease was recorded in the second quarter of 2017 at 1.32 percent,” the report read. Central Luzon remained as the top hog-producing region during the peri-

₧104.55 The average farm-gate price of live hogs in the first half of 2017, according to the PSA

od, accounting for 18.17 percent of the total output. However, hog production in Region 3 declined by 4.33 percent to 197,596 MT, from 206,530 MT a year ago. The PSA also noted the country’s total swine population as of July 1 reached 12.52 million heads. This figure was slightly higher than the 12.5 million heads recorded last year. “Stocks in backyard farms increased by 0.62 percent. However, stocks in

commercial farms decreased by 0.67 percent compared to their 2016 levels,” the report read. “About 64 percent of the total stocks were raised in backyard farms and the rest were in commercial farms,” it added. Hogs in backyard farms reached 8.047 million heads, while 4.470 million were in commercial farms. The country’s sow inventory as of July 1 stood at 1.70 million heads, 1.32 percent higher than the 1.679 million recorded a year ago. Of the total swine population, sow accounted for 13.59 percent, according to the PSA. During the same period, the PSA said traders spent $160.112 million to import pork. The amount is 3.81 percent lower than the 2016 record. “The total volume of imported pork from January to June 2017 was 106,907 metric tons. This was lower by 11.31 percent over the previous year’s output [of 116,583 MT],” the report read. “Decrease in the volume of pork imports were noted in the first and second quarters.” Earlier. Meat Importers and Traders Association President Jesus C. Cham told the BusinessMirror the decline in meat imports is due to a “confluence of events”. “We’re seeing a confluence of events that impact negatively on imports— high prices abroad, weak peso, volatile foreign exchange and bans on imports,” Cham said.

ILOILO FARMERS FINISH TRAINING

Ninety graduates were added to the roster of Kabalikat sa Kabuhayan Rural Farmers Training as they completed the 12-week program in Barangay Lanit, Jaro, Iloilo City. The training program, conducted in partnership with Harbest Agribusiness Corp., was an opportunity for farmers to learn the latest techniques in vegetable farming, from soil preparation to fertilizer utilization and suitable harvest methods. Other partners were SM City Iloilo, SM Supermarket, departments of Education, Agriculture, Social Welfare and Development and the local government. A program to culminate the harvest festival was held at the Tio Chu Teg Ana Ros Foundation Integrated School. The graduates shared their talents in singing and dancing and actively participated in the games. SM FOUNDATION

Senate to prioritize passage of bill amending agricultural tariffs law Continued from A1

The authority to set bound tariffs is vested in Congress. But under the Customs Modernization and Tariff Act, the President, upon the recommendation of the National Economic and Development Authority, has the power to modify the tariffs applied on Philippine imports. The Philippines is now under pressure to convert its QR on rice into ordinary customs duties after its waiver on the special treatment on rice expired on June 30. The WTO General Council approved the waiver, which allowed Manila to keep its rice QR until June 30, on the condition that the Philippines will subject its rice imports to ordinary custom duties by July 1. “At the expiration of this waiver, and no later than June 30, the importation of rice shall be subject to ordinary customs duties in accordance with paragraph 10 of Annex 5, Section B, of the Agreement on Agriculture,” the World Trade Organization (WTO) General Council decision read.

In March the Philippines informed WTO members that it is facing delays in converting the QR due to the nonamendment of RA 8178, which imposed the import caps on rice indefinitely. As a sign of “goodwill” to its trading partners, Duterte signed Executive Order 23 in July, extending the concessions made by the Philippines in securing the waiver in 2014. The temporary modification of mostfavored nation-tariff rates is effective until June 30, 2020, or until such time a law amending certain provisions relating to rice in RA 8178 is enacted, whichever comes first. House Committee on Agriculture and Food Chairman Party-list Rep. Jose T. Panganiban Jr. of Anac-IP, who also chairs the TWG, said a final hearing on the draft substitute bill will be conducted before it is submitted to the committee. “I only want one hearing in the committee so that the bill will be ready for plenary de-

bates after the [Halloween break, which will start on October 14 and end on November 12],” Panganiban earlier told the BusinessMirror. He added the House is planning to approve the bill on third and final reading before the year ends. The amendment of RA 8178 is included in the priority legislative agenda of the Duterte administration as indicated in its economic blueprint dubbed as the Philippine Development Plan (PDP 2017-2022). Under PDP 2017-2022, the Duterte administration vowed to allocate all the tariffs collected from rice imports for programs aimed at helping farmers cut production cost. “Replace quantitative restrictions on rice with tariffs. The tariff proceeds from rice imports will be plowed back to the rice sector,” the PDP read. While the PDP is cognizant of the adverse impact of the scrapping of the rice QR on small farmers, the government said the tariff collected from imports will be used to help them recoup their losses.

Coconut producers earn $6M from US trade expo

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he Americans’ preference for Philippine coconut was affirmed last month after local manufacturers of coconut-based products generated $6 million in sales during a trade exposition in the United States, according to the United Coconut Association of the Philippines (Ucap). The Ucap has also assured farmers and makers of virgin coconut oil and other processed coconut—not only here but among Asian-Pacific producers—that the US market continues to “rave” about Philippine coconut and its health benefits. “America still loves our coconuts,” Ucap Chairman Dean A. Lao Jr. said during the Cocohouse briefing on the Maryland East Expo Roadshow. The trade mission sought to affirm scientific studies about the health benefits of coconut. The expo was supported by the Department of Trade and Industry, Philippine Coconut Authority, Philippine Embassy and attachés in the US. Aside from Maryland, local coconut producers also visited Washington D.C., Los Angeles, San Francisco and Denver. While there has been misinformation on coconut oil apparently arising from competitor products, the Ucap said the sentiment of the US consumer market is to “defend coconut products”. Scientific studies have linked mediumchain fatty acid (MCFA) content in coconut oil to less incidence of cardiovascular disease in studied populations. MCFA is also widely recognized as the major ingredient in energy-boosting ketogenic diet. The private-public sector trade group will carry out more programs to attest to authorities scientific proof of coconut oil’s nutritional benefits. Dr. Fabian M. Dayrit, chairman of the A sia and Pacific Coconut Communit y (APCC) Scientific Advisory CommitteeHealth, said the APCC has communicated with the Food and Agriculture Organization (FAO) its position against a presidential advisory issued by the American Heart Association (AHA) that branded coconut oil as saturated fat and classified it as the same as any animal fat. “The FAO agreed to a technical meeting in a scientific conference among experts in 2018,” Dayrit said. The APCC’s communication with the FAO will be important as the APCC also deals with World Health Organization, also a United Nations unit. While the country thrives in exporting virgin coconut oil and semiprocessed coconut products in bulk, Lao said it is

Refrigerated coconut in the nut

Photo from

the United Coconut Association of the Philippines

important for the Philippines to “intensively invest” in product research. He noted that Thailand has led Southeast Asian countries in coconut-product innovation. Packaging, marketing and distribution strategies are important such that some coconut products get more sales through branding, private labeling and online (Internet-marketing) distribution. Some coconut-based products t hat should inspire Philippine producers, according to Ucap, include the privately labeled “Simple Truth” of Kroger, Pure Brazilian Coconut Water, and tortilla chips made from coconut flour. “Trends point to everything coconut. There’s a strong preference for natural and organic, and companies with a focus on CSR [corporate social responsibility], fair trade and sustainability,” Lao said. The group also met with Filipino scientists from Philippine American Academy of Science and Engineering, which may explore scientific studies on coconut in the future. The Ucap also oriented the Coconut Coalition, a group of major distributors of coconut products in the US, on its position on the false accusation of the AHA that all saturated fats could cause cardiovascular diseases. “The Coalition wants us to be alert, and we are. We feel the sentiment that consumers still prefer coconut. But it’s not something we should take for granted,” he said. The Ucap noted shipments of coconut products are immediately recovering from a temporary 25-percent drop in sales following the release of the AHA advisory. Ucap Executive Director Yvonne T. Agustin said shipments of Philippine coconut products in January to June reached $1.132 billion, nearly double the $636 million recorded in the same period last year.

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TheBroa

Business

Thursday, October 5, 2017

Inside the Tent City of Marawi

By Nonie Reyes | Chief of Photographers

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AY down South there was once a peaceful place. The serene waters of Lake Lanao are surrounded by towering coconuts against the backdrop of a greenish, forest-covered mountain and blue sky. This is the place officially known as the Islamic City of Marawi. Only 4 percent of the total 201,785 people here are Christians. But the violence that erupted here on May 23 started far beyond the difference between believers of Islam or Christianity. The differ-

ence is as far as Pagadian City and Marawi City, indeed, but the violence is as near as the relationship of the peoples. On the way to Marawi one can take a side trip to the breathtaking

Maria Cristina Falls, a place that Maranaos can boast of because it also generates electricity that powers their lives. The four-month-old war between the government forces and the terrorist group Maute has shattered that pride and the tranquillity of Marawi. It also left people to live a nightmare for 125 days. For most of them, these days felt like an eternity. The largest city of Lanao del Sur is now a ghost town; a place Maranaos once called home. Everywhere one looks, homes and buildings are riddled with bullets or damaged by fire from the armed fighting on the ground and bombs dropped from warplanes. Because they are among the casualties of war, thousands have been forced to evacuate and live in temporary shelters if they have no relatives in adjacent areas like Iligan or Cagayan de Oro cities. A yellow tent in Balo-i, Lanao del Norte, for instance, serves as one such place to stay for those with no relatives outside Marawi. The cold ground serves as their bed. A hole in the ground serves as a toilet. What looks like a mini fireplace from afar is where they cook their meals—less than three a day. A total of five families live inside one tent. Given their nightmarish experiences, worries and burdens that they now face, the colorful kerudung worn by women seem to hide the true color of their life as they attend a psycho-social talk given by a social worker. A smile with sad eyes explains

the burden the children have been through, while performing exercises that help them to forget the traumatic experience they’ve been through at such a young age. Despite all the smiles, their eyes would still betray their feelings. Who, indeed, can ever forget the nightmare brought on Marawi since May 23? Abolkhair Marangit and his family are among those called “internally displaced persons” (IDP) who live in one of the evacuation

centers in barangay Bito Buadi Itowa, Marawi City, Lanao del Sur. “Lahat ng mga bagay na naipundar ko, nawala sa isang iglap,” Marangit said. “Mabuti nga’t kasama ko pa pamilya ko, kaso wala na kong maitulong; nakakalungkot ngang isipin [Everything I owned disappeared in a blink of an eye. The only thing I can be thankful for is our family is still intact. But I can’t do anything more; which brings me sadness everytime I think about it].”

Marangit earned his keep as a tricycle driver before violence erupted in Marawi City. “Lahat talaga nawala, pati yong motor ko, nawala. Sa katunayan, hindi ito unang beses naming lumipat ng tent [I lost everything. Honestly this is not the first time we transferred to a tent],” he said. Marangit paused to remember his experience in the first tent he and his family lived in. He said they experienced a

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sMirror

shortage in relief goods. “Sa unang tent namin, nakula­ ngan sa relief goods. Hindi ko hina­ yaang doon kami manirahan kasi ’di ka talaga makakakain; unahan talaga doon. Minsan nga, palakasan pa [In our first tent, we didn’t get much relief goods. I didn’t want my family to stay there because they really can’t have a decent meal; you have to fight for a share of the relief goods. Some peddle influence].” He considers the tent they currently

stay in better than the previous sites. “Pero iba pa rin talaga ’yung dati [It’s still different before the war].” Congestion and sanitation are the major problems that evacuees have to bear. One comfort room that has been filled with human waste is being used by everyone, heightening the risk of health problems especially for children. Without proper ventilation inside the tent, if someone gets ill, everybody in that particular tent faces

www.businessmirror.com.ph | Thursday, October 5, 2017

the risk of acquiring a disease, too. A member of the Civilan Armed Forces Geographical Unit (Cafgu) assigned at the frontline has his family in the evacuation center. “Ayaw ko sana itira ang pamilya ko sa evacuation center kasi alam kong mahihirapan sila, wala kasing sapat na gamit doon; ni electric fan nga wala,” the Cafgu member said. “Sobrang init pa kasi walang hangin, dito pa nga lang sa labas mainit na. Pero kahit paano tiyaga

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ang kailangan talaga para mabuhay [I really didn’t want my family in the evacuation center because I know it would be difficult for them because the tent doesn’t have basic appliances like an electric fan. It’s too hot inside because even here outside the tent, there’s nary a breeze. Nevertheless, we need to persevere if we want to live].” But all hope is not lost. A stone’s throw away, soldiers put finishing touches on one of 50 houses to serve as an immediate shelter and accommodation housing. The houses were inaugurated by President Duterte on October 2. The houses were built by soldiers belonging to the 1st Infantry Tabak Division, 54th Engineering Brigade, Mechanized Infantry Division, Chinese Filipino Business Club Inc. and the Tarlac Heritage Foundation. Photos inside the Tent City of Balo-I and Bito Buadi Itowa show the stories of a proud people displaced, barely surviving, but determined to rebuild their lives again.

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Banking&Finance BusinessMirror

Wednesday, October 4, 2017 • Editor: Jun B. Vallecera

news@businessmirror.com.ph

Final months seen posting slightly higher inflation

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By Bianca Cuaresma @BcuaresmaBM

nflation was seen trending back to the 3-percent territory in the final few months of the year as consumption quickens and the local currency continues to show weakness against the dollar, according to the DBS Bank. In his latest assessment of the local inflation dynamics, DBS Bank economist Gundy Cahyadi said the headline print could hit 3.1 percent again in September.

I f t h i s proves t r ue, Se ptember will be the second consecutive month that inf lation averages 3.1 percent, f rom on ly 2.8 percent in Ju ly a nd 2.7 percent in June.

“ Two factors may be behind the gradual rise in core inf lation. First, domestic demand remains firm even as it moderates. Private consumption growth is still trending circa 6 percent, while total investment growth is likely to come in near 10 percent this year,” Cahyadi said. “Second, a weakening peso is likely to have fueled inflationary expectations in the economy. The peso is the worst-performing currency in Asia this year, having weakened by some 3 percent against the US dollar this year,” he added. The weakness of the local currency was flagged in an earlier report on the manufacturing sector. Following his commentary on subdued Purchasing Managers’ Index (PMI) in August, IHS Markit economist Bernard Aw said the weakened peso pos-

Some banks abandon TDFs for 5-year bonds

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ome of the banks and trust units have found the term-deposit facility (TDF) of the Bangko Sentral ng Pilipinas (BSP) already unappealing on Tuesday and redeployed a portion of their assets to the Bureau of the Treasury (BTr) where their presence was betrayed by a surfeit of bids for five-year Treasury bonds (T-bonds). At its latest auction, the BTr awarded in full the P15 billion on offer upon seeing the investors that used to exploit the rich rewards presented by the BSP’s TDF were, instead, looking to invest in risk-free government securities. According to National Treasurer Rosalia V. de Leon, the turnout of bids at Tuesday’s auction may be traced to the reduction in the BSP’s 28-day TDF from P110 to just P100 billion. “I guess everybody’s flocking the government securities market. And the offering today is something that caters to their appetite given that [interest rates are] in the belly of the curve,” de Leon told financial reporters. T he BTr received tenders a lmost twice the full subscription amounting to P29.951 billion that forced the committee to reject P14.952 billion. The five-year T-bond rate now averages 24.7 basis points lower to 3.979 percent, from 4.226 percent set at an earlier auction. The reissued T-bonds have a remaining life of four years and three months.

“We’re happy with the participation of the GSEDs [government securities eligible dealers]. I suppose that’s because they want to improve their respective performance. Sometime before the end of the year we’ll also be selecting our market makers,” she added. Data from the BSP showed the 28-day TDF in August attracting tenders totaling only P103.33 billion, equal to only 73.8 percent of the P140 billion offered for the week. The BSP kept the volume deposit minimum unchanged at P40 billion for the seven-day TDF and P140 billion for the 28-day TDF, with the volumes having

been in place since May 2017. De L eon sa id t he gover nment is focused on the planned panda bond issu a nce seen issued by November this year. The Department of Finance earlier said the BTr tapped the Bank of China and Standard Chartered Bank as lead issuers for the $200-million sale exercise. “For now we’re just focused on the panda market. [It will be issued] onshore,” she said. Panda bonds are renminbi-denominated securities from a non-Chinese issuer but sold in the People’s Republic of China. Rea Cu

Case clippings

By Justice S J Ranada Jr.

TRADEMARKS–dominancy test The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion and deception. If the competing trademark contains the main, essential and dominant features of another, and confusion or deception is likely to result, likelihood of confusion exists. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the public or to deceive consumers. Nestlé v. Puregold GR 217194 06 Sept 2017 Carpio, J

PHL fully backing AIIB, ‘Belt and Road’ initiative

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HANGHAI—Finance Secretary Carlos G. Dominguez III has assured China of the Philippines’s full cooperation with the Asian Infrastructure Investment Bank (AIIB) and the Belt and Road program, both of which, he said, will “bring lasting benefits to all countries of this region”, as these “will set the conditions for more comprehensive trade” in this part of the world. Dominguez, at the same time, thanked China for its generosity in supporting the Duterte administration’s ambitious infrastructure-modernization program, noting that, “Over the past few years, we have developed numerous bilateral mechanisms that will allow closer coordination between our two countries across a broad range of issues and concerns.” “These bilateral mechanisms are the scaffoldings helping us build a truly functional, bilateral relationship,” Dominguez said at a briefing on the Philippine economy organized by the Bank of China at the Pudong Shangri-La, here. Given the “great strides” that have been achieved toward building a common market among the Philippines and the other member-economies of the Asean, which will create a large enough market to make their industries achieve economies of scale, Dominguez added the Philippine economy can “perform as a gateway to a very large and increasingly prosperous Southeast Asian regional market”. Dominguez said he believes the comprehensive cooperation between the Philippines in China, while currently only in its early stages, will “function as a driver of growth in the region” over the next decade. “We are grateful for the enthusiastic support China has offered to help

us grow our economy rapidly. I am sure there are many complementary points that will ensure the sustained growth of an inclusive economy in the Philippines,” Dominguez said. “There is much to look forward to in our trade and investment partnership. There is much ground for optimism in the vitality of this partnership,” he added. Dominguez said that, while the Philippines and China have been good friends historically, their development ties “may be said to have blossomed only recently” following two significant initiatives from Beijing, namely its effort to build a distinct financial community for the region via the AIIB and the Belt and Road initiative, “which might be considered the largest and most comprehensive cooperation project of this century”. “The Philippines is happy to cooperate with both the Asian Infrastructure Investment Bank and the Belt and Road program. Both initiatives will bring lasting benefits to all countries of this region. Both will set the conditions for more comprehensive trade among the countries in this part of the world,” he added. Dominguez said China has shown “immense goodwill” to the Philippines by offering to build two bridges in the Manila area—the Binondo-Intramuros Bridge and the Estrella-Pantaleon Bridge—that will both help ease traffic congestion in these areas. He likewise noted that the Philippine economy benefits from numerous investments committed by Chinese enterprises, the increased tourist flow from China and the expanding bilateral trade between the two countries. Bilateral trade between Manila and

Beijing amounted to $12.32 billion in 2011, which grew dramatically to $21.6 billion in 2016. In 2011 the Philippines received 243,137 tourists from the People’s Republic of China, which ballooned to 675,663 visitors in 2016. “In a couple of years, we expect China to become our most important partner in trade. The benefits to both our economies are enormous,” Dominguez said. He added the Philippine economy has become “an engine of growth” in Asia, with its second quarter GDP expanding by 6.5 percent, which is well on track in meeting the full-year target growth rate of 6.5 to 7.5 percent. An even more significant development is that GDP growth was led by the industry sector at 7.3 percent, and agriculture at 6.3 percent, which is a “departure from the earlier pattern where growth was led by the services sector”, Dominguez said. Overseas Filipino worker remittances, meanwhile, accounted for about a tenth of the GDP and the country’s high domesticconsumption demand, while government spending sped up by 7.1 percent year-onyear during the second quarter. He cited the economy’s low interestrate environment, benign inflation rate, lightening public-debt load, the government’s continuing efforts to improve the ease of doing business by cutting red tape, curtailing corrupt practices and limiting its negative list for foreign investments, and training the country’s young and talented work force to be more globally competitive, as among the factors that would keep the economy on its high-growth path and haul in more long-term investments.

es problems for the sector and partly to blame for the lack luster g row th during the month. The peso failed to boost exports and its weakened state has raised the cost of imports. The higher cost of imported raw materials for manufacturers due to the cheap peso led to high vendor prices as manufacturers upped the charges and passed on comparably higher overheads to consumers. Given this and the anticipated price impact of t he proposed ta x-refor m package, the Singapore-based econo-

mist said the Bangko Sentral ng Pilipinas (BSP) should soon respond to inflationary pressures and drop broad hints as to where moneta r y pol ic y is headed. “Expect the Bangko Sentral ng Pilipinas to turn more hawkish in the coming meetings. We maintain our call for a 25-basispoint rate hike in the Philippines in each of fourth quarter of 2017 and first quarter of 2018,” Cahyadi said. In its rate-setting meeting on September 21, the Monetary Board once again agreed to keep policy levers where they are, saying inflation risks have moderated enough such that consumer prices should prove within target this year and the next. The Philippine Statistics Authority is scheduled to report the September inflation data on October 5.

UnionBank has lock-card feature to secure client accounts

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ard fraud remains one of the biggest concerns faced by cardholders and banking institutions today. As Filipinos become more dependent on banking for many of their financial needs—cash safety, shopping transactions, bill payments and the like—scammers are presented with more opportunities to carry out malicious activities targeting cards. To increase the level of security against this threat, UnionBank’s EON recently rolled out a lock-card feature to help its cardholders prevent unauthorized individuals from accessing accounts through card fraud. The new lock-card feature allows users to lock their cards any time they want. This prevents criminals from accessing the accounts of users through cards that are stolen or skimmed. Card skimming is an attack vector wherein the perpetrator uses small devices called skimmers to capture the data in a user’s card. Criminals secretly place a skimmer in the card slot of a machine used for card transactions, such as automatic teller machines and point-of-sale systems (card-swiping devices used by retail cashiers) that captures user data, as well as a hidden camera that captures the unwitting victim’s personal identification number or PIN. Using the data obtained in this way, the perpetrator creates a replica of the card and then uses it and the PIN to steal money from the account. The lock-card feature is designed to deter fraudsters from stealing money from a user’s account via card fraud. The card itself may be lost, but the cardholder’s money remains safe as long as the feature is active. On top of being able to lock the card, cardholders will be sent an e-mail and a text message informing them that a transaction was attempted while the lock is active. With this feature, an EON Account becomes safer to use. The lock-card feature can be accessed through the EON App. “The lock-card feature for EON Accounts is just one of the many ways UnionBank empowers its customers with complete control over their accounts,” UnionBank President and COO Edwin Bautista said. “With this, they won’t have to worry about card fraud anymore.”

Add-on vs effective interest rate

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s medium-term financing becomes more readily available, particularly in the case of auto loans where the standard repayment period is five years or 60 months, it is always good to know how much you are actually paying in interest cost. Typically, most banks and financing companies will quote you an add-on interest rate, which is the gross interest rate per year multiplied by the number of years of the loan. This add-on interest is added to your principal loan amount and divided by the number of repayments, which is equal to your amortization. As an example, if your wanted to borrow P500,000 to buy a car for a period of five years, with an add-on interest rate of 10 percent per annum, the total amount you would have to repay back is the principal plus 50 percent, which is 10 percent multiplied by five, which is the loan tenor. This will amount to a total of P500,000 plus P250,000 for a total of P750,000. Assuming you have to make a monthly amortization payment, this will be a total of 60 months, which is 12 months multiplied by five years. Therefore your monthly amortization is P12,500. While most consumers will not think too much of paying 10 percent, you have to remember that, as you pay down your principal every month, this 10-percent interest is still being applied to the original principal amount. The effective interest rate on the other hand is the true interest rate you are paying based on the outstanding loan amount calculated after each principal repayment is deducted from your outstanding loan. Using my trusty HP 12C to calculate the effective interest, this comes out to 17.2737 percent per annum. This is really how much interest rate you are paying for availing of the 10-percent add-on rate. In comparison, when banks give you their interest rate on your savings account or time deposit you are being quoted an effective interest rate. So is this bad news for the consumer? Not necessarily, after all, the effective interest rates on credit cards and pawn shops are typically in the

finex free enterprise George S. Chua lower range of 3.0 percent a month, or 36 percent per annum. The important thing is for the consumer to be aware of the effective interest rate they are really paying for. While many consumers tend to find low down-payment options appealing, what they do not realize is that they are actually paying more in interest, since the principal amount becomes larger. To minimize your cost, you really should minimize your loan amount and your tenor. It really does not make sense to keep money in your savings account or time deposit and end up borrowing more money from the bank or financing company. With savings or current accounts paying you as little as zero-percent interest rate and time deposits paying you no more than 2.0 percent less the 20 percent withholding taxes, it absolutely does not make sense to borrow money at 17.2737 percent. Of course, if you don’t have the money to begin with, you will need to borrow as much as you can and have the longest repayment terms possible. In this situation, with an effective interest rate of 17.2737 percent, there is very little margin for missing out on making an amortization payment. I guess this is the primary reason that the highest auto-loan default rates are those that have the lowest down payments with the longest terms. In this case, before you get into trouble, you should ask yourself if you really needed that car so badly that you would be willing to take on such a risk. Comments may be sent to georgechuaph@ yahoo.com

ExportUnlimited BusinessMirror

Editor: Efleda P. Campos • Wednesday, October 4, 2017 A9

MARKET DEVELOPMENT UPDATE CREATE PHL, CECP poised to elevate PHL What’ s next for the Asean Roro? as Asia’s next creative powerhouse F

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HE Creative Economy Council of the Philippines (CECP) aims to turn the country into one of the big players in the global creative-industry scene. The CECP is a participant of the maiden edition of CREATE Philippines. The Center for International Trade Expositions and Missions (Citem), the export promotions arm of the Department of Trade and Industry, is the proud organizer of CREATE Philippines, the first-ever international creative-industry trade event in the country. Happening from October 20 to 22 at the World Trade Center and the Philippine Trade Training Center in Pasay City, CREATE Philippines will showcase the Philippines’s creative and content industries to an international market. It is where creative professionals gather, connect and identify new business ideas and collaborations. The event will focus on fast-growing creative sectors, such as visual arts and graphic design, advertising content and production, film and animation, digital games and apps and music and the performing arts.

Creative industries all over the world have generated 29.5 million jobs (or 1 percent of the world’s population) in 2015. The visual-arts sector contains the largest number of employees (6.73 million). The Philippines, a heritage-rich nation, is home to talented individuals in creative sectors, such as fashion, graphic and product design, advertising, animation, architecture, arts and crafts, music and the performing arts and visual arts. The CECP is working with CREATE Philippines to help propel the country’s creative industry toward global recognition in the coming years. The CECP, a private think tank strategist, is comprised of members from different creative sectors who all want the Philippines to be in the top creative economies in Asia Pacific by 2030. Founder Paolo Mercado described the CECP members as “the

avengers of the creative industry”. “We’re putting together a group in order to say, ‘Okay, how do we win in the creative economy?’ And by win, I mean how do we win in the national market? We’re setting a high goal,” Mercado said. Out of 128 economies surveyed in 2016, the Philippines ranked 96th from being 101st in 2015 in terms of creative outputs. Digital marketing and advertising are high-potential markets in the country, thanks to the high number of Filipino Internet users. In 2016 there were 44 million Filipinos who went online every day, and that percentage is expected to surge to 69.3 million by 2018. Internet access in the Philippines has grown by 500 percent, one of the fastest growth rates in the whole Southeast Asia. China, India, Japan and South Korea are already in the top 4 creative economies in Asia. Mercado said the Philippines should beat the likes of Indonesia and Singapore for that last, highly coveted spot. The Philippines’s annual revenue from its video-game industry amounts to $100 million, and the government and the private sector are teaming up to drive that revenue up. For example, the Game Development Association of the

Philippines recently participated at Gamescom, Europe’s biggest platform for video games, to promote its services and attract investors from Europe’s $18.4-billion video-gaming industry. “What we’re contributing to CREATE Philippines is the perspective of the private sector. Encourage them to share their ideas on how to become a powerhouse in terms of the international creative economy,” Mercado said. He added the CECP aims to prove the Philippines can be a lucrative and competent player in the international creative industry. To do that, the country’s creative marketplace must be certain of what it excels at and develop those skills. Mercado said the Philippines’s advertising, animation and digital sectors are all promising, and those sectors can be further developed by adding key people that can succeed internationally. The CECP’s goals don’t just stop at chasing individual success stories; they also want to develop business models that will take the Philippines higher up the ladder in the creative sector. The CECP is not biased toward a particular creative industry. The group is collaborating with all the local creative sectors and unifying them in the process.

OLLOWING the successful launch of the Asean Roro (roll-on, roll-off) shipping service between Davao, General Santos and Bitung (DGB) on the eastern part of Indonesia, what’s next for the Asean Roro? While the establishment of the Asean Roro was considered a major accomplishment of the Philippine government in its chairmanship of the Asean this year, the government and private stakeholders are faced with challenges in sustaining the route, such as low load factor and regulatory constraints. However, the Interagency Task Force on Roro, spearheaded by the Department of Transportation and composed of government agencies involved in transportation and trade (the Department of Trade and Inustry [DTI], Mindanao Development Authority, etc.) are continuously working in making the route sustainable. One such initiative was the trade mission to Jakarta and Manado from September 4 to 8 organized by the Davao Chamber of Commerce, the Indonesian Consulate in Davao and strongly supported by DTI Davao Region 11 and the Foreign Trade Service Corps. T he Ph i l ip pi ne bu si nes s delegation composed of government representatives and local entrepreneurs in Davao focused on building networks and partnerships with Indonesian companies in the areas of trading, joint-venture agreements, joint-production schemes and other forms of strategic partnerships in a bid to sustain the DGB Roro operations and expand trade with Indonesia. DTI Trade and Investments Promotion Undersecretary Nora K. Terrado said, “Sustaining the Roro

By Alma F. Argayoso Trade Service Officer, PTIC Jakarta

operations, launched in April by President Duterte and Indonesian President Joko Widodo, is high on the agenda of the DTI.” “We want to see the sustained operations of the shipping service so our local entrepreneurs, particularly our small and medium enterprises in Mindanao, could begin to reap the gains from enhanced connectivity between Mindanao and Sulawesi, and the greater Brunei Darussalam-Indonesia-Malaysia-Philippines-East Asean Growth Arearegion,” Terrado said. Among the companies that joined the delegation were Eagle Multi Purpose Cooperative, Mindanao Agriplus Corp., Certuso Structural Speacialists Corp., Halal Business Council, Aleson Shipping Lines Inc. and Fastcargo Logistics Corp. Business-to-business meetings and networking sessions, site visits in Bitung Port, as well as market and company visits were included in the mission’s itinerary. The interagency task force also met with their Indonesian counterparts in Jakarta on the second week of September to discuss remaining regulatory constraints and focus on efforts to sustain the operations. Once the DGB route truly becomes operational, the government can then focus on the next route to be formed for the international network envisioned by our Asean leaders in the Master Plan on Asean Connectivity, or MPAC 2025.

Taiwan entrepreneurs urged to invest in PHL biz ventures By Roderick L. Abad Contributor

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PHL ENDORSES CONTINUING ASEAN-RUSSIA GROWTH STORY

Following the June visit of President Duterte in Russia, the Philippines successfully concluded a trade and investment scoping mission in Russia, as well as actively participated in the Eastern Economic Forum (EEF) on September 6 and 7. The country promoted trade and investment opportunities to Russian importers and buyers of food products, government representatives of the Primorsky Territory, officials and members of the Primorsky Chamber of Commerce and Industry, officials of the commercial port of Vladivostok and the Far Eastern Development Corp. Leading the Philippine delegation was Department of Trade and Industry (DTI) Undersecretary Rowel Barba (fifth from right), with Philippine Ambassador to Russia Carlos D. Sorreta (sixth from left), Philippine Economic Zone Authority (Peza) Director-General Charito B. Plaza (fifth from left), Philippine-Russian Business Assembly Inc. Armi Lopez Garcia (seventh from right) and Cagayan Economic Zone Authority (Ceza) Administrator Raul Lambino (sixth from right). Other officials were from DTI, the Department of Agriculture, the Philippine Chamber of Commerce and Industry’s Philippines-Russia Business Council and the Mindanao Banana Farmers and Exporters Association. Barba also served as panel speaker during the EEF’s Russia-Asean Dialogue, where he underscored the latest developments and business opportunities in the Philippines and Asean. He also encouraged private sector members to do business in the Philippines, given that among the Asean countries, the Philippines is consistently among the fastest-growing economies.

PHL IT-BPM companies talked biz with Korean ICT delegates By Maria Luz S. Medialdia Supervising TIDS, DTI-EMB

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HE Philippine Department of Trade and Industry-Export Marketing Bureau (DTIEMB), together with Korea Association for information and communications technology (ICT) Promotion (KAIT), conducted an Inbound Business Matching Mission (IBMM), a strategic EMB program to maximize the opportunities of partnering and doing business with foreign counterparts. KAIT led a group of 13 Korean ICT companies that came to meet with the Philippine companies for a possible collaboration and partnership in the area of ICT. This undertaking was part of the continuous support of EMB to promote the Philippine IT BPM sector through a showcase of the country’s IT offerings during the conduct of the business-to-business (B2B) meetings, as well as to develop the network of collaboration with KAIT member-companies. The IBMM was a two-day activity, entitled “2017 Philippines-Korea ICT Partnership Program”, aimed to provide a venue for the ICT companies of both countries to exchange business experiences and develop possible business relationships between the Philippines and Korea in the area of ICT. The B2B event was an opportunity for the Philippine ICT companies to expand their network

REPRESENTATIVES of Philippine information and communications technology (ICT) companies meet with their counterparts from 13 Korean firms during an Inbound Business Matching Mission (IBMM) with the Korea Association for ICT Promotion (KAIT) sponsored by the Department of Trade and Industry, on September 7 and 8.

of contacts in Korea, as well. The first day focused on the business matching, scheduled on September 7 at Makati Shangri-La Hotel. On the second day, September 8, company visits and focused discussions were conducted with the two major telecommunication companies of the Philippines, Globe and PLDT. The main areas for business opportunities

among Philippine ICTs and the 13 Korean delegates covered digital advertising solution, IoT cloud-platform provider, smart-center platform solution, database-encryption solution, geographic-information system, education technologyand software digital-signage solution, among others. The Philippine companies that met with Korean delegates were Alliance Software Inc., IQOR, Collabera, Northstar Solutions Inc., Dynaquest Technology Services Inc, Personiv, DTSI Group, CPI Outsourcing, CAI-STA Philippines Inc., ADEC Innovations, Xurpass Enterprise, Global Outsourcing, Red Core Solutions, Ammex iSupport Worldwide, Jones Lang LaSalle Philippines Inc., Lares Inc., Robinsons Land Inc. and Learning Development. The DTI-EMB and KAIT’s collaboration aimed to explore and gain valuable business leads and partnership among and between the Philippines and Korean companies in the area of telecommunications and IT-related technology. With the onset of 4G technology, the Philippines was identified by KAIT as one of the targeted countries to engage with for their future plans for convergence of ICT services in the Asian region. The event was coorganized by the EMB, the Korea Ministry of Science and ICT, through its National IT and Promotion Agency, supported by the Philippine Software Industry Association.

AIWANESE enterprises are encouraged to do business in the Philippines to further strengthen the economic and bilateral ties of two allied and close neighbors. “Now is the best time and the best opportune moment to nourish our friendship and to work together to strengthen our relations and broaden multifaceted cooperation, so as to create a win-win situation eventually mutually beneficial for us,” Taiwan Association Inc. (TAI) President Allan Lin said during the opening ceremonies of the Taiwan Expo 2017 held in Pasay City over the weekend. In support of Taiwan President Tsai Ing-wen’s New Southbound Policy, the top executive called for potential Taiwanese investors to venture in various Philippine industries, including agriculture, fisheries aquaculture, technology, small and medium enterprises, information and communications technology, green technology, climate change, education and culture. “Also, as the Philippines’s infrastructure and public facilities have been continuously improved over the years and the efficiency of operations at ports has also been increasing, I will urge more Taiwanese entrepreneurs to diversify their investments to the Philippines,” he added. Since the Philippines has become the forefront and gateway of Taiwanese investors to Southeast Asia, Lin urged more Filipino entrepreneurs to engage potential partners from Taiwan in agribusiness, manufacturing, banking, transport and communications, infrastructure and real estate, and tourism and logistics. The competitive advantages of the Philippines as a preferred investment destination, he said, include strong

Now is the best time and the best opportune moment to nourish our friendship and to work together to strengthen our relations and broaden multifaceted cooperation, so as to create a win-win situation eventually mutually beneficial for us.”—Lin

macroeconomic fundamentals, an English-speaking population, a vast pool of talented professionals and a young consumer market with increased purchasing power. “All of these above-mentioned factors explain why the Philippines has been selected as one of the most important countries to be prioritized by Taiwan to carry out the New Southbound Policy. If we work in partnership, I am sure our two countries will benefit from it,” Lin added. Taiwan has very close economic relationship with the Philippines, with the latter being its 10th-largest trading partner. The former is the 12th-largest foreign investor in the Philippines, with total investments reaching $2.3 billion last year. “I believe that our two countries will continue to strengthen cooperation and deepen bilateral substantive relations based on the existing solid foundation,” Lin said. “With your help, our cooperation, partnership and substantial bilateral relations will grow from strength to strength in the years to come.”

A10 Wednesday, October 4, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Food insecurity in PHL

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he Economist Intelligence Unit (EIU) released last week the 2017 Global Food Security Index (GFSI) that provided a worldwide perspective on which countries are most and least vulnerable to food insecurity and how resource risks increase vulnerability. The GFSI, developed by the EIU and sponsored by chemical and seeds firm DuPont, considered three core pillars of food security—affordability, availability and quality and safety— across 113 countries. It also included a new category on natural resources, which measured a country’s exposure to the impacts of a changing climate, its susceptibility to natural resource risks and how a country is adapting to these risks. The GFSI model defined food security as the state in which people, at all times, have physical, social and economic access to sufficient and nutritious food that meet their dietary needs for a healthy and active life. The EIU said this framework is based on the internationally accepted definition established at the 1996 World Food Summit. Out of the 113 countries ranked by the EIU, the Philippines garnered a score of 47.3 and placed 79th. The country trailed behind other poor countries, including Guatemala, Honduras, Ghana and Pakistan. In Asia Pacific out of the 23 countries assessed by the EIU, the Philippines landed on 17th place. Poor countries in Asia Pacific, such as Sri Lanka and Pakistan, obtained higher scores and fared better than the Philippines. In terms of the three pillars of food security, the Philippines ranked 77th on affordability, 80th on availability and 69th in quality and safety. The country’s ranking in the new natural resources and resilience category was dismal at 101st. Among the subcategories, the Philippines ranked first in only one— nutritional standards. The index, which also included year-on-year trends, showed that in the last five years, the Philippines had never garnered a score higher than 50. From 2012 to 2017 the index showed that the Philippines’s average score declined by 2.6 points. Among Asia-Pacific countries surveyed by the EIU, the Philippines and Tajikistan performed poorly in the last five years. However, this is not unique to the Philippines and other countries that have seen their scores decline. According to the EIU, more than 60 percent of countries in the GFSI saw their scores deteriorate in the past year. According to the GFSI, the major challenges that the Philippines needs to address to boost food security are the minimal public expenditure on agricultural research and development (R&D) and corruption. Out of 100, the Philippines scored zero in these two indicators. This means that government spending on agricultural R&D and efforts to eliminate corruption are not enough. Governments can take a cue from Ireland, which has overtaken the United States, at the top of the GFSI. Its continued economic rebound after the Irish banking crisis of 2008-2010, and as its high public investment in R&D have enabled Ireland to take the top spot in this year’s GFSI. Unfortunately, GFSI experts noted that austerity remains the norm across advanced economies and many emerging economies, including the Philippines. Aside from putting more money into agricultural R&D, the government should reach out to the private sector and find ways to boost food supply. Data from the Department of Science and Technology (DOST) showed the R&D expenditures of both the private and public sectors in the Philippines have not even reached 1 percent of GDP. While the absolute values grew over the years, the DOST said the equivalent shares to GDP remained constant at 0.14 percent. For a country that is highly vulnerable to climate change, low government spending on R&D is unacceptable. The Philippines must not just rely on the kindness of its neighbors and other advanced countries to develop the technologies needed to increase food production. Instead of spending taxpayers’s money on projects that do not benefit many Filipinos, such as the construction of basketball courts, the government should just channel funds to more R&D activities that will improve the country’s food supply.

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Art Amansec

All About Social Security

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he Social Security Commission works as the policy-making body of the Social Security System (SSS). It acts collegially. It checks the decisions and recommendations of SSS vice presidents and department managers, who constitute the management. Major management decisions, especially those requiring financial allocations, cannot be implemented without the approval of the Commission. The present Commission is chaired by former University of the East dean, lawyer Amado D. Valdez. Former Insurance Commissioner lawyer Emmanuel F. Dooc is the president. In order to facilitate its policy-making and related functions, the Commission has activated seven working and research committees, notably, the Investments Oversight Committee, chaired by Commissioner Pompee La Viña, a successful businessman and social-media wizard; the Information Technology (IT) Committee, which is principally tasked to make the SSS IT-savvy and chaired by Commissioner Di-

ana Pardo-Aguilar; the Media Affairs Committee, also chaired by Commissioner Pompee La Viña; the Audit Committee, chaired by Commissioner Anita Bumpus-Quitain; the Membership Committee, chaired by Comm. Gonzalo Duque; the Risk Management Committee, chaired by Commissioner Michael Regino; and the Governance, Organization and Appointments Committee (GOAC) chaired by yours truly. Ideally, all management policies and decisions regarding facets of administration, including the movements, notably, appointments, promotions and discipline

of employees are reviewed by the GOAC before they are confirmed by the Commission en banc. The chairman of the GOAC and the other committees were handpicked by Valdez. On the other hand, memberships in the committees are determined on a volunteer basis. A Commissioner is given the privilege to choose the committee he or she wants to be a member of. I willingly accepted the chairmanship of the GOAC, secretly admiring Valdez about his psychic ability to have perceived my interest in the handling of matters and concerns relating to employment. But maybe, just maybe, he chose me to be chairman of the GOAC because of my long stint as labor arbiter of the National Labor Relations Commission, where I resolved dismissal and money-claims cases filed by workers against their employers. As GOAC chairman, the first thing that came to my mind was the millions of SSS members, particularly those disabled and nearretirees who need all the empathy of the SSS public servants. Are we serving our members well enough? Why do I hear complaints about long delays in the processing of death claims? Why do I hear about rude SSS personnel?

As GOAC chairman, I was burdened to think of ways of improving SSS services. A visiting friend from the United States advised me, “Arch, why don’t you render your service to your members with a smile? It will cost your employees nothing, but it will gain for the SSS a lot of goodwill,” she told me. Her name is Hatima Saul Centi, who works as a nurse in New Jersey. She was right. So, with all good intention in mind and in heart, in aid of policymaking, I decided to check on the SSS branches, nearly 200 of them, scattered all over the archipelago. My first target branch was SSS Guadalupe, headed by Hoechst Potato. I ordered two of my staff to go undercover and check the services of the branch. I was impressed with the report of my staff. The counter employees of the branch were all cordial and friendly, entertaining the needs and plaints of the members. Everyone was friendly and smiling as they talked with SSS clientele. When the report reached Valdez, he readily promised to give the branch a personal reward donation of P5,000. The same went true with my second target branch, the Malolos See “Amansec,” A11

Martin Frankel: A story of insurance fraud

T. Anthony C. Cabangon

Editor in Chief

Senior Editors

The shadow of their smiles

Dennis B. Funa

INSURANCE FORUM

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he story of Martin R. Frankel (born 1954) is the story of the biggest and most notorious insurance fraud in the history of the United States. Frankel was a con man who was eventually sentenced to 16 years in prison. A second-year college dropout from the University of Toledo, Ohio, Frankel was a securities trader who set up the “Frankel Fund” and stole money from his investor clients. He would use the shareholder accounts for his personal expenses. The fund was eventually closed down in 1992, and the Securities and Exchange Commission fined him $1 million and forever banned him from trading in securities. With a ban in place, Frankel then operated under assumed names (he used several aliases, such as James Spencer, David Rosse and Mike King) and operated unregistered securities. He set up the Thunor Trust based in Franklin, Tennessee. Using this trust and $71 million, he gained an 83-percent control of a holding company, the Franklin American Group, which held interests in various southern insurance companies, such as the Franklin American Life Insurance Co. International Financial Services Life Insurance Co. and other small insurance companies in

such states as Colorado, Mississippi, Virginia and Alabama. It was never established where the $71 million came from. He also acquired the Protective Services Life Insurance Co. in 1994. He targeted struggling southern insurance companies. Eleven in all. There is a perception that regulations in these states were lax. These companies mostly sold funeral insurance. His modus would be to acquire insurance companies and then loot the reserves and the premiums paid. Of course, the purchase price is much lower than the pile of money with the

Eventually, in April 1999, the insurance regulator of Mississippi became suspicious of investments being made overseas through a purported Vatican-connected religious foundation. He had established the Saint Francis of Assisi Foundation as a way to launder money, hoping that the Vatican connection would lend credibility. On the contrary, it only aroused the suspicion of the Mississippi regulator.

insurance companies because monies will have to be paid out to the policyholders. He would even use these reserves to acquire other insurance companies in a seeming Ponzi scheme. He tapped into these reserves without being noticed. More than $208 million would be stolen from these insurance companies in a decadelong scam. Frankel would take over the reserves of the holding company and its subsidiaries on the pretext that these will be invested. Instead of being legally invested in government bonds, most of the investments were made in Frankel’s own shell companies, such as the Liberty National Securities, which operated from his living room, and where the funds would be siphoned off in Swiss bank

accounts. Frankel presented bogus financial statements that showed high returns on investments. Eventually, in April 1999, the insurance regulator of Mississippi became suspicious of investments being made overseas through a purported Vatican-connected religious foundation. He had established the Saint Francis of Assisi Foundation as a way to launder, money hoping that the Vatican connection would lend credibility. On the contrary, it only aroused the suspicion of the Mississippi regulator. Specifically, the insurance commissioner wanted to know why $600 million was moved from a Vatican-linked foundation in Italy to a Catholic charity in the British Virgin Islands and then to a trust that controlled a group of Mississippi insurance companies. The state insurance commissioner ordered Frankel to place several million dollars on deposit with a reputable Mississippi bank. He made an escape to Rome in May 1999, but was eventually arrested on September 4, 1999, in a Hamburg, Germany, hotel. In 2004 he was sentenced to 200 months in prison. He was released on October 27, 2016.

Lawyer Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.

opinion@businessmirror.com.ph

Opinion

Kung fu wisdom

The EU and the Philippines

BusinessMirror

Teddy Locsin Jr.

Free fire Continued from A1

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ee died before the movie’s release. Here is one reflection, written in a small notebook, in his small neat hand. “The power of will is the supreme court over all other departments of my mind. I will exercise the power of will daily for when I need the urge to act. I will form the habit, at least once daily, to bring the power of my will into action.”

What he is saying is that none of this is instinctive. If anything is instinctive, it is lack of will or enervation. Here’s another. “My emotions often err in their overenthusiasm. My faculty of reason often is without the warmth of feeling necessary to enable me to combine justice with mercy in my judgments. I will encourage my conscience to guide me as to what is right and what is wrong, but I will never set aside the verdicts that conscience renders, no matter the cost of carrying them out.” What he is saying is that even feelings need to be trained to respond to situations and often the

response is excessive or too little, badly calibrated with the nature of the occasion calling them forth. Even conscience needs to be prodded into working. Most of the time, we are conscienceless. And even after our conscience is awakened and arrives at the right judgment, yet another act of will is needed to abide by the ruling of conscience. What he is saying is that, by nature, man is lazy and the closest of his evolutionary companions is the sloth. All that from a real kung fu master and not an animation though nothing tops Kung Fu Panda’s words, “Enough talk, let’s fight.”

Gun massacres won’t stop until voters demand action

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n the immediate aftermath of a mass shooting in America, the usual response is twofold: Mourn the victims and wait for the facts. It’s getting increasingly hard to justify the second. In other realms of public debate, the facts can be used to guide an analysis of any proposed policy response. The problem is that dispassionate analysis of gun-safety laws, no matter how long delayed, never penetrates the panic room in which politicians hide out from their responsibilities. After a deranged young man used his mother’s readily accessible firearms in 2012 to shoot schoolchildren and educators in Newtown, Connecticut, issues, such as proper gun storage and the challenges of balancing legal gun rights and mental-health risks, were frighteningly obvious. Nothing happened in Congress. Instead, the gun lobby and the extremist movement it has long nurtured went on a legislative rampage through conservative states —pushing for guns in churches, in bars, on playgrounds and on campus, concealed and open. Right now, Republicans in the House of Representatives are focused on legislation to make crime more convenient by ending regulations on silencers and enabling concealed guns to be carried in places where they are expressly unwanted, and by people with no training or background check. With each massacre—from a church in Charleston, South Carolina, to a club in Orlando, Florida

Amansec. . .

continued from A10

Branch. The branch recently won the five-star distinguished service award from the Civil Service Commission, thanks to its branch manager, Francisco Paquito L. Lescano, and the employees therein who are caring and compassionate to members, particularly the senior citizens, the mayayabang and the makukulit ones. My third target branch was a disaster. Due to complaints I had personally received that the counter employees in this branch were not friendly to inquiring members and the general public, I ordered two of my staff to go undercover and check on the veracity of the complaints. Nobody was smiling, my staff reported. My female staff was even reported as mayabang. My

—and with each pointless, preventable shooting in which a child picks up a loaded firearm left by a reckless adult, the gun lobby and its culture warriors issue the same sick call: to counter the effect of too many guns with a rash of more guns, and fewer restrictions on using them. In Las Vegas, one of the National Rifle Association’s favorite maxims—the only thing that stops a bad guy with a gun is a good guy with a gun—was exposed yet again as not just false but tragically absurd. If the gun debate in the US appears stalled, it is because argument in the absence of reason and facts is circular. Thus a White House spokesman for President Donald J. Trump, who previously called himself the NRA’s “true friend”, said it’s inappropriate to discuss remedies to gun violence so soon after a mass incidence of gun violence. There are legitimate disputes about the scope of the Second Amendment, the efficacy of specific gun regulations and the right to selfprotection. None of these is debated in Congress, and few in statehouses, because too many politicians subscribe to aphorisms and claptrap in lieu of an honest reckoning that more guns, and less regulation, is a recipe for mayhem. This cycle of preventable violence and pointless debate will not end until more political leaders, and responsible gun owners, acknowledge the obvious: that sensible restrictions on gun possession and use are both constitutional and necessary. Bloomberg View order to her was really to act mayabang to provoke the counter employees to see if they were understanding enough to accommodate the mayayabang and makukulit inquirers. Will I go on with my mission? Will I just be courting the ire of managers and employees who do not want to freely give their smile or leave its shadow to foul-smelling widows in dirty slippers and dusters who braved sun and rain to inquire about the delayed death benefit of their deceased husbands? The wit that concocted the sign “Bawal Ang Nakasimangot” certainly knows the comforting effect of a smile, especially coming from a civil servant. Indeed, the smile will linger in the member’s mind, its shadow becoming an unforgettable and memorable embrace of love and compassion for a more positive SSS image.

Edgardo J. Angara

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rade Secretary Ramon M. Lopez and I led a Philippine delegation to the European Union (EU) in Brussels, Belgium last week.

We had extensive discussions with EU officials on a range of concerns from the drug war, to Islamic State of Iraq and Syria, to Generalized Scheme of Preferences Plus (GSP+) and the free trade agreement (FTA), to President Duterte’s invitation to the United Nations Human Rights Council and EU Subcommittee on Human Rights to open in Manila a human-rights monitoring center, to EU request to allow Senator Leila M. de Lima to attend Senate sessions and exercise her parliamentary

duties when the Senate is in session. We met with the EU commissioner of trade (equivalent to minister of trade), members of EU parliament (MEP) chairing Southeast Asia, the Committee on Human Rights, the Committee on Trade in charge of GSP+ and FTA, the committee in charge of Partnership and Cooperation Agreement (PCA) on grants, and the head of the EU Commission Secretariat. The meetings were all generally pleasant, open and civil. All

Wednesday, October 4, 2017 A11

praised the Philippines’s openness to dialogue and warmly welcomed Duterte’s initiative allowing the setting up in Manila of a monitoring center and his invitation to President Donald J. Trump to attend the Leader’s Summit in Manila in November. The human-rights issue needs to be confronted head on because it is inextricably linked to and cannot be separated from our trade relations with the EU. Philippine exports to the EU already amounted to €6.2 billion, or P317 billion, in 2016. Up to €213 million, or P12.7 billion, fall under the GSP+, a privilege the EU granted to the Philippines in December 2014. Under the GSP+, the Philippines can export to the EU at zero-tariff up to 6,200 products, including our most prized exports, like fruits, coconut oil, fish and textiles. The Philippines became eligible and the EU accorded us the special preferential trade deal given that the Philippines had ratified and

implemented various international conventions on human rights and labor rights, the environment and good governance. The main beneficiaries include entrepreneurs from Mindanao exporting tuna and fish products to the EU. The President’s initiative and the visit of a high-level delegation possibly turned the once frosty relations and, sometimes, angry exchanges to a new and cooperative mood. “Let’s continue to engage each other,” “How can we help?” were expressions often uttered by key EU executives. I believe strongly we should take aggressive measures to seize the changing political atmosphere: a more unified action in diplomacy and trade, a proactive Senate participation, and a more enlightening and less combative messaging. The EU can be one of our most effective partners in peace making and development in Mindanao. E-mail: angara.ed@gmail.com, Facebook and Twitter: @edangara

Martin Frankel: A story of insurance fraud Michael Makabenta Alunan

on the contrary

T

he story of Martin R. Frankel (born 1954) is the story of the biggest and most notorious insurance fraud in the history of the United States. Frankel was a con-man who was eventually sentenced to 16 years in prison. A second-year college dropout from the University of Toledo, Ohio, Frankel was a securities trader who set up the “Frankel Fund” and stole money from his investor clients. He would use the shareholder accounts for his personal expenses. The fund was eventually closed down in 1992, and the Securities and Exchange Commission (SEC) fined him $1 million and forever banned him from trading in securities. With a ban in place, Frankel then operated under assumed names (he used several aliases, such as James Spencer, David Rosse and Mike King) and operated unregistered securities. He set up the Thunor Trust based in Franklin, Tennessee. Using this trust and $71 million, he gained an 83-percent control of a holding company, the Franklin American Group, which held interests in

various southern insurance companies, such as the Franklin American Life Insurance Co., International Financial Services Life Insurance Co. and other small insurance companies located in such states as Colorado, Mississippi, Virginia and Alabama. It was never established where the $71 million came from. He also acquired the Protective Services Life Insurance Co.

in 1994. He targeted struggling southern insurance companies. Eleven in all. There is a perception that regulations in these states were lax. These companies mostly sold funeral insurance. His modus would be to acquire insurance companies and then loot the reserves and the premiums paid. Of course, the purchase price is much lower than the pile of money with the insurance companies because monies will have to be paid out to the policyholders. He would even use these reserves to acquire other insurance companies in a seeming Ponzi scheme. He tapped into these reserves without being noticed. More than $208 million would be stolen from these insurance companies in a decadelong scam. Frankel would take over the reserves of the holding company and its subsidiaries on the pretext that these will be invested. Instead of being legally invested in government bonds, most of the investments were made in Frankel’s own shell companies, such as the Liberty National Securities, which operated from his living room, and where the funds would be siphoned off in Swiss bank

The philosophical assault on Trumpism David Brooks

new york times

E

stablishment Republicans have tried five ways to defeat or control Donald J. Trump, and they have all failed. Jeb Bush tried to outlast Trump, and let him destroy himself. That failed. Marco Rubio and others tried to denounce Trump by attacking his character. That failed. Reince Priebus tried to co-opt Trump to make him a more normal Republican. That failed. Paul Ryan tried to use Trump; Congress would pass Republican legislation and Trump would just sign it. That failed. Mitch McConnell tried to outmaneuver Trump and Trumpism by containing his power and reach. In the Senate race in Alabama last week and everywhere else, that has failed. Trumpist populist nationalism is still a rising force within the GOP, not a falling one. The Bob Corkers of the party are leaving while the Roy Moores are ascending. Trump himself is unhindered while everyone else is frozen and scared. As a result, the Republican Party is becoming a party permanently associated with bigotry. It is becoming the party that can’t govern. And as a bonus, Trumpish recklessness could slide us into a war with North Korea that could leave millions dead. The only way to beat Trump is to beat him philosophically. Right now the populists have a story to tell the country about what’s gone wrong. It’s

a coherent story, which they tell with great conviction. The regular Republicans have no story, no conviction and no argument. They just hem and haw and get run over. The Trump story is that good honest Americans are being screwed by aliens. Regular Americans are being oppressed by a snobbish elite that rigs the game in its favor. White Americans are being invaded by immigrants who take their wealth and divide their culture. Normal Americans are threatened by an Islamic radicalism that murders their children. This is a tribal story. The tribe needs a strong warrior in a hostile world. We need to build walls to keep out illegals, erect barriers to hold off foreign threats, wage endless war on the globalist elites. Somebody is going to have to arise to point out that this is a deeply wrong and un-American story. The whole point of America is that we are not a tribe. We are a universal nation, founded on universal principles, at-

tracting talented people from across the globe, active across the world on behalf of all people who seek democracy and dignity. The core American idea is not the fortress, it’s the frontier. First, we thrived by exploring a physical frontier during the migration west, and now we explore technological, scientific, social and human frontiers. The core American attitude has been looking hopefully to the future, not looking resentfully toward some receding greatness. The hardship of the frontier calls forth energy, youthfulness and labor, and these have always been the nation’s defining traits. The frontier demands a certain sort of individual, a venturesome, hardworking, disciplined individual who goes off in search of personal transformation. From Jonathan Edwards to Benjamin Franklin, Abraham Lincoln to Frederick Douglass, Americans have always admired those who made themselves anew. They have generally welcomed immigrants who live this script and fortify this dynamism. The Republican Party was founded as a free labor party. It believed in economic diversity, cultural cohesion and national greatness. The entrepreneurial economic philosophy was highly individualistic, but strong local communities built a web of nurturing relationships and shared biblical morality helped define common standards of character. This American vision champions social mobility. The original Republicans were not for or against government, they were for government that sparked mobility; they were against

accounts. Frankel presented bogus financial statements that showed high returns on investments. Eventually, on April 1999, the insurance regulator of Mississippi became suspicious of investments being made overseas through a purported Vatican-connected religious foundation. He had established the Saint Francis of Assisi Foundation as a way to launder money hoping that the Vatican connection would lend credibility. On the contrary, it only aroused the suspicion of the Mississippi regulator. Specifically, the insurance commissioner wanted to know why $600 million was moved from a Vatican-linked foundation in Italy to a Catholic charity in the British Virgin Islands and then to a trust that controlled a group of Mississippi insurance companies. The state insurance commissioner ordered Frankel to place several million dollars on deposit with a reputable Mississippi bank. He made an escape to Rome in May 1999 but was eventually arrested on September 4, 1999, in a Hamburg, Germany hotel. In 2004 he was sentenced to 200 months in prison. He was released on October 27, 2016.

government that enervated ambition. These Americans heavily invested in schools at a time when other nations were investing heavily in welfare states. These Americans built railroads and roads to increase mobility. They tore down social, racial and legal barriers to give poor boys and girls an open field and a fair chance. Today, the main enemy is not aliens; it’s division—between rich and poor, white and black, educated and less educated, right and left. Where there is division there are fences. Mobility is retarded and the frontier is destroyed. Trumpist populists want to widen the divisions and rearrange the fences. They want to turn us into an old, settled and fearful nation. The Republican Party is supposed to be the party that stokes dynamism by giving everybody the chance to venture out into the frontier of their own choosing—with education reform that encourages lifelong learning, with entitlement reform that spends less on the affluent elderly and more on the enterprising young families, with regulatory reform that breaks monopolies and rules that hamper startups, with tax reform that creates a fair playing field, with immigration reform that welcomes the skilled and the hungry. It may be dormant, but this striving American dream is still lurking in every heart. It’s waiting for somebody who has the guts to say no to tribe, yes to universal nation, no to fences, yes to the frontier, no to closed, and yes to the open future, no to the fear-driven homogeneity of the old continent and yes to the diverse hopefulness of the new one.

2nd Front Page BusinessMirror

A12 Wednesday, October 4, 2017

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PHL earns ₧146B from inbound tourism in H1 with Taiwanese as top spenders By Ma. Stella F. Arnaldo

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@akosistellaBM Special to the BusinessMirror

HE Department of Tourism (DOT) has finally released its first-half visitor receipts for 2017, showing an increase of almost 15 percent to P146.34 billion.

Visitor receipts refer to the income earned by the country f rom tou r i sm ac t iv it ies. O n its web site, the DOT said the month of May recorded the biggest earnings at P27.86 billion, as well as the highest growth of

39.62 percent, year on year. For June 2017 alone, earnings jumped 30.7 percent to P27.1 billion, from the P20.8 billion in June 2016. The average spending by tourists in the Philippines every day was P6,229.27, an increase of

₧6,229.27

The average daily spending of tourists in the country in June 20.26 percent from June 2016. Under the National Tourism Development Plan of 2016-2022, the Duterte administration aims to generate P407 billion in inbound visitor receipts from a targeted 6.5 million foreign tourists for 2017. This year’s inbound visitor-receipts target is up 15.3 percent, from P353 billion in 2016, which was earned from 5.9 million foreign tourists. This developed as Tourism Secretary Wanda Corazon T. Teo

instructed all DOT regional directors “to submit reports of visitor receipts, weekly”, according to a highly placed source in the agency. The source said this was in response to insistent queries on the delay in releasing the visitorreceipts data. In a separate interview, Undersecretary for Tourism Development Planning Benito C. Bengzon, who now oversees the statistics division of the DOT, explained the delay to difficulties in collecting data from tourism establishments. “You must remember, these data are collected from third parties [hotels, restaurants, travel agents, etc.],” he said. He underscored that, in comparison, v isitor-arrivals data

PPA seeks justice for slain member, better protection for pharmacists

Geronimo was a good pharmacist and she was just doing her job to protect the health and welfare of patients, as mandated by the Pharmacy Act of 2016, when she was killed by her customer. PPA officials, including its President Dr. Yolanda Robles, former President Leonila Ocampo and Board of Directors Reynaldo Umali and Mercelinda Gutierrez, also asked the authorities to speed up their investigation on the case and arrest the stillunidentified suspect. The officials said G eronimo was a good pharmacist, and she was just doing her job to protect the health and welfare of patients, as mandated by the Pharmacy Act of 2016, when she was killed by her customer. The officials also explained that a pharmacist is very different from being an ordinary vendor, while antibiotics are not ordinary medicine, that’s why customers need to present prescription before they can be allowed to buy them. Robles stressed that prescriptions from doctors are important to make sure that the medicines being given to the patients are fit to cure their illnesses and avoid any complication that may cause harm to their health. Ocampo, for her part, noted that a pharmacist is a friend and not an enemy, while Umali said that what happened to Geronimo was the worst form of harassment against a pharmacist because it resulted in her death. Gutierrez, meanwhile, appealed to authorities to give protection to pharmacists and other health workers in the country who are only doing their job.

almost P5.25 billion, the United States with P2.62 billion, Taiwan with P2.14 billion and Japan with P2.13 billion. Among the top 20 source markets of tourists for the Philippines, the DOT said Taiwan registered the highest per-capita expenditure for two consecutive months. Each visitor from Taiwan spent an average of P116,443.45 while in the country. Visitors from Vietnam came in second with a per-capita spend of P97,440.99; followed by South Korea at P80,722.99; China at P79,420.88; Norway at P59,981.81; and Malaysia at P59,883.58. The Duterte administration aims to generate P922 billion in inbound visitor receipts by the end of its term in 2022.

URBAN SLUM PROBLEM WORSENING ON LACK OF AFFORDABLE HOMES

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he Philippine Pharmacists Association (PPA) has appealed to authorities to immediately arrest a man who shot and killed one of their members just for refusing to sell him antibiotics after he failed to present a doctor’s prescription. In a news conference in their office, the PPA has denounced the killing of their member Loigene Geronimo, 40, a pharmacist and drugstore owner in San Jose del Monte, Bulacan. Geronimo was killed by a lone gunman on September 26 inside her drugstore after she refused to sell antibiotics to the suspect due to lack of prescription from a doctor.

were sourced directly from arrival and departure cards of the Bureau of Immigration. Under the previous administration, a visitor-receipts report was usually released together with the monthly visitor-arrivals report. But, in the past months, the DOT had failed to do so, prompting questions from the media why it was now taking longer for the agency to release visitor-receipts data. Meanwhile, the DOT said foreign tourists stayed an average of 10.04 nights in the country in June 2017, longer by 5.02 percent from the average length of stay in June 2016. South Korea was the top spending market in June 2017, with receipts amounting to about P8.75 billion, followed by China with

By Cai U. Ordinario @cuo_bm

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MID-AUTUMN FESTIVAL A giant moon cake is displayed at the second level of Lucky Chinatown Mall as part of its celebration of the MidAutumn Festival, one of the most important events for the Chinese. Lucky Chinatown Mall has lined up several activities from September 25 to October 8 to celebrate the event, such as colorful and spectacular performances, a culinary showdown and fun games. ALYSA SALEN

Emergency powers. . . is being undertaken. The Ways and Means Committee recommended the abolition of the BOC and have it replaced by the BCS and BSC. “The replacement of the present bureau with two new bureaus is no easy task. The complexity of the current system and the difficulty of the entire transition process can give rise to unforeseen difficulties. As such, this committee recommends a two-year transition process to establish a fully operational system,” the report said. “It is clear that the concentration of powers into a single agency inevitably breeds a culture of corruption. A bureau that is already drenched in a culture of corruption is difficult, if not impossible, to reform.” For the Federation of Philippine Industries (FPI), which has been on the forefront of the fight against smuggling because of its ill effects on domestic manufacturers, the solution lies in the system and the dedication of the people that will enforce the corrective measures. “Will dividing the BOC solve the problem of technical smuggling in its various forms? Will it solve smuggling through the special economic zones or formula of manufacture? Don’t reinvent if it is not broken; the problem is with the system,” FPI Chairman Jesus L. Arranza said. Arranza noted that the FPI has been forwarding numerous ways to combat smuggling in its various modes, like the publication of updated reference values per commodity and use of compulsory acquisition and forward manifests. These, however, have fallen on deaf ears. The House Committee on Ways and Means said due to corruption, incompetence of the bureau and manipulation of the system, the safety of the general public was put to risk, and the government lost P43.8 billion in revenues from July 2016 to July 2017. The committee also recommended that the

Continued from A1

two new bureaus only hire highly qualified, competent and experienced personnel with proven integrity. It said the new BCS should be under the Department of Finance, while the BSC will be under the Department of Interior and Local Government, in close coordination with the Philippine National Police, Philippine Drugs Enforcement Agency, Maritime Industry Authority, Philippine Coast Guard and other enforcement agencies. The service bureau will be primarily tasked to assess and collect import duties and taxes. It shall adopt a modern customs-control system and be allowed to privatize nonsovereign functions that are more efficiently and effectively performed by private individuals. “This committee recommends considering the European customs administration and case study conducted by the World Bank on Peru in designing and structuring this new bureau. In said study, it was found that most countries with privatize customs administration achieved higher revenue collection and better trade,” it said. The panel said these functions are recommended to be in addition to the usual mandate of gathering and publishing values of commodities imported into the country; monitoring implementation of rules and regulations governing assessment, end processing of goods for exports, warehousing and support operations and auction and disposal activities; maintaining an accounting of revenues collected; and providing information and analysis of collection statistics, and audits of liquidated entries and bonds. On the other hand, the security-control bureau shall exercise police authority at all ports, take charge of customs border control, port security and communication, as well as inspection and monitoring of cargoes. It shall gather intelligence information related

to customs and economic activities, conduct internal inquiry and investigation and perform necessary and related police functions. Besides the emergency powers, the committee also recommended the immediate execution of these interim measures: abolish the Command Center for being contrary to existing laws and for being a conduit of corruption; immediate revocation of invalid Customs Memoranda, Orders and/or Regulations; and immediate dismissal from public service of the bureau personnel, and conduct investigation against involved bureau and nonbureau personnel. It also recommend to reorganize the bureau’s organizational structure and align its ranks to their respective qualifications; implement the National Single Window Program; and upgrade and fully implement the automation of Bureau’s Information Technology System. The committee also asked the Bureau of Internal Revenue to assess and collect the necessar y taxes due from EMT Trading’s Shipments; and the Commission on Audit to conduct an audit on the revenues assessed and collected by the BOC. It also called for the full and faithful implementation of the Customs Modernization and Tariff Act; relocate bureau offices and improve the bureau’s infrastructures and facilities to ensure transparency; consider expanding the coverage of the port-load survey to containerized cargoes; review the process of accreditation to eliminate the use of alter-ego’s or consignees-for-hire and revisit the Attrition Act of 2005. Meanwhile, the committee also recommended that investigation be conducted by the National Bureau of Investigation, Department of Justice, Office of the Ombudsman or Civil Service Commission for the determination of possible violations committed by the bureau personnel and private individuals and initiate the filing of appropriate criminal, civil or administrative charges against them.

ilipinos living in stilt houses and makeshift dwellings in cemeteries and railways are among the country’s 17 million urban slum dwellers, according to the latest report from the World Bank. In the East Asia Pacific (EAP) report, titled “Expanding Opportunities for the Urban Poor”, the Philippines has the third-largest slum population in the region. China and Indonesia have the largest number of urban slum dwellers at 191.1 million and 29.2 million, respectively. The entire region has some 75 million people living in slums. “First of all, people living in slums are not necessarily poor. I think slums, at it’s very basic root, is a failure of urban land markets”, EAP Urban and Disaster Risk Management Sector Manager for Transport Abhas Jha said in a videoconference with journalists in the region. Judy Baker, World Bank lead economist, noted that since not all poor people live in slums, this also reflects the shortage of affordable housing in Asia’s rapidly growing megacities, which includes Metro Manila. In the Philippines alone, the Housing and Urban Development Coordinating Council (HUDCC) estimates that there are will be about 1.4 million informal settler families (ISFs) nationwide, of which 40 percent live in Metro Manila. The World Bank said in the report that the HUDCC projected that the total housing units needed this year will reach 6.3 million. By 2030 the private sector estimated that the required housing units would reach 12.5 million. “This reflects a shortage of affordable housing for the lower middle class. This is a problem across the region,” Baker said. “[The] challenge of cities growing so fast [is] not being able to keep up with the housing demand.”The report noted that the expansion of slum areas in the Philippines also stemmed from poor urban planning and the lack of coordination in housing policies by cities and municipalities. In Metro Manila, the report stated, there were 85 municipalities and cities that have their own housing policies and city-planning efforts. These are not coordinated with other local governments and the national government. Jha and Baker said one factor

17million The number of urban slum dwellers in the Philippines, according to the World Bank that makes this more difficult is incity migration. But, no matter what governments do, they will not be able to stop migrants from being attracted to the economic and social opportunities offered by cities. However, once they reach cities, migrants are confronted not only by skyscrapers but also skyrocketing housing prices, as well as problems, such as poor public transport and the lack of jobs. “Each municipality is independently managed, and all work on various issues related to decreasing the incidence of urban poverty. Strategies to facilitate land acquisition, opportunities for tenure and zoning are disconnected, and many go unfunded”, the report read. According to the report, the region’s average annual urbanization rate of 3 percent has helped lift 655 million people out of poverty in the last two decades. But the region also has the world’s largest slum population: 250 million people with poor-quality housing, limited access to basic services and at risk to hazards, such as flooding. The bank said the failure to expand oppor tunities for the urban poor impacts the countries’ growth potential. In highincome countries, such as Japan and Korea, “inclusive urbanization” created the space for higher economic growth. Throughout the 1970s and 1980s Singapore’s economy grew at an average of 8 percent annually, largely due to an urban-planning strategy that delivered effective infrastructure, affordable housing and social services. Among the challenges faced by the urban poor is the lack of access to jobs, public transport and other infrastructure and affordable housing. In Ulaanbaatar, Mongolia, lowincome commuters can spend as much as 36 percent of their monthly expenses on bus fare, due to inefficient public transportation. In Indonesia and the Philippines 27 percent and 21 percent of the urban population, respectively, have no access to effective sanitation facilities. See “Slum problem,” A2