Businessmirror october 11, 2017

BMReports

If federalism is the solution, what is the main problem? By Alladin S. Diega | Correspondent

D

URING a congressional committee hearing on Constitutional amendments early-October, an acknowledged authority on Constitution reiterated “concerns” over the move to a federal form of government. Retired Supreme Court Associate Justice Vicente B. Mendoza cited the current situation in Spain, wherein Catalonia, a rich province, is moving to secede. Mendoza noted that Catalonia “has always been, more or less, independent of Madrid; that’s why some call Spain a federal government”. “That’s one of the risks of fragmenting. For so many years, our efforts have been for unity for these thousand islands,” he said during the

A mosque stands above nipa huts in Pagadian City. Retired Supreme Court Associate Justice Vicente V. Mendoza has told lawmakers that “decentralization”, and not federalism, may lead to real unity of the islands composing the archipelago. Nonie Reyes

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

Part Three

A broader look at today’s business

n

Wednesday, October 11, 2017 Vol. 12 No. 363

DENR backs bill granting tax perks to biodiversity donors SB 144

T

By Jonathan L. Mayuga

The Senate bill approved early this year expanding the National Integrated Protected Areas System

Inter v iewed by t he BusinessMirror, Director Theresa Mundita S. Lim of the DENR’s Biodiversity Management Bureau (BMB) said this will encourage greater private-sector participation in the protection and

business news source of the year

P25.00 nationwide | 5 sections 30 pages | 7 days a week

More kung fu wisdom Teddy Locsin Jr.

free fire

I

gave you a sampling of Bruce Lee’s mind, showing rare depth of insight and clarity of expression. Here are others.

“You will never get any more out of life than you expect. So keep your mind on the things you want and not on those you do not want.” “Things live by moving and gaining strength as they go. So be careful in choosing what you want. Consider the consequences of getting it.” The danger of momentum. Continued on A10

Continued on A12

Concepcion advises Duterte to focus on BBB, not on politics

FDI inflows dropped by 37.9% in July By Bianca Cuaresma @BcuaresmaBM

he decline in foreign investors’ placement in Philippine debt instruments pushed the country’s foreign direct investments (FDI) numbers in July to its lowest in 13 months. The Bangko Sentral ng Pilipinas (BSP) on Tuesday reported a $307-million net inflow of FDI in July this year. The net inflow of these investments placed by foreign investors in the country for longer-term yield is 37.9 percent lower than the $493-million net inflows seen in July last year. It is also the weakest monthly FDI net inflow since June 2016, when it reached $238.4 million. The BSP attributed the FDI decline to lower investments in debt instruments, which fell $105 million, from $407 million in July 2016. This outweighed the surge in investments in net equity capital, which hit $131 million this year, from a meager $23-million in July last year. The $131 million net equity capital investments commenced as placements of $179 million more than compensated for the $39 million in withdrawals for the period.

2016 ejap journalism awards

@jonlmayuga

he Department of Environment and Natural Resources (DENR) is endorsing a proposed measure that will allow companies to deduct from their taxable income their donations to efforts to preserve the country’s protected areas (PAs).

See “FDI,” A2

Continued on A2

BusinessMirror

www.businessmirror.com.ph

T

hearing where he was invited as a resource person. “Provinces are not self-supporting; they’re not self-governing. Which province can honestly claim a natural boundary from a neighboring province?” Mendoza expressed surprise at a recent announcement from PDP-Laban’s Jonathan E. Malaya that the version of federalism they gave to Malacañang will provide sovereignty only to the federal government and not to the federal states. “This contradicts early statement from Senate President [Aquilino] L. Pimentel III, who said federalism is apt for the Philippines because, in this system, sovereignty is constitutionally divided between the central government and its constituent political units—state or provinces.”

CONCEPCION: “The programs of [the administration], the massive infrastructure build, which is very important, which creates greater connectivity, will enhance...the development, especially for many of the Filipinos who are at the bottom of the pyramid.”

By Elijah Felice E. Rosales

HEALTH-CARE FORUM The European-Philippines Business Network, in collaboration with the Pharmaceutical Healthcare Association of the Philippines (PHAP), hosted on Tuesday the first Healthcare for All Forum at the Makati Diamond Residences. Serving as panelists in the first session, dubbed “Access to Affordable and Innovative Medicines”, are (from left) University of the Philippines School of Economics Prof. Ramon L. Clarete, former Health Secretary Enrique T. Ona, Medicines Transparency Alliance Philippines Chairman Roberto M. Pagdanganan, Philippine Alliance for Patients’ Organization Board of Trustee Karen Villanueva and PHAP Executive Director Teodoro Padilla. ALYSA SALEN

DOT seeks visas on arrival for Indian tourists By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

A

SIAN tourists still comprised the bulk of visitor arrivals in the Philippines from January to July 2017, data from the Department of Tourism (DOT) show. An official DOT report obtained by the BusinessMirror said, “countries from Asia still hold the biggest market share by delivering 60.88

PESO exchange rates n US 51.1640

percent of the total visitor volume”, or some 2.4 million of the total tourist arrivals of 3.92 million for the seven-month period. East Asian markets (China, Hong Kong, Japan, South Korea, Macau and Taiwan) accounted for 51.8 percent, or 2.03 million, of the total volume; those from the Asean (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Singapore, Thailand and Vietnam) supplied 7.1 percent, or 279,732; and

those from South Asia (Bangladesh, India, Iran, Nepal, Pakistan and Sri Lanka) contributed 77,458 arrivals. A total of 732,664 arrived from North America and South America, representing an 18.7-percent share of total inbound tourists, while 421,144 (or 10.7 percent of total) came from Europe. There were 193,560 visitors from Australasia/ Pacific (Australia, Guam, Nauru, New Zealand and Papua New Guinea). See “DOT,” A12

P

@alyasjah

residential Adviser for Ent repreneu rsh ip Jose Maria A. Concepcion III said President Duterte should focus on the administration’s economic plan, instead of getting involved in political spats, such as in the impeachment complaints against the Chief Justice and the Ombudsman. Concepcion urged Duterte to take charge of the administration’s infrastructure program, dubbed the “Build, Build, Build” (BBB), as this will benefit primarily the majority of the population. “I think it’s ver y important that we remain focused on the economic agenda. The programs of [the administration], the massive infrastructure build, which is very im-

portant, which creates greater connectivity, will enhance… the development, especially for many of the Filipinos who are at the bottom of the pyramid,” Concepcion said in a news briefing on Monday. Concepcion was responding to a query on whether the President should stay away from too much political noise, which a business group finds disturbing. T he Phi lippine Chamber of Commerce and Industr y (PCCI) over the weekend expressed concern over the brewing tension between Duterte and Chief Justice Maria Lourdes A. Sereno and Ombudsman Conchita Car pio -Mora les, who are both facing impeachment charges in Congress. “Let me put it this way, if I was an investor, and I was looking at See “Concepcion,” A2

n japan 0.4541 n UK 67.2500 n HK 6.5543 n CHINA 7.7231 n singapore 37.5267 n australia 39.6623 n EU 60.0768 n SAUDI arabia 13.6434

Source: BSP (10 October 2017 )

A2 Wednesday, October 11, 2017

BMReports BusinessMirror

If federalism is the solution, what is the main problem? Continued from A1

Unity

THE former magistrate noted that, as it presently stands, “there should be an agreement as to what we mean by federalism”. “Merely to cluster existing provinces or to convert existing provincial administrative regions, which are not self-governing, into sovereign states— assuming that is what is going to happen—will not ipso facto make that a real state.” He said the Philippines may get into a federal state, which is decentralized but is still a unitary government. Mendoza added: “If that’s what the PDP-Laban is proposing, then I agree into that, where policymaking is still retained by a central government but administratively decentralized so that the provinces can pursue policies in the way they see it fit.” He, however, has recommended that whether under a federal or a decentralized unitary system, several provisions in the Constitution be retained, particularly those on independent Constitutional bodies. Mendoza even proposed to strengthen the Commission on Human Rights and the Office of the Ombudsman by elevating their ranks to that of the Commission on Election (Comelec) and the Commission on Audit (COA). He explained that both the Comelec and the COA receive automatic budgets, and the heads are confirmed by the Commission on Appointment, unlike the CHR and Ombudsman who are merely presidential appointments.

Examples

MENDOZA also reiterated his definition of federalism in the hope

FDI. . .

Continued from A1

The equity-capital infusions in July came mostly from investors in Singapore, the United States, the Netherlands, Japan and Taiwan, according to the BSP. Their investments were mainly channeled to the manufacturing sector, real estate, wholesale and retail trade, finance

that proponents “will think many times” in their proposal for shifting to a federal system. “Federal states were created when several self-governing territories agreed to form a union, surrendering some of their powers and retaining some for themselves,” he said. “Such are the cases of the United States of America, the dominion of Canada, the commonwealth of Australia and even the most recent federation of Malaysia.” Mendoza added the US was formed when 13 population centers in North America simultaneously declared their independence from Great Britain. Eventually, it became a federal nation when they realized that they had a better chance at defending their independence by force should the British try to reimpose its colonial authority on them, he said. He added Canada was established when its three provinces agreed to unite because they feared being overrun by American expansionism. “Australia was established when its six population centers united for fear of conquest by Prussia, which manifested its presence in the Pacific, by Germany, which occupied parts of nearby New Guinea, and by France, which colonized neighboring New Caledonia.” According to Mendoza, the common denominator of these federal countries “is prior existence of distinct, autonomous communities”. These communities, he said, “eventually found a need to federalize in order to gain political or military strength”.

ACCORDING to Mendoza, the Philippine attempt at federalism is the complete reverse—

ACCORDING to Mendoza, “Filipinos may speak different languages, but [they] have both a national language, and [the] English [language

that] allow them to communicate with one another.” He acknowledged, however, that the concentration of power in the national government is the main obstacle to the development of the country. However, Mendoza maintained that the solution is the decentralization of the national government, not federalism. “Decentralization is a managerial concept involving the delegation of administrative powers to local governments while keeping policy determination in the central government.” In sum, Mendoza cautioned against “an unorthodox approach to a problem that can be addressed through conventional means”. “Because radical solutions often give rise to other, more serious problems,” Mendoza said, quoting the constitutionalist Paul Freund, who said: “If it isn’t necessary to change, it is necessary not to change.” In a forum in the University of the Philippines (UP)-Diliman campus early this year, former UP President Jose Abueva also expressed support for retaining the existing unitary government saying that the solution to “the nation’s social and political woes lies not in creating a federal government, but in putting up a parliamentary one, devoid of political dynasties”. Hezekiah Concepcion, professor at the Ateneo de Zamboanga University, said “in the United States they do not use the term ‘decentralization’ but ‘federal’”. Conception said, in the Philippines, “it is the national government that will relegate political powers to the federal states, such as the power of the local governments emanated from a law passed by Congress”. To be continued

and insurance and electricity, and gas, steam and air-conditioning supply activities. Reinvestment of earnings, according to data from the BSP, expanded by 11.5 percent to $71 million for the month. The decline in the country’s FDI net inflows, however, is not isolated in July. Data from the BSP showed the FDI numbers of the country is still 16.5 percent lower in

the January-to-July period, compared to the 2016 record. FDI inflows in the seven-month period hit $3.9 billion, lower than the $4.7-billion net inflows in the same period last year, as equity-capital infusions were overpowered by the volume of withdrawals during the period. The BSP said earlier that their expectations for FDI turned more optimistic for 2017, adding

that long-term foreign investment could hit $8 billion, up from their December assessment of $7 billion. This means that the country still needs to attract $4.1 billion in FDI net inflows so the BSP could hit its projection. The highest monthly net inflow of FDI for the year was recorded in April, when it hit $874 million.

Reverse

fragmentation of an independent country into “smaller, weaker, separate units”—of what the US and other highly developed countries did. The retired Justice also expressed fears that, should the Philippines succeed in mutilating itself “and cluster into small groups”, there is no certainty that the hope for reunification as a federal country will happen eventually. “Some of the independent states would do it alone; some would be prey to neighboring states, especially those that are weak and cannot maintain themselves,” Mendoza said. “In those who [do] succeed, local tyrants or regional despots will arise in lieu of a national dictator.” “Right now, there are many warlords in Mindanao,” Mendoza added. “What will happen when these warlords seize the reins of state government?” Mendoza’s fears are shared by former Chief Justice Reynato Puno who said that before the Duterte administration moves for federalism, it should first enact the AntiDynasty Bill. Puno, to note, is advising the current administration on federalism. Mendoza emphasized that even if the Philippines is an archipelago, which is used by proponents to push for federalism, 2,000 of the 7,000 islands comprising the archipelago are uninhabited. He added that the archipelago’s islands constitute one country that has fought wars under one flag and sings one anthem.

Oneness

www.businessmirror.com.ph

‘Reforms to reverse decline in H1 foreign direct investments’ Continued from a12

macrofundamentals through the Tax Reform for Acceleration and Inclusion bill, which is expected to have a tax yield of P133.8 billion, if enacted into law. The tax-reform package is a crucial component of the government’s massive infrastructure program, dubbed as “Build, Build, Build.” Tungpalan also noted the rosy business outlook for the last quarter of 2017, citing results of the Business Expectations Survey (BES) quarterly conducted by the Bangko Sentral ng Pilipinas. “Among the reasons for the positive outlook of businesses, according to the BES, are the uptick in the consumer demand during the holiday, harvest and milling seasons, and the government’s massive infrastructure spending program,” he said. The Neda said the decline in net equity capital was also due to the high base effect. Citing BSP data, the Neda said net equity capital more than doubled on account of the combined effects of higher gross equity-capital placements and lower gross equitycapital withdrawals. BSP data showed FDI posted a net inflow of $674 million in June 2017, an increase of 182.7 percent, from $238 million a year ago. The Neda also said foreign equity placements were only a component of total FDI. The other components of FDI are reinvestment of earnings and intracompany loans or debt instruments.

More road shows

The Department of Trade and Industry (DTI) and other agencies, such as the Department of Finance, are keen on organizing more road shows to the EU and the United States.

Concepcion. . . Continued from A1

the Philippines as an investment target in the beginning or even the middle of the year, the picture would have been more encouraging,” PCCI President George T. Barcelon said. “The government’s economic team is not slowing down, but the perception can be unsettling. Hopefully, things can quiet down,” Barcelon added. This was seconded by Concepcion, saying it is important for the Chief Executive to keep his eyes on the prize, which is the infrastructure program, as this is what will affect industries, such as agriculture, trade and tourism. “When you improve your logistics cost and bring it lower because of a better road, if we’re able to connect the south and the north freeways together, you can imagine, the cost of logistics will go down,” Concepcion explained. Nonetheless, the presidential adviser said he has full confidence in the President on his commitment to deliver on his promises listed in the BBB program. “I’m confident that, under President Duterte, who is a strong-handed leader and really wants to make it happen, the

Govt. . .

Continued from A12

The codes are meant to improve productivity of workers and enterprises involved in export processes and propose sound labor policies for the protection of workers and employers. The National Economic and Development Authority was mandated to “promote the use of regulatory impact assessment and other related tools by regulatory agencies to improve the quality of new regulations in a way that will facilitate the free flow of goods and services”. Other government agencies instructed to abide by the memorandum are the departments of Agriculture, Energy, Environment and Natural Resources, Health, Information and Communications Technology, Interior and Local Government, Tourism, Science and Technology and Foreign Affairs.

“We have to do more road shows to dispel the wrong perception of the Philippines, especially now with the Marawi crisis. The perception that’s being blown up outside is that terrorism has spread, so we have to clarify that it’s limited to Marawi,” Trade Secretary Ramon M. Lopez said. T h e DT I a l s o re i t e r a t e d o n Tuesday that the Duterte administration continues to protect human rights and that members of the Philippine National Police follow the rules of engagement. Lopez defended anew the administration’s war on drugs after two Europe-based political groups called on the President to stop the extrajudicial killings. According to reports, the Progressive Alliance and the Party of European Socialists warned that, should the killings continue, there would be an impact on the Philippines’s availment of the EU’s trade-preference scheme, dubbed as the EU Generalized Scheme of Preferences Plus (EU-GSP+). “We reiterate that the Philippine government protects human rights. There may be isolated cases of abuses, and the President does not tolerate those, that’s why there are now investigations,” Lopez said in a text message to reporters. Just two weeks ago, the DTI chief visited Brussels to present before EU Trade Commissioner Cecilia Malmstrom the benefits of EU-GSP+ to the Philippines. The visit was also scheduled a week before the EU Commission was set to review the country’s compliance with 27 international treaties and conventions—a condition attached to the preferential trade scheme.

secretaries will see to it that it will happen.” “Our President is looking toward the future, and I think we should all try to look at the future rather than what’s today,” Concepcion added. The administration is dead set on completing big-ticket public infrastructure projects, such as the North Luzon Expressway Harbor Link, Luzon Spine Expressway, Philippine National Railway North and South Rails and the Metro Manila Subway. The government intends to achieve this dream by increasing infrastructure-to-GDP ratio to 7.4 percent, which will amount to as much as P8 trillion by the end of Duterte’s term in 2022. To buttress the infrastructure program, the government has allocated hefty budgets for the Department of Public Works and Highways (DPWH) and the Department of Transportation (DOTr). The DPWH and the DOTr are expected to receive P643.3 billion and P70.8 billion in 2018, respectively. However, as the PCCI pointed out, much of public attention is drawn to the verbal attacks of the President against Sereno and Carpio-Morales. The Chief Justice and the Ombudsman are facing impeachment charges on alleged corruption, among others. “The foregoing agencies shall submit to the EDC and to the Office of the President, through the Executive Secretary, the inventory of relevant policies, programs and action plans within 60 days upon the approval of succeeding PEDPs,” the memorandum read. “The same shall also be submitted to the Department of Budget and Management for budget allocations to be taken from available appropriations in the annual General Appropriations Act of the concerned agencies, in order to efficiently implement the succeeding PEDPs through their respective programs, activities and projects,” it added. Under the PEDP 2015-2017, the government aims to further boost key export sectors, which include electronics; motor vehicle and parts; coconut oil; information technology and business-process management; technical, computer and information services; and processed food and beverages.

news@businessmirror.com.ph

The Nation BusinessMirror

SC junks de Lima’s plea to dismiss drug charges and grant her liberty By Joel R. San Juan @jrsanjuan1573

T

HE Supreme Court (SC) has rejected the petition filed by Sen. Leila M. de Lima that seeks the dismissal of drug charges lodged against her and be released from detention. SC Spokesman Theodore O. Te said the 15-man High Tribunal voted 9-6 to deny de Lima’s petition for lack of merit. As a consequence, de Lima will have to remain in detention at the Camp Crame Custodial Center while her three drug cases are being heard by three separate branches of the Regional Trial Court (RTC) in Muntinlupa City. This would also strip the Office of the Ombudsman of the jurisdiction to prosecute de Lima as the duty now belongs to the prosecutors of the Department of Justice (DOJ). The Court junked the claim of de Lima that it is the Sandiganbayan and not the RTC that has jurisdiction over the cases against her, since her position at that time was secretary of justice which has salary grade higher than 27. The SC noted that the exclusive original jurisdiction of the RTC over violations of Republic Act (RA) 9165 is not transferred to the Sandiganbayan whenever the accused occupies a position classified as Grade 27 or higher, regardless of whether the violation is alleged to have been committed in relation to the office being occupied. “The Sandiganbayan’s jurisdiction is limited to violations of the anti-graft laws and do not extend to violations of the drugs law,” the SC held. The Court explained it is the RTC that has jurisdiction over the information that charges de Lima with violation of Section 5 and Sec-

Disrupted Terror Plot

In this photo taken on Monday, the Department of Justice’s Chief State Counsel Ricardo Paras shows an extradition request by the US government for Filipino doctor Russell Salic, who was accused by American authorities of plotting terrorist attacks in New York City during an Associated Press interview in Manila. On Tuesday a lawyer for Salic, the orthopedic doctor who is now detained in Manila, said he donated money to charity but not to terrorists, and is a 37-year-old Muslim who renounces terrorism and has never held a gun in his life. AP

tion 28 of RA 9165. “The Court did not agree with petitioner’s characterization of the offense as ‘direct bribery’ under the Revised Penal Code, but maintained that the allegations in the information are sufficient to characterize the offense as a violation of the Dangerous Drugs Act [RA 9165]. For this reason, the Court pointed out that RA 9165 specified only one court with jurisdiction to try offenses under the law, the Regional Trial Court,” the SC said. The SC also held that there was no grave abuse of discretion on the part of Muntinlupa City Regional Trial Court Branch 204 Presiding Judge Juanita Guerrero in finding probable cause to order de Lima’s arrest. It said that the judge was not obliged to first resolve de Lima’s motion to quash before issuing a warrant of arrest. “The Court noted that there is no rule of procedure, statute or jurisprudence to support this claim,” the SC said. Those who voted against de Lima were Associate Justices Presbitero Velasco Jr., Teresita Leonardo-de Castro, Diosdado Peralta, Lucas Bersamin, Mariano del Castillo, Samuel Martires, Noel Tijam, Andres Reyes and Alexander Gesmundo. On the other hand, those who voted in favor of granting de Lima’s petition were Chief Justice Maria Lourdes A. Sereno, Senior Associate Justice Antonio T. Carpio, Associate Justices Estela Perlas Bernabe, Francis Jardeleza, Marvic Leonen and Benjamin Caguioa. De Lima is facing cases for violation of the Comprehensive Dangerous Drugs Act in three branches before the Muntinlupa courts for allegedly benefiting from the drug trade inside the New Bilibid Prisons during her stint as justice secretary.

Editor: Vittorio V. Vitug • Wednesday, October 11, 2017 A3

House members move to block Palace plan to impeach Morales

S

By Jovee Marie N. dela Cruz

@joveemarie

everal lawmakers have expressed their support to Ombudsman Conchita Carpio-Morales, amid a reported looming impeachment complaint to be filed against her by a group close to President Duterte.

In House Resolution 1395, 26 lawmakers urged the House leaders to “support, preserve and protect the constitutional independence and integrity of the Office of the Ombudsman”. The lawmakers said the Office of the Ombudsman, created under the 1987 Constitution, is an independent body “to serve as protectors of the people against inept, abusive and corrupt [officials] in the government… with the power to investigate on its own or on complaint by any person,

any act or omission of any public official, employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient,” the resolution said. According to the lawmakers, the framers of the Constitution intended that these independent bodies be “insulated from political pressure” to the extent that the absence of independence would result in the impairment of their core functions, and to shield it from the pressures and influence of officialdom and partisan politics

and from fear of external reprisal. They said even the Supreme Court has previously stated that it has maintained a policy of non interference with the “virtually unlimited investigatory and prosecutorial powers granted by the Constitution and by law to the Ombudsman”. Earlier, the Volunteers Against Crime and Corruption said it is poised to file an impeachment case against the Ombudsman. Meanwhile, 21 of the authors of the resolution are members of Liberal Party, namely: Reps. Francis Gerald A. Abaya of the First District Cavite; Benjamin C. Agarao of the Fourth District of Laguna; Vicente J. Alcala of the Second District of Quezon; Isagani S. Amatong of the Third District of Zamboanga del Norte; Arlene J. Bag-ao of the Lone District of Dinagat Island; Jorge Banal of the Third District of Quezon City; Jose Christopher Y. Belmonte of the Sixth District of Quezon City; Emmanuel A. Billones of the First District of Capiz; Gabriel H. Bordado Jr. of the Third District

of Camarines Sur; Raul A. Daza of the First District of Northern Samar; Raul V. del Mar of the First District of Cebu City; Cheryl P. Deloso-Montalla of the Second District of Zambales; Christopher V. P. de Venecia of the Fourth District of Pangasinan; Edgar R. Erice of the Second District of Caloocan; Edcel C. Lagman of the First District of Albay; Jocelyn S. Limkaichong of the First District of Negros Oriental; Miro S. Quimbo of the Second District of Marikina; Josephine Y. RamirezSato of the Lone District of Occidental Mindoro; Rene L. Relampagos of the First District of Bohol; Vilma Santos-Recto of the Sixth District of Batangas; and Edgar Mary Sarmiento of the First District of Samar. Other non-Liberal Party signatories include Reps. Ma. Lourdes Acosta-Albay of the First District of Bukidnon, Party-list Rep. Tom Villarin of Akbayan, Rep. Strike H. Revilla of the Second District of Cavite, Lawrence Fortun of the Second District of Agusan del Norte and Ramon V.A. Rocamora of the Lone District of Siquijor.

Army officer in ‘sex scandal’ case dropped from the service By Rene Acosta @reneacostaBM

A

senior Army officer, who has catapulted the Armed Forces of the Philippines (AFP) to its first publicly known “sex scandal”, has been dropped from the service by the military, but on other cases. Col. Jessie Mario Dosado has been dismissed from the service since last year, even before he was charged by the Office of the Ombudsman with sexual harassment before the Sandiganbayan, according to the Army. “He was dismissed since last year, so all of his benefits...are now forfeited. Now his case in the Sandiganbayan is still ongoing, but his

dismissal was caused by other cases and was implemented by the AFP,”Army Spokesman Lt. Col. Ray Tiongson said. Dosado is a member of the Philippine Military Academy Class of 1985, which also counts military Spokesman Maj. Gen. Restituto F. Padilla, newly designated Army commander Maj. Gen. Rolando D. Bautista and Western Mindanao Command Lt. Gen. Carlito Galvez Jr. as members. Galvez is among the contenders to replace retiring Armed Forces Chief of Staff Gen. Eduardo M. Año. Other prominent members of the class are Northern Luzon Command commander Maj. Gen. Emmanuel Salamat, Western Command Maj. Gen. Galileo Gerard Kintanar and PNP Deputy Director General Ramon Apolinario.

Tiongson said the military separated Dosado from the service as ordered by the Ombudsman for usurpation of official functions, dishonesty, gross negligence and gross misconduct, with the dismissal order served on February 10, 2016. “The Army does not hold him anymore, since he was already dismissed from the service,” Tiongson added. Last week the Ombudsman filed three counts of violation of the Republic Act 7877, or the Anti-Sexual Harassment Act of 1995, before the anti-graft court, arising from alleged sexual acts that were committed in 2013. According to the Ombudsman, Dosado allegedly committed the alleged acts while he was the commander of the Army Procurement

Center in May 2013. The Ombudsman claimed Dosado asked a female subordinate with the rank of master sergeant to watch him perform sexual acts with a certain Miss Glacy before asking her to “join them in an orgy”.

On October 22, 2013, Dosado, then assistant chief of the Philippine Army Staff of Logistics office, has also allegedly ordered his lady secretary to wipe his back and give him a bath while he was naked. The sexual advances were supposedly repeated on October 25, 2013, when Dosado allegedly ordered the same secretary to apply lotion on his genitals and asked her how she feels about seeing him naked.

Murder cases decline by 7.98% in 1st 7 months of 2017—PNP

T

he number of murder cases in the country dropped by 7.98 percent, or 554 cases, the Philippine National Police (PNP) reported on Tuesday. Based on data from the PNP’s Directorate for Investigation and Detective Management (DIDM), the total number of murder cases in the country from January to August 2017 decreased to 6,391, which is lower by 554 cases compared to 6,945 cases recorded in the same period last year. Of the total number, murder has accumulated 8.41 percent of Index Crime Distribution over the period of January to August 2017. DIDM head Police Director Augusto Marquez Jr. said the decline in murder incidents nationwide was due to the

PNP’s intensified campaigns and focused actions against criminality, corruption and illegal drugs. On the other hand, theft is the most prevalent crime accounting to 24,825, or 32.65 percent to the total of Index Crime Distribution of the same period, Unit Crime Periodic Report (UCPER) showed. T he UCPER, a crime information system, said that theft cases have significantly declined by 10,911, or 30.53 percent, from 35,736 to 24,825 of the same period covered. The DIDM report also disclosed that before President Duterte assumed his post, the murder trend has already ramped up to 1,265 incidents compared to the 803 cases from June to July 2016. PNA

Economy

A4 Wednesday, October 11, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

news@businessmirror.com.ph

Neda sees manufacturing output decline in Q4

H

By Cai U. Ordinario

@cuo_bm

igher prices and work disruptions, such as typhoons, could slowdown the country’s manufacturing output in the fourth quarter, according to the National Economic and Development Authority (Neda). In a news statement issued on Tuesday, Neda Officer in Charge (OIC) Undersecretary for Investment Programming Rolando G. Tungpalan said, however, that manufacturing output growth expectations remain positive in the October-to-December period. The statement came on the heels of the data released by the Philippine Statistics Authority (PSA), which showed the Volume of Production Index (VoPI) growth slowed to 2.8 percent in August 2017, from 13.3 percent in August 2016. “Short-term upward inflationary

pressures, such as increase in global oil prices, as well as price increases in fish, corn, vegetables, flour and other cereal products, may affect cost of production. Typhoon occurrences may also interrupt business activities, resulting in lower manufacturing output,” Tungpalan said. He added the factors that would pull up factory production in the last quarter of the year include construction products that could increase the demand for construction-related products. These products, Tungpalan said, have already boost the growth in

VoPI in August. The production of basic metals, fabricated metal products and nonmetallic mineral products continues to increase at 28.5 percent, 89.5 percent and 18.7 percent, respectively. These are linked to the government’s flagship projects and the “Build, Build, Build” program, wherein the government is expected to increase its spending for various infrastructure projects. “Sustained infrastructure development, translating to increase in public construction expenditure, is anticipated not only to increase the growth of the manufacturing sector, but also to support the continuous growth of the economy,” he said. Apart from the Duterte administration’s huge infrastructure push, Tungpalan said higher exports are also expected to contribute to growth in the VoPI. The manufacture of export-oriented products, he added, have already contributed to boosting VoPI growth in August. Tungpalan cited PSA data, which showed furniture and fixtures, as well as leather products, posted

double-digit growths of 35.6 percent and 21.9 percent in August 2017, respectively. “The local production capacity and efficiency of construction-related manufacturers must be expanded to support our initiative of massive spending in infrastructure programs and projects,” Tungpalan said. Meanwhile, the PSA’s Monthly Integrated Survey of Selected Industries (Missi), showed the VoPI growth in August was a significant improvement from the 3.5-percent

decline posted in July 2017. The PSA data also showed the manufacturing sector’s Value of Production Index (VaPI) increased by 2.4 percent from a 2-percent contraction in July. Neda noted that the three-month moving average for both indexes remained in the positive territory at 0.2 percent for the VoPI and 1.7 percent for the VaPI. The PSA added that the average capacity utilization rate in August 2017 is 83.8 percent, with petro-

Short-term upward inflationary pressures, such as increase in global oil prices, as well as price increases in fish, corn, vegetables, flour and other cereal products, may affect cost of production. Typhoon occurrences may also interrupt business activities, resulting in lower manufacturing output.”­—Tungpalan

leum products posting the highest among industries. Data showed the average capacity utilization rate in August 2017 for total manufacturing was recorded at 83.8 percent. Around 55 percent, or 11, of the 20 major industries operated at 80 percent and above capacity utilization rates. “The proportion of establishments that operated at full capacity [90 percent to 100 percent] was recorded at more than one-fourth of the total number of establishments [26.8 percent] in August 2017. About 53.8 percent of the total establishments operated at 70-percent to 89-percent capacity, while almost one-fifth of the total establishments [19.4 percent] operated below 70 percent capacity,” the PSA said. Tungpalan is currently the OIC of the Neda while Socioeconomic Planning Secretary Ernesto M. Pernia is on official travel abroad. Missi is a report that monitors the production, net sales, inventories and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.

BOI sticks to P550-billion investment goal by year-end PHL obtains ‘satisfactory progress’ rating

T

he Board of Investments (BOI) have registered P392 billion in pledges as of the first week of October, reflecting a 32-percent growth over the same period in 2016. BOI data showed that, as of October 4, the country’s investment promotion agency has hauled in P392 billion in investment-pledges.

This reflects a 32-percent growth from the same period’s haul of P296 billion in 2016. Employment in the same period jumped by 26.03 percent, or by 51,732 workers from 283 projects, to 65,196 workers from 332 projects, the BOI said. Since its inception in 1967, it has registered 15,161 investment projects

with a cumulative value of P6.38 trillion as September of this year. Trade Secretary Ramon M. Lopez, speaking at Monday’s celebration in conjunction with the 2017 BOI Guinogulan Awards and Invest Philippines Night, said they are sticking with the P550-billion investment goal by year-end. Catherine N. Pillas

in extractive industry transparency initiative By Jonathan L. Mayuga @jonlmayuga

T

he Philippines has become the first country to have successfully obtained a “satisfactory progress assessment” under the 2016 extractive industry transparency initiative (EITI) Standard. This was disclosed on Thursday by the EITI International Board, amid an ongoing review by the Mining Industry Coordinating Council (MICC) on mine closure and suspension orders affecting over two dozen large-scale operating mines and an open-pit mining ban policy affecting selected ores. The mining sector is under attack because of its alleged measly contribution to the country’s economic development. The country’s mining sector contributes less than 1 percent to the GDP, prompting former President Benigno S. Aquino III to sign Executive Order 79, which, among others, called for a halt in the processing of new applications for new mining projects pending the enactment of a new revenue-sharing law, a periodic review of the performance of existing operating mines, and imposition of mining no go zones that led to a steep drop and slowdown in min-

ing investment inflow since 2011. EITI is a Norway-based international initiative that promotes open and accountable management of extractive industries that include mining, oil and gas sectors. The 2016 EITI Standard provides a set of requirements for data disclosure or transparency in the industry, from the awarding of licenses and contracts to monitoring production, revenue collection and allocation, as well as a socioeconomic contribution of the industry. EITI is being implemented worldwide by 52 countries to date, including the Philippines, in a bid to be compliant with the EITI Standard (i.e., to be given a “satisfactory progress” rating) after a rigorous validation process. In a news statement, the EITI noted that, as an implementing country, the Philippines established in 2013 the Philippine EITI, through Executive Order 147, issued Aquino. Philippine-EITI is steered by a multistakeholder group chaired by the Department of Finance (DOF) and composed of representatives from the government, industry and civil society. The Philippines underwent the EITI validation process beginning in January this year.

The process culminated in the EITI Board’s decision, placing the country in the historic position of being the first in EITI compliance and serving as a model for other implementing countries. According to the statement released by the EITI Board, “the Philippines presents a dynamic case of EITI implementation, with its fast-paced and innovative multistakeholder group engaging in strategic discussions linking the EITI to national priorities for the extractive sector.” It also said, “EITI has also built trust in a country where the mining sector has often been contentious.” Philippine-EITI Head and Finance Secretary Carlos G. Dominguez III welcomed the decision, saying: “ The...EITI...has been indispensable to achieving mutually beneficial collaboration between all stakeholders in the country. With the proper governance framework in place, the extractive industries may do what they do without causing harm.” He added: “To achieve that, they must be transparent and the communities ever watchful. I trust that the international recognition we have received will further spur our nation to build institutions of accountability and enterprises that are better able to serve the common good.” With Rea Cu

Solon says PNR South long-haul project on track for 2022 opening

L

EGAZPI CITY—The Philippine National Railways (PNR) South Long Haul Project, spanning some 581 kilometers from Manila to Matnog, Sorsogon, is now on track for its target opening by second quarter of 2022. “Dagos po an Bicol Express [the Bicol Express pushes through],” Rep. Joey S. Salceda of the Second District of Albay announced here last week. He based his announcement on the project’s revised funding structure approved by the National Economic Development Authority (Neda) board recently. The project, originally proposed years ago by Salceda, now forms part of the Duterte administration’s flagship projects under the massive infrastructure “Build, Build, Build” program. It is envisioned as a backbone of economic development designed to enhance the connectivity of major airports and seaports in Southern

Tagalog and Bicol region. From a proposed budget of P171 billion originally, and later P185 billion, it is now allocated with a P299.4-billion budget, one of the government’s biggest infrastructure investments. Salceda, who is senior vice chairman of the House Committees on Appropriations and Ways and Means, said some P800 million and P7 billion have been appropriated for the project in the General Appropriations Act for (GAA) 2016 and GAA 2017 budgets, respectively. The project is also included in the first basket of projects to be financed and built with the assistance of China. A memorandum of understanding setting out the scope of China’s assistance for the project will be signed during the Asean Summit in November 2017. Based on recent changes, the project’s Commuter Line segment, which spans 72 kilometers with 23 stations, now starts from Solis-

Hermosa in Manila to Los Baños, Laguna. The Long Haul segment picks up from Los Baños and runs through Batangas, Quezon and the Bicol provinces of Camarines Sur and Albay to Sorsogon. Salceda said the PNR South Railways is now “a priority investment project of the government” and is a vitally urgent infrastructure for Southern Luzon. It was approved and strongly recommended by the Bicol Regional Development Council in 2015, during Salceda’s term as chairman. When completed, it will vastly improve connectivity and efficiency amongSouthernLuzon’surbancenters and regional growth hubs and, thus, enhance productivity in the industry, services and agriculture sectors. It is seen to further boost Bicol’s tourism industry by as much as 30 percent, which forms part of the predicted 24-percent economic returns it will bring to the countryside when fully operationalized, he added. PNA

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Wednesday, October 11, 2017

A5

PHL to lift ban on Brazilian meat imports Rice inventory declined by nearly 20% in September

T

he country’s rice inventory as of September 1 declined by almost 20 percent to 1.422 million metric tons (MMT), from 1.775 MMT a year ago, according to the latest report of the Philippine Statistics Authority (PSA). The PSA said the total rice inventory during the period is equivalent to the rice-consumption requirement of Filipinos for 42 days. “Stocks in the households would be enough for 20 days, those in commercial warehouses for 20 days and those in National Food Authority [NFA] depositories for two days,” the PSA said in its monthly report, titled “Rice and Corn Stocks Inventory September 2017” published on October 10. Of the rice inventory as of September 1, the PSA said 48.42 percent were with the households, 46.97 percent were in commercial warehouses and 4.61 percent were in NFA depositories. Less than 1 percent of NFA stocks consisted of imported rice. PSA data showed that NFA stocks during the period reached 65,540 MT, while commercial warehouses accounted for 668,290 MT. Households accounted for 689,010 MT. “Compared with the previous year, rice stocks in households and in commercial warehouses grew by 9.70 and 27.92 percent, respectively,” the report read. “However, stocks in the NFA depositories dropped by 89.52 percent,” it added. On a monthly basis, rice stocks across all sectors were lower compared to their levels in August. The PSA said stocks in the households was down by 7.93 percent, while stocks held in commercial warehouses fell by 42.93 percent. Rice stocks in NFA depositories declined by nearly 40 percent month on month.

PSA data showed that the NFA’s rice stockpile as of September 1 of 65,540 MT was the lowest volume the state-run food agency held since November 1995, when its inventory reached only 65,700 MT. Data from the PSA showed that the total rice inventory as of September 1 was nearly 30 percent lower than the 2.028 MMT posted in August. The PSA noted that the inventory during the period was the lowest since October 2007, when the national stockpile amounted to 1.375 MMT. The government periodically monitors rice inventory to determine whether it would need to import the staple to boost local stocks. PSA data also showed that total corn-stock inventory rose to 1.422 MMT, from last year’s record of 380,570 MT. The corn-stock inventory as of September 1 was also more than double the 696,460 MT recorded in August. The PSA said the bulk of corn-stock inventory in September, or 88.98 percent, was in commercial warehouses, while households accounted for 10.98 percent. NFA depositories accounted for only 0.04 percent. Corn stocks in commercial warehouses amounted to 1.265 MMT; households, 156,210 MT; and NFA warehouses, 570 MT. “Corn stocks in all sectors increased compared with their levels the previous year. Stocks in the households grew by 8.15 percent, in commercial warehouses by 435.97 percent and in NFA depositories by 1,681.25 percent,” the report read. “Month on month, corn stocks in the households and commercial warehouses increased by 87.13 percent and 108.14 percent, respectively. On the other hand, stocks in NFA depositories decreased by 88.65 percent,” it added. Jasper Emmanuel Y. Arcalas

bloomberg

By Jasper Emmanuel Y. Arcalas

T

he Philippine government may lift the ban on meat imports from Brazil this month following an inspection of meat plants in the Latin American country, according to Agriculture Secretary Emmanuel F. Piñol. Piñol said on Tuesday the ban on shipments from Brazil foreign meat establishments (FMEs), which exported meat tainted with salmonella to the Philippines in July, could be lifted “anytime soon”. “So far, the team did not find anything negative,” he said when asked about the initial results of the inspection. National Meat Inspection Service (NMIS) Executive Director Ernesto S. Gonzalez confirmed to the BusinessMirror that the team from the Department of Agriculture (DA) has recently completed the inspection of suspended Brazil FMEs. Brazillian Animal Protein As-

Smoke, wildfires damage California’s famed wine country

N

APA, California—Workers in Northern California’s renowned wine country picked through charred debris and plotted what to do with pricey grapes after wildfires swept through lush vineyards, destroying at least two wineries and damaging many others. The wind-driven wildfires came as Napa and Sonoma counties were finishing highly anticipated harvests of wine grapes. Monday normally would have found workers picking and processing the ripe grapes to make chardonnay and other wines. Instead, melted and blackened wine bottles decorated the ruined Signorello Estate winery in Napa Valley. People at Paradise Ridge Winery in Sonoma County posted photos of debris and haze, saying they were “heartbroken to share the news” that the winery had burned. A maintenance worker watched and hoped for the best on Monday, as flames crept down a hillside by the Gundlach Bundschu Winery. “It’s right behind the main office. It’s working its way down the hillside. What can I say? It’s slowly working its way in,” Tom Willis said. The Napa Valley Vintners, a trade association, said on Monday that most wineries were closed because of power outages, evacuation orders and employees who couldn’t get to work. The organization said it did not have firm numbers on wineries burned or how the smoke might affect this year’s harvest or the industry, in general. But it said most grapes had already been picked. About 12 percent of grapes grown in California are in Sonoma, Napa and surrounding counties, said Anita Oberholster, a cooperative extension specialist in enology at the University of California, Davis. But they are the highest value grapes, leading to the highest value wines, she added. It’s hard to predict correctly, but she said chances are good this year’s crop won’t carry much smoke damage. “Even if wines now were heavily affected by smoke, it doesn’t carry over to the next season, only in the fruit itself,” she added. Gloria Ferrer, Ravenswood and Kenwood were among well-known wineries closed for the day because of the fires, according to social-media posts. Chateau Montelena Winery, which helped put California on the

@jearcalas

The entrance to the fire-ravaged Signorello Estate winery is seen on Monday, October 9, in Napa, California. AP Photo/Marcio Jose Sanchez

global wine map when it won a French wine-tasting competition in 1976, escaped damage. Wineries that escaped damage grappled with the lack of power, which they need to process the grapes. “Some of our growers did pick for us last night. So we had to unload the fruit into our cold barrel room and wait until tomorrow to process it,” said Alisa Jacobson, vice president of winemaking at Joel Gott Wines. “I think we’ll be OK, but it’s not an ideal situation. But more importantly, all our employees seem to be doing OK,” she said. She added she was stunned by the speed of the fires, falling asleep around 10 p.m. last Sunday only to wake during the night to the smell of smoke. By 3 a.m. people were being evacuated. Lise Asimont, director of grower relations for the Family Coppola wineries, was among the people being urged to leave her Santa Rosa home. She said explosions that made her think of war woke her around 2 a.m. She opened the front door to a sky snowing ash. Authorities told her family to prepare to flee, but Asimont was also worried about her grapes, four truckloads of cabernet sauvignon machine-picked in Lodi on Sunday with no way of getting to Coppola facilities Monday because of a closed highway. She called a wine maker with LangeTwins winery and vineyards, who had a tank available to crush the grapes and was happy to be able to help. AP

sociation (ABPA) Vice President of Market Ricardo Santin told the BusinessMirror that his group is confident the ban on meat products from Brazil would be lifted within the month. “The inspection of Brazilian plants by Philippine authorities proceeded with no hitches. We are waiting for the report from the Philippine government,” Santin said. “We are optimistic that the ban on Brazilian plants will be lifted in October.” Should the DA allow the resumption of shipments from Brazil this month, he said the meat products would reach the Philippines just in time for Christmas.

Santin reiterated ABPA’s statement that the ban should not have been imposed in the first place given the stringent food-safety measures imposed by the Brazilian government. “Brazil has a trustworthy system, quality products and the most stringent measures to ensure animal health,” he said. Earlier, Meat Importers and Traders Association President Jesus C. Cham urged the government to expedite the lifting of the ban, arguing that it “was not justified in the first place”. “We had hoped that the Philippines would expedite the lifting of the ban, especially we know now that the ban was not justified in the first place. We understand that the outbreak of the bird flu also contributed to the delay,” Cham told the BusinessMirror. “But since there was no basis to begin with, the Philippines could just have restored the accreditation of FMEs.” He noted that lifting the ban on meat products from the Latin American country before the year ends would not have any effect on the prices of meat products this holiday season. Should the government resume the issuance of permits to import-

ers of Brazilian meat, he said it would benefit them next year. “It is now too late in the day for meat products to arrive in time for the Christmas season. Importers are resigned to [the fact that there may be] no Brazilian meat for the rest of the year.” In August Piñol issued Memorandum Order (MO) 32, dated July 31, which authorized the temporary suspension of the accreditation of all Brazilian FMEs. “According to Memorandum Circular 9-2008-5, Series of 2008, entitled ‘Microbiological limits for assessment of microbiological quality fresh, chilled and frozen meat’, microbiological limits for salmonella spp. must be absent in 25 grams sample,” Piñol said in MO 32. “A total of 246 out of 492 container vans were sampled and subjected to laboratory analysis from March 1 to June 30, wherein samples from 18 containers [7 percent] tested positive for salmonella spp.,” MO 32 read. Earlier, the Philippine Association of Meat Processors Inc. (Pampi) told the BusinessMirror that the government’s decision to ban meat imports from Brazil could cause the retail price of some processed-meat products to go up by as much as 15 percent. Brazil is a top source of raw materials, particularly mechanically deboned meat (MDM), for Philippine meat processors. L ast yea r Bra zi l e x por ted 55,581.853 metric tons (MT) of meat and meat products to the Philippines. The figure was 5.86 percent higher than the 52,505.429 MT recorded in 2015. Beef accounted for 33.3 percent of meat purchases from Brazil. Government data showed that beef imports reached 18,524.966 MT, 69.04 percent higher than the 10,959.168 MT in the previous year. More than half of the country’s meat imports from Brazil were MDM of chicken. Chicken MDM imports last year reached 30,557.036 MT, 18 percent lower than the 2015 record of 37,314.374 MT.

House panel approves bill promoting urban agri

T

he House Special Committee on Food Security on Tuesday gave its nod to the substitute bill promoting integrated urban agriculture to boost the country’s food security. Party-list Rep. Orestes T. Salon of AGRI, one of the principal authors of the proposed Integrated Urban Agriculture Act, said the measure seeks to avert “a possible crisis brought about by food insecurity”. Under the bill, an Office of Urban Agriculture (OUA) shall be established by the Department of Agriculture. The OUA will formulate implementing guidelines, programs and operating principles consistent with government policies and the objectives of the measure. The office will also study and make recommendations regarding the impact of urban agriculture and vertical farming in metropolitan communities, carry out the implementation of the law and submit and report to Congress its findings and recommendations. The bill added the OUA shall develop the research agenda on urban agriculture in the country’s metropolitan areas, in coordination with the departments of Science and Technology, Environment and Natural Resources and Health. It also provided that idle and/ or abandoned government lots and buildings owned by either the national or local governments, or available land within state colleges and universities will be considered for use in urban agriculture. The program encourages the use of indigenous materials for agricultural inputs, such as seeds, fertilizers and agricultural machinery and other implements. The measure indicated that lo-

cal governments will be required to formulate policies on the practice of urban agriculture and on utilizing urban spaces, unused spaces and idle lands, consistent with existing policy on the Comprehensive Land Use Plan and Zoning ordinances. The designated spaces, however, shall not be prime lots or areas suitable for investments. Local government units (LGUs) in cities and urban areas shall be required to enact local legislation institutionalizing urban agriculture as a regular component in their annual appropriations. If passed, urban agriculture will be included in the academic curriculum for elementary-, secondary-, and tertiary-level students of both public and private schools. A course curriculum on urban gardening will be developed and included in the regular curriculum of both elementary and secondary levels. Urban agriculture shall also form part of the required period dedicated to the National Service Training Program, or the Citizens Military Training, in universities and colleges. A nationwide information campaign will also be conducted by the OUA with the assistance of the Philippine Information Agency to raise public awareness. Salon urged the leadership of the House of Representatives to prioritize the passage of the bill. “Besides helping bridge the gaps in the country’s food supply, urban agriculture could positively impact employment and

income generation for urban settlers,” he said in a statement. Salon noted the Philippines ranked poorly in the 2017 Global Food Security Index recently released by the Economist Intelligence Unit (EIU). Citing the report, he said out of the 113 countries ranked by the EIU, the Philippines garnered a score of 47.3 and placed 79th. In Asia Pacific the Philippines was 17th out of the 23 countries assessed. The EIU considered three core pillars of food security—affordability, availability and quality and safety in its assessment. In terms of the three pillars of food security, the lawmaker said the Philippines ranked 77th on affordability, 80th on availability and 69th in quality and safety. “ T he u rgenc y of add ress ing our nation’s food security should guide us in our actions,” Salon said. Jovee Marie N. Dela Cruz

A6

Wednesday, October 11, 2017 • Editor: Lyn Resurreccion

The World BusinessMirror

www.businessmirror.com.ph

Israeli official hits Trump, expects more settlements

J

ERUSALEM—A top Israeli minister close to Prime Minister Benjamin Netanyahu expressed rare criticism of President Donald J. Trump on Monday and said he expects the government to approve more construction in West Bank Jewish settlements next week. Minister of Jerusalem Affairs Zeev Elkin said he is “disappointed” that Trump hasn’t fulfilled his campaign promise to move the United States Embassy from Tel Aviv to Jerusalem, a decision that the Palestinians fiercely oppose. “There were very clear election promises, not to the state of Israel but to the American voter, of moving the embassy, and I very much regret the delay,” Elkin told Army Radio. Israel considers Jerusalem, home to holy sites sacred to Jews, Muslims and Christians, as its capital. Palestinians demand east Jerusalem for the capital of their future state, along with the West Bank and Gaza Strip. Israel captured the territories in the 1967 Mideast war, though it withdrew from Gaza in 2005. Trump has backed away from t he campa ig n pledge on t he

4,000 The estimated number of new homes expected to be granted approval in the Jewish West Bank settlement

embassy move as his Mideast envoy attempts to breathe life into peace talks, which last collapsed in 2014 under US tutelage. Elkin also said Israel is set to give the green light next week to new homes in Jewish West Bank settlements. Israeli Channel 2 TV reported last Sunday that some 4,000 homes are expected to be granted approval. It was not immediately clear

Israeli and Palestinian women participate in a march organized by the “Women Wage Peace” organization, near the Dead Sea, on October 8. Thousands of women are wrapping up the march around the region, demanding that their leaders act to achieve a peace agreement. The group says the two-week march sends a message to their leaders to work toward a negotiated solution to the Israeli-Palestinian conflict and to make sure women have equal representation in any talks. AP/Sebastian Scheiner

how many of the homes would be new projects, in contrast to previously announced projects moving forward in the building process. An official announcement with more details is expected as soon as Tuesday.

The Palestinians, along with much of the international community, consider settlements illegal and an obstacle to reaching a peace deal. Israel disputes this, saying the fate of the settlements should be decided in negotiations.

Two decades of US-led peace plans have called for evacuating settlements to make room for a Palestinian state alongside Israel. Netanyahu’s hard-liner base opposes such a move, citing religious, security or nationalistic grounds.

Trump has been more sympathetic to West Bank settlements t ha n his predecessor Ba rac k Obama, gaining fans in Netanyahu’s government and prompting some pro-settler lawmakers to press Netanyahu to exploit the perceived leniency and approve more settlement housing. The White House expressed ambivalence about the expected housing approvals. One official said Trump “has made clear that unrestrained settlement activity does not advance the prospect for peace.” However, the official continued, “at the same time the administration recognizes that past demands for a settlement freeze have not helped advance peace talks.” The official spoke on condition of anonymity because the housing has not officially been approved yet. The Palestinians, meanwhile, condemned the expected settlement announcement. In a statement , P r i me M i n i ster R a m i Hamdallah urged the international community “to compel Israel to stop settlement activity.” The Palestinians have expressed frustration over Trump’s peace efforts. Trump’s Mideast envoy, Jason Greenblatt, has been meeting with the sides for several months. But, so far, the White House has not announced any plan for resuming negotiations. AP

UK and EU exchange volleys over Brexit briefs

L

ONDON—Prime Minister Theresa May said on Monday there is a positive “new dynamic” in Brexit talks, with Britain and the European Union (EU) nearing agreement on the rights of 4 million citizens whose lives will be affected by the split. May urged EU officials to show “leadership and flexibility” in negotiations on Britain’s exit, saying “the ball is in their court.” The EU, however, lobbed the ball straight back. European Commission Spokesman Margaritis Schinas said the responsibility for progress is “entirely in the UK court.” More than a year has passed since Britain voted to leave the EU, and six months since Britain triggered the two-year countdown to its EU exit. A fifth round of divorce negotiations opened on Monday in Brussels, with both sides frustrated by the lack of progress. May told British lawmakers that “there is a new dynamic in the negotiations” since her major Brexit speech in Florence, Italy, last month.

In the Florence speech, May said Britain would be willing to abide by EU rules and pay into its coffers during a transition period of about two years after Brexit in 2019. She also signaled Britain would pay what it owes to settle financial commitments it has made to the bloc, but without naming a figure. EU leaders have called her suggestions positive but asked for more details. Few were forthcoming in May’s statement on Monday, though she did say that Britain might accept the jurisdiction of the European Court of Justice during the transition period—an idea that infuriates many pro-Brexit members of her Conservative Party. The UK is increasingly anxious to move talks on to discussing future trade relations, but, so far, the EU says there hasn’t been “sufficient progress” on the major divorce terms—the size of the Brexit bill, the status of the border between Ireland and Northern Ireland and the rights of 3 million EU citizens living in Britain and 1 million

Britons in other member-states. May said progress was being made on all three, and “there is considerable agreement” between the UK and the bloc on citizens’ rights. “So I hope our negotiating teams can now reach full agreement quickly,” she said. Schinas added “there has been so far no solution found on step one, which is the divorce proceedings.” “So the ball is entirely in the UK court for the rest to happen,” he said. Danish Foreign Minister Kristian Jensen, however, called for compromise, saying “this will never be a 100-percent win for one side or the other side.” Jensen said the sides “are now on the same page”, and “it is rather important we get on to a more close and more speedy process of concluding some of the issues.” May told lawmakers she believed the negotiators would “prove the doomsayers wrong,” but also said Britain was planning for the possibility of leaving the EU without a deal. Critics have accused the govern-

ment of failing to prepare for a “no deal” Brexit, which would mean an end to tariff-free trade with the EU. On Monday the government published papers on trade and customs which May said would pave the way for Britain to “achieve the greatest possible tariff and barrier-free trade” after Brexit, even if there is no trade deal with Brussels. May addressed Parliament on its first day back since her disastrous speech to the Conservative conference last week, which saw her bedeviled by a prankster, a sore throat and a malfunctioning set. The debacle intensified debate about whether May can unite her fractious government—divided between Brexit enthusiasts and more reluctant leavers—and how long she can survive as prime minister. Labour Party leader Jeremy Corbyn accused the government of making a mess of the Brexit negotiations. “Fifteen months on from the referendum, we’re still no clearer what the future of this country will look like,” he said. AP

Thaler gets Nobel for making economics human again

W

A SH I NG T ON — Pe o pl e m a k e p o or e conom ic choices. They don’t save enough for retirement. They refuse to cut their losses on plummeting investments because they won’t own up to mistakes. They buy houses and stocks when prices are high, thinking that what’s going up today will keep going up tomorrow. Richard Thaler of the University of Chicago Booth School of Business on Monday won the Nobel economics prize for documenting the way people’s behavior doesn’t conform to economic models that portray them as perfectly rational. As one of the founders of behavioral economics, he has helped change the way economists look at the world. “Thrilling news,” said Thaler’s collaborator, Cass Sunstein of Harvard Law School. “He changed economics, and he changed the world.” Far from being the rational decision-makers described in economic

Thaler

AP

theory, Thaler found, people often make decisions that don’t serve their best interests. Illogical human behavior has econom ic consequences: baby boomers haven’t saved enough for old age. Americans kept buying houses even as prices soared in the mid-2000s, creating a bubble that burst and triggered the biggest economic downturn since the 1930s. To limit the damage, behavioral economists say, eco-

nomic policy needs to take human foibles into account. “I try to teach people to make fewer mistakes,” Thaler told the Associated Press (AP). “But in designing economic policies, we need to take full account of the fact that people are busy, they’re absentminded, they’re lazy and that we should try to make things as easy for them as possible.” Thaler’s work is grounded in day-to-day reality and connected to popular culture in a way that isn’t always true of Nobelwinning economists. “He’s made economics more human,” said Peter Gardenfors, a member of the prize committee. Thaler had a cameo alongside pop star Selena Gomez in the film The Big Short and once analyzed the flawed strategies of participants in the game show “Deal or No Deal.” He’s looked into how taxi drivers decide to spend their days and how school cafeterias should

display their food. Thaler won the 9-million-kronor ($1.1-million) prize for “understanding the psychology of economics,” Swedish Academy of Sciences secretary Goran Hansson said on Monday. He is the 13th Nobel-winning economist from the University of Chicago. Oddly, the University of Chicago is closely associated with the classical economic views that Thaler has challenged. “There’s nothing people like better at the University of Chicago than a good argument,” Thaler says. In fact, Thaler is golfing buddies with an intellectual rival, Eugene Fama, the classical Chicago economist who won the Nobel in 2013 for arguing that financial markets are rational. Asked in a news conference immediately after the announcement what he planned to do with the prize money, Thaler joked that he intended to spend it “as irrationally as possible.” AP

U.S.-backed Syrian fighters preparing for final push in Raqqa BEIRUT—United States-backed fighters in northern Syria are preparing for a final offensive on neighborhoods still held by the Islamic State (IS) group in the city of Raqqa, a spokesman for the group said on Monday. A US official affirmed that the battle for Raqqa is now approaching its last phase. Mustafa Bali of the Kurdish-led Syrian Democratic Forces told The Associated Press that the battle is expected to last between seven to 10 days. The extremists still have hundreds of fighters in the city that they once declared as their de facto capital. The Kurdish-led forces launched an offensive against IS in Raqqa in early June, under the cover of airstrikes by the US-led coalition. The Kurdish-led group has captured 80 percent of the city, leaving IS in control of parts of the Raqqa’s center and north. AP

Chemist: Kim had 1.4 times lethal dosage of VX on face SHAH ALAM, Malaysia—The estranged half brother of North Korea’s leader had about 1.4 times the lethal dosage of VX nerve agent on his face after he was attacked at a Malaysian airport, a government chemist testified on Tuesday. Pure VX was on Kim Jong Nam’s body, in his eye and in his blood plasma, government chemist Raja Subramaniam said at the murder trial of two women accused of smearing the chemical weapon on Kim in the brazen assassination in February. VX was also detected on the clothes both women wore the day of the attack. The trial on Monday had temporarily moved to a high-security laboratory for the judge, attorneys and the defendants to examine the clothing before it was presented as evidence. AP

For 2nd year, no women among Nobel winners STOCKHOLM—For the second consecutive year, there were no women among the 2017 Nobel prize laureates. The head of the Royal Swedish Academy of Sciences says the committees that choose Nobel Prize winners will meet this winter to discuss gender and ethnic diversity issues in the prestigious awards. Goran Hannsson said after the announcement of the economics prize on Monday that “I hope in five years, 10 years, we’ll see a very different distribution.” Each of the six prizes is chosen by a different committee, three of which are currently headed by women. Three of the prize committees are within the sciences academy. Hansson said he did not believe there was systemic gender discrimination, but “we are concerned; we are taking measures.” AP

Ice creamery dedicates new flavor to helping Syrian refugees SARATOGA SPRINGS, New York—A New York ice creamery is dedicating a new ice cream flavor to Syrian refugees and donating part of the profits to efforts to help them. The Adirondack Creamery in Saratoga Springs says its new flavor is inspired by a popular Syrian pastry called ma’amoul. The New York Times reports the ice cream combines dates and walnuts into a sweetened confection. A pint of the new flavor has calls for unity plastered all over, including the word “peace” in English, Arabic and Hebrew. The newspaper reports 50 percent of the profit made from each pint will be donated to the International Rescue Committee’s efforts to assist Syrian refugees. Pints of the new flavor are available at multiple stores and online. AP

The World BusinessMirror

news@businessmirror.com.ph

Aramco plans ‘mega investment’ in oil’s demand growth center

Japan-wide scandal erupts over Kobe Steel’s falsified product data

in a separate statement. Honda said it used falsified material from Kobe Steel in car doors and hoods while Mazda Motor Corp. confirmed it uses aluminum from the company. Suzuki Motor Corp. and Mitsubishi Motors Corp. all said they are checking whether their vehicles are affected.

S

audi Arabia’s state-owned oil giant has “megainvestment” plans for the world’s fastest-growing oil market. Saudi Arabian Oil Co. aims to create a fully integrated business in India and is interested in partnering on a planned refinery project on the country’s west coast, CEO Amin Nasser said last Monday in New Delhi. Investing in the plant, which is slated to be among the world’s largest, follows efforts by the producer known as Saudi Aramco to bulk up on refining assets ahead of what could be the biggest-ever initial public offering. “India has all the signs of a prosperous economy that is on the move. This is a market of investment priority and not a choice anymore,” Nasser said at the Indian Energy Forum by CeraWeek. “We have a number of partners with whom we are going to have serious discussions.” Saudi Arabia has been edged out as the top oil supplier to India amid an intensifying race among producers to retain their most-prized markets. India, which imports about 80 percent of its crude requirement, has been diversifying its sources of oil supply and is seeking more favorable terms from producers in the Middle East. It received its first oil cargo from the US this month. Saudi Aramco held talks with India’s state-owned oil companies led by Indian Oil Corp. to discuss participation in the 60 million ton a year refinery being set up in the state of Maharashtra on India’s west coast, Oil Minister Dharmendra Pradhan said on Monday at the same event.

Refining strategy

The potential partnership would be an extension of Aramco’s strategy to lock up market share by investing in refineries in Asia, which is driving global oil demand growth. The world’s biggest exporter earlier this year committed $13 billion to projects in Malaysia and Indonesia, as well as a new refining and petrochemical plant in China. The oil industry is pinning its hopes on India and China, together home to four of every 10 people in the world, as demand elsewhere remains weak while production stays high, keeping prices low. India’s oil demand is forecast to grow 135,000 barrels a day this year and 275,000 barrels a day in 2018, according to the International Energy Agency. Saudi Aramco opened an office in India this week primarily to market crude oil and liquefied petroleum gas, as well as to provide engineering and technical services in the country. Nasser said Aramco’s plans for India would cover oil supply, refining, marketing, renewables, as well as manufacturing petrochemicals and lubricants. India’s oil consumption surged 11 percent in 2016 to the most on record as rising income levels spurred greater use of cars, trucks and motorbikes. “By 2040, India is likely to be among the fastestgrowing oil markets, with demand almost doubling to about 10 million barrels per day. Meanwhile, demand for gas is expected to more than triple over the same period,” Nasser said. Bloomberg News

Wednesday, October 11, 2017 A7

Rocket, jet

K

A worker at Kobe Steel Ltd. Bloomberg

obe Steel Ltd. unleashed an industrial scandal that reverberated across Asia’s second-largest economy after saying it falsified data related to strength and durability of some aluminum and copper products used in aircraft, cars and maybe even a space rocket. The company’s stock was untraded in Tokyo, poised to slump by the daily limit, as customers, including Toyota Motor Corp., Honda Motor Co. and Subaru Corp., said they had used materials from Kobe Steel that were subject to falsification. Boeing Co., which gets some parts from Subaru, said there’s nothing to date that raises any safety concerns. Kobe Steel’s admission raises fresh concern about the integrity of Japanese manufacturers, and follows Takata Corp. misleading automakers about the safety of its air bags, and last week’s recall by Nissan Motor Co. of cars after regulators discovered unauthorized inspectors approved vehicle quality. Kobe Steel said last Sunday the products were delivered to more than 200

200

The estimated number of companies that buy Kobe Steel products companies but didn’t disclose customer names, with the falsification intended to make the metals look as if they met client quality standards. CEO Hiroya Kawasaki is now leading a committee to probe quality issues. Toyota said it has found Kobe Steel materials, for which the supplier falsified data, in hoods, doors and peripheral areas. “We are rapidly working to identify

which vehicle models might be subject to this situation and what components were used,” Toyota Spokesman Takashi Ogawa said. “We recognize that this breach of compliance principles on the part of a supplier is a grave issue.” Kobe Steel said it discovered the falsification in inspections on products shipped from September 2016 to August 2017, adding there haven’t been any reports of safety issues. The products account for 4 percent of shipments of aluminum and copper parts, as well as castings and forgings. “The incident is serious,” Takeshi Irisawa, an analyst at Tachibana Securities Co., said in an interview. “At the moment, the impact is unclear but if this leads to recalls, the cost would be huge. There’s a possibility that the company would have to shoulder the cost of a recall in addition to the cost for replacement.” Subaru has produced training planes for Japan Self-Defense Forces and wings for Boeing jets, such as the Boeing Dreamliner, according to a spokesman, who added the company was checking which planes and parts used affected aluminum. “Nothing in our review to date leads us to conclude that this issue presents a safety concern, and we will continue to work diligently with our suppliers to complete our investigation,” Boeing said

Mitsubishi Heavy Industries Ltd. Spokesman Genki Ono said Kobe Steel aluminum was used in the MRJ regional jet, as well as the H-IIA rocket, which was launched by Japan Aerospace Exploration Agency on Tuesday for a satellite. “We perceive that there was no problem as the rocket launch was a success,” he said. “Checks are under way, but at this point, no large effects have been found in the manufacture of the rocket or MRJ.” Kobe Steel CEO Kawasaki has run the company since 2013, and has recently overseen moves to expand its presence in aluminum. Earlier this year, the company said it was spending $500 million to boost output of the lightweight metal, including buying a half-stake in a plant in South Korea. Kobe Steel’s aluminum and copper operations account for about 20 percent of total sales, according to data for the quarter ended June 30. “Aluminum is a strategic business for Kobe Steel,” said Irisawa at Tachibana Securities. “If the aluminum business doesn’t work out well, I question where the company can make money,” given the mainstay steel business remains one of low profitability, he said.

Another scandal

This latest scandal threatens to further undermine confidence in the quality of Japanese manufacturing. Shinko Wire Co., a Kobe Steel affiliate, in June 2016 said a unit had misstated data on tensile strength of stainless steel wires for springs and that it had supplied customers with alloy that failed to meet Japanese industrial standards. In other recent Japanese product-related cases, Takata pleaded guilty in the US in February to one count of wire fraud for misleading automakers about the safety of its exploding air bags. Toyo Tire and Rubber Co. officials were referred to prosecutors in March following the company’s 2015 admission that it had falsified data on rubber for earthquake-proofing buildings. Nissan last week recalled more than 1 million cars in Japan. Bloomberg News

China hastens the world toward an electric-car future; 300,000 expected sale this yr.

S

HENZHEN, China—There is a powerful reason that automakers worldwide are speeding up their efforts to develop electric vehicles—and that reason is China. Propelled by vast amounts of government money and visions of dominating next-generation technologies, China has become the world’s biggest supporter of electric cars. That is forcing automakers from Detroit to Yokohama and Seoul to Stuttgart to pick up the pace of transformation or risk being left behind in the world’s largest car market. Beijing has already called for one out of every five cars sold in China to run on alternative fuel by 2025. Last month, China issued new rules that would require the world’s carmakers to sell more alternative-energy cars here if they wanted to continue selling regular ones. A Chinese official recently said the country would eventually do away with the internal combustion engine in new cars. “We are seeing ourselves at a crossroads in the development of the automobile industry in this country, with a global scale in mind,” said Juergen Stackmann, Volkswagen’s (VW) top executive for VW brand sales and marketing, during a visit to Shanghai.

China has reshaped industries before—clothing, steelmaking, even lace—through a potent mix of government support and cheap labor. More recently it has transformed green-energy businesses, like solar and wind power. This, however, would be on a different scale. If China succeeds—and there is no guarantee—Beijing’s policymakers will be front and center reimagining the global auto industry, a business that has helped define communities, industries and people’s aspirations for more than a century. It is a role that was almost inconceivable just a few decades ago, when China was more closely associated with a different type of green transportation: the black, classic Flying Pigeon bicycle. China feels it has little choice in pressing forward. While it is true that electric vehicles fit neatly into China’s plan to become the world leader in sci-fi technology like artificial intelligence, the country also fears a dark future—one where its cities remain cloaked in smog and it is beholden to foreign countries to sell it the oil it needs. Already, China is the world’s largest maker and seller of electric cars. Chinese buyers are on track to snap

A driver waits for his car to be charged at a station for electric vehicles in Beijing on October 5. Propelled by vast amounts of government money and visions of dominating next-generation technologies, China has become the world’s biggest supporter of electric cars, forcing automakers from Detroit to Seoul to pick up the pace of transformation or risk being left behind. Gilles Sabrie/The New York Times

up almost 300,000 of them this year, three times the number expected to be sold in the US and more than the rest of the world combined. The country’s market heft is considerable. China buys more General Motors-branded cars than Americans do. Even for Tesla, the still-small American maker of luxury electric

sedans, China has become the second-largest market, even though China’s taxes on imported cars are 10 times as high as those in the US. Tesla officials have said they are considering opening a factory in China. A week ago, GM and Ford unveiled plans to add a combined 33 electric models to their lineups. Global manufacturers, like GM

and Volkswagen, are also moving much of their research, development and production of electric cars to China. China, in turn, is pressuring them to share that technology with their Chinese partners. Behind the scenes, China is recruiting some of the world’s best electrical engineering talent, even in the US. China is also home to many smaller companies that make the parts essential to assembling electric cars. All this comes just as electric cars are finally starting to become competitive with gasoline- or diesel-powered cars on performance and cost. Electric cars are an increasingly common sight in cities, like Beijing, Shanghai and Shenzhen. For some drivers here, electric cars are all they know. “I don’t plan to buy a gasoline car, since I heard they are going to be banned for sale,” said Xiong Jianghuai, a lawyer based in Shanghai, who has bought two made by Chery, a Chinese automaker. He said he was delighted that the operating cost was less than one-fifth of the cost of buying gasoline, even if the initial purchase price was a little higher. “I think the future lies in electric cars,” Xiong said.

Many outside China—including some members of President Donald J. Trump’s administration—say China is using unfair government support to create national champions that could eclipse their rivals abroad. Chinese auto executives say their country is pursuing common-sense policies to develop cutting-edge industries. “In China the entrepreneurs in the industrial sector are very lucky, because we have the foundation” from the government, said Li Bin, the founder and chairman of the NIO Co., a Chinese electric-car manufacturer. “These opportunities are rare or impossible in any other country in the world.” China’s ability to dominate electric cars is not ensured. China’s auto manufacturing skills are considerable, but it has yet to create a single car model that has become popular abroad. Even in China, most car buyers still prefer Fords, Chevrolets and Volkswagens largely made by government-mandated joint ventures between global and Chinese companies. When it comes to electric cars, most Chinese models are inexpensive and boxy, unlike the sleek lines and looming falcon-wing doors of Tesla’s latest models. New York Times News Service

A8

Banking&Finance BusinessMirror

Wednesday, October 11, 2017 • Editor: Jun B. Vallecera

news@businessmirror.com.ph

BOC told to collect ₧50B a month in Q4

T

he Bureau of Customs (BOC) reported a collection shortfall of P1.59 billion in September amounting to only P40.16 billion instead of P41.75 billion as expected, data from the Department of Finance (DOF) show.

According to the DOF, the bureau missed its target collection by 3.81 percent, itself a reversion from year-ago collection expansion by 18 percent to P34.24 billion. “We were given a target of P50.1 billion per month up to December. We were not able to hit it in September, but this October I am optimistic we will hit our target,” Lapena told financial reporters. Year-to-date, the bureau collected only P323.72 billion or still short of target by 5.59 percent. Its target revenue collection from January to September was set at P342.87 billion.

This was nearly 12 percent higher compared to only P289.57 billion in the

same month last year. According to Customs Commissioner Isidro S. Lapeña, they should still hit the collection target this year, since the agency has done away with benchmarking and have, instead, implemented the correct valuation process when computing for cargo tax and duties on goods entering the country. “I will say the correct valuation is now working, unlike in prior years when it was based on benchmarking. The government loses a lot from the benchmarking method. We are determined to implement the correct valuation,” he said. He illustrated that a container van with an estimated cargo value of P1 million under the benchmarking scheme allows the government to collect only P40,000 instead of P120,000 from the value-added tax alone under the valuation scheme. “So if [we] go by correct valuation, [we] should be hitting much more,” he said while also acknowledging that the valuation method is the slower process hated by importers. Lapeña said businessmen are willing to cooperate if the BOC can implement a faster processing framework in the handling of imported goods. Rea Cu

Moderate grown seen in PHL this year

T

he Philippines’s economic growth was seen to moderate in 2017 before picking up in 2018, while inflation was likely to remain within the target range. This was according to the preliminary assessment by the Asean+3 Macroeconomic Research Office (Amro) after its annual consultation visit to the country in September. Discussions centered on risks to macroeconomic and financial stability, progress and challenges of the government’s infrastructure push and pending fiscal reforms and risk pockets that could dampen growth prospects. Dr. Sumio Ishikawa, Amro lead economist, led the mission. Amro Director Dr. Junhong Chang and Chief Economist Dr. Hoe Ee Khor participated in the policy discussions. After the boost from elections-related spending in 2016, the pace of economic expansion moderated to 6.4 percent in the first half of 2017 as fixed investment decelerated. Private consumption growth also slowed but, nonetheless, remained robust, supported by gains in employment and sustained remittance inflows. Government disbursement was weak in the

first quarter, but improved in the second quarter to guide public spending higher. The trade deficit eased in the first half of 2017 as exports outpaced imports for the first time since the first quarter of 2015. Both private consumption and exports are expected to remain buoyant going forward, while hurdles to budget execution are also gradually being overcome. Inflation has climbed to within the 2 percent to 4 percent of the government’s target range on higher food and oil prices and is expected to settle slightly above the midpoint through 2018. Risks to the inflation outlook are tilted to the upside arising from the transitory impact of the fiscal-reform program and the pending petitions for adjustments in electricity rates. While upside risks to the inflation outlook are mostly supply-driven, monetary policy should remain vigilant against possible demand pressures with the economy growing robustly and credit expanding rapidly, and against the potential second-round impact of the tax reform on inflation. The economy continues to have sound macro fundamentals, which should make it less vulnerable to shocks.

Postgraduate biz students urged to help MSMEs T

he Department of Finance (DOF) on Tuesday stressed the importance of strengthening the micro, small and medium enterprise (MSME) sector and the role it plays in helping the marginalized rise from poverty. Against this background, Finance Secretary Carlos G. Dominguez III urged those entering the labor force to help impoverished communities develop MSMEs that will serve as catalysts for growth and save the marginalized from the poverty trap. “Help sort out the problems there. Build social enterprises. Organize the poor. Create capacity where there seems very little.

Be crusaders for ethical business practices. Protect our environment,” Dominguez said in a speech read for him by Finance Undersecretary Karl Kendrick T. Chua at commencement exercises held at the Ateneo de Manila University in Quezon City. He urged AdMU to pioneer small-business immersion programs in its graduate school curriculum and assign students to poor communities where they could help micro enterprises, small agribusinesses and similar struggling endeavors to thrive and expand. “They [small enterprises] do not have the credit history to readily access financing. They may have excellent products, but no

Celebrating teachers

entrepreneurship for our society. That is the only advice I can leave you,” he said. Dominguez’s proposed small-business immersion program was inspired by the concept of “barefoot doctors”, those young interns encouraged by their medical schools to help poor communities as paramedics. By serving in impoverished areas, young doctors learn to appreciate what needs to be improved in the country’s health-care system, what ailments mostly afflict the poor and what nontraditional medical treatments not covered by their standard medical education can be effective in treating them, Dominguez explained.

“We might want to explore the development of parallel programs for our business schools. After all, the vast majority of our people work in microenterprises, cooperatives and small agribusinesses. They daily confront the challenges of meeting payrolls, sourcing supply, figuring out distribution channels for their products and dealing with the limitations of our microfinance networks. These are challenges that incite the imagination,” Dominguez said. Associated Labor Union Spokesman Alan Tanjusay in March estimated some 1 million students were to graduate this year. Rea Cu

Indonesia to probe $1.4-B StanChart client transfer

W

hen one looks back to his years in school, one often remembers one or two teachers who had made an impact in one’s life, who might have led him to where he headed in his career. His teacher may have been a “favourite” or a “terror”, but nevertheless, he or she may have had a lasting lesson or memory that one reminisces about. I remember at least three teachers who, in one way or another, influenced me to become a person who loves writing, and whose career had bloomed as a result of the inspirations these teachers, who were all nuns in Saint Theresa’s College, provided me with. Sister Adolphine in her way was a terror—teaching us to declaim or orate, or simply speak to an audience with confidence: From the back of the room she would shout, “Louder!” Miss Consuelo Varela, later Sister Consuelo, instilled in me a love of literature, particularly English literature—I learned the poem “The Hound of Heaven” by Francis Thompson from her and, to this day, this is by far my most favourite of all poems (in fact, I wrote an article expressing my awe for this poem in one of my columns in one broadsheet). Miss Jo de los Reyes, “our jo” who also became a nun, was a charming and kind mentor we all idolized—I also wrote about her in a column. In fact, all three of them somehow helped me move up in the career ladder, writing economic reports (I had joined the Department of Economic Research of the Central Bank), becoming a ghost writer and simply writing columns, the latter eventually being fodder for what has been called the “apostolate of public opinion”. Indeed, I would say that the most important thing a teacher can do is to provide his or her students with confidence, tenacity, integrity and a love for whatever course to take or career to pursue. Considering my regard for teachers, I am delighted that our country has given tribute to teachers through the celebration of National Teachers Month (NTM) from September 5 to October 5 of each year, with October 5 as National Teacher’s Day. Back in 2008, inspired by

distribution networks for them. They need your expertise. You will need the experience working in the raw,” he said. According to Dominguez, building a strong base of small but competently run enterprises with the help of graduates from the country’s best schools will have a dramatic impact on the country’s poverty profile. “If we could somehow institutionalize small-business immersion programs in the curriculum of this school, that will give flesh to our University’s mission of building ‘Men for Others’. The Ateneo Graduate School of Business must be a functional asset for cultivating a culture of

I

FINEX free enterprise Mercedes B. Suleik the celebration of World Teachers Day on October 5 of every year at the behest of the United Nations Educational, Scientific and Cultural Organization (Unesco), Brother Armin Luistro, F.S.C., then-President of De La Salle University, together with President Aniceto Sobrepeña of Metrobank Foundation, spearheaded the Teachers Month Campaign. Sobrepeña has been an active and guiding spirit in our country’s campaign to celebrate teachers. 2011 and 2012 were banner years for the campaign as former President Benigno S. Aquino III issued a Presidential Proclamation 242, which declared “the period from September 5 to October 5 of every year as National Teachers Month”. Further, Republic Act 10743 in January 2016 officially designated the culminating activity on October 5 as National Teachers Day. NTM’s mission is to engage the public in appreciating the contributions of Filipino teachers and the nobility of the teaching profession. The NTM Council spearheads the conduct of activities aimed at generating awareness and expressions of gratitude, leading to the long-term goal of creating a strong movement that cultivates a Filipino culture that celebrates all teachers’ service and heroism. As a result, two invitations to participate in Unesco Paris for World Teachers Day celebrations have been received, as well as an endorsement from Unesco Philippines to submit in the prestigious Hamdan Prize for Education. It would indeed be a great honour if our country was to receive that prize.

ndonesia will investigate whether citizens linked to the transfer of $1.4 billion of Standard Chartered Plc. private bank-client assets complied with tax-amnesty requirements. The country’s Finance Ministry received data on the fund transfer for taxcompliance purposes and found that it involved 81 private citizens, without any military, police, law enforcement or civil servants involved, Ken Dwijugiasteadi, director general for taxation, told reporters in Jakarta on Monday. The government will coordinate with the bank and expects to complete the investigation by the end of October. It comes as European and Asian regulators probe over the role staff may have played in transferring the client assets from Guernsey to Singapore before new tax-transparency rules were introduced, people with knowledge of the probes have said. The bank conducted an inquiry and notified regulators after employees raised questions early last year about the timing of the transactions and whether the source of customers’ funds had been properly vetted, said the people, who declined to be identified because the details are private. The assets—held in its Guernsey trust

unit for mainly Indonesian clients, were moved in late-2015 before the Channel Island adopted the Common Reporting Standard, a global framework for the exchange of tax data, at the start of 2016, the people said. Standard Chartered shuttered its operations on the island last year. The Monetary Authority of Singapore (MAS), the country’s central bank, and Guernsey’s Financial Services Commission are investigating the chain of events, the people said. The UK Financial Conduct Authority, Standard Chartered’s home regulator, is aware of the transfers, but isn’t currently reviewing them, one person familiar with the matter said at the time. In a statement late Monday, the MAS confirmed it is investigating the Standard Chartered transfer. The central bank said it takes “a serious view of the matter and will take firm action against any financial institution or individual that is found to have breached MAS’s requirements relating to antimoney laundering and countering the financing of terrorism”. The MAS said it was unable to comment further “as our supervisory probe is still ongoing”. However, it said that in the past it has “not hesitated to take firm action against financial institutions with

control deficiencies, and have imposed financial penalties and prohibition orders on culpable individuals where there are serious lapses”. When breaches of the law are detected, it has worked with lawenforcement agencies to pursue criminal prosecutions, the MAS noted. Last year the MAS took tough enforcement action against several banks over their dea lings w ith 1Ma laysia Development Bhd., shutting the local units of two Swiss banks, imposing fines and seizing at least S$240 million ($176 million) of assets. Four bankers have been jailed in Singapore in relation to the 1MBD affair. Financial institutions in Singapore are required to assess and understand risks associated with their customers, verify their identities, inquire about the source of their funds, monitor transactions, as well as perform regular account reviews, the MAS said in Monday’s statement. “Where suspicious activities are detected, financial institutions have to apply enhanced scrutiny and report these to the authorities accordingly,” the MAS said. “ Si ngapore w i l l not tolerate t he abuse of its financial system as a refuge or conduit for tax-illicit funds,” the MAS added.

Sun Life Grepa seeks to create millennial millionaires

I

n a bid to help young Filipinos become more f inancia l ly prepared, Sun Life Grepa Financial Inc. (Sun Life Grepa) recently introduced a program meant to help them prepare for a prosperous million-peso future goal without hindering their present priorities. Dubbed the “Millennial Now, Millionaire Later” program, young millennial Filipinos just starting out can choos—Normal Track, Fast Track and Safe Track—to help build funds starting from as low as P100 a day depending on how much they are willing to save or how fast they want to achieve their million-peso goal.

Each program track prov ides life-insurance benefits starting from day one so that millennials are ready for life’s uncertainties that could come their way. With millennials so focused on the Yolo or You Only Live Once mindset, this program gives them a chance to balance their outlook with ways to build a bright future. “Mi l lennia ls have t he adva ntage of time. They have more years to save money and more chances to maximize

their earning potential. The best time for millennials to start saving for their million-peso goal is now,” said Richard Lim, president of Sun Life Grepa. “We want millennials to know that they do not have to worry about the future for as long as they understand their intended timetable on achieving these goals. If they know the age they want to achieve each goal and how much should they save for that goal, they will be able to achieve prosperity in their future,” he added. “With this program, we want to be able to transform the mindset of millennials from Yolo to Yoli or Young Owner of Life Insurance,” he added.

ExportUnlimited BusinessMirror

Editor: Efleda P. Campos • Wednesday, October 11, 2017 A9

PHL products on display in Fabex Kansai By Gina Yap | Senior Trade-Industry Development Specialist DTI-EMB

F

INEST products from the Philippines are on display in a pavilion at the World Food And Beverage Great Expo (Fabex) Kansai 2017 being held in International Exhibition Center (Intex) Osaka until October 13. Fabex Kansai is Japan’s largest general trade fair for commercial food, cooking ingredients, equipment and containers.

Organized by the Philippine Department of Trade and Industry, through the Export Marketing Bureau (EMB), the Philippine Trade and Investment Center-Osaka, and the Department of Agriculture-Agribusiness and Marketing Assistance Service, the country's delegation is showcasing an array of food products, food supplements, food machinery and various kinds of farm produce in the three-day event. EMB Assistant Director Agnes R. Legaspi, who leads the business delegation from Manila, said that the 18 Filipino companies participating in Fa-

bex Kansai 2017 are also visiting Tokyo from October 9 to 18 for meetings with Japanese importers. This business mission aims to promote the Philippines as a reliable supplier of high-quality food products. In addition to Philippine exhibition in Fabex Kansai 2017, top Philippine government officials will talk on doing business with the Philippines in a seminar, entitled “Philippine Seminar on Business Opportunities on Agriculture and Logistics”, organized by the Osaka Port Promotion Association at their conference hall on October 11.

66th Manila FAME set on Oct. 20-22 By Roderick L. Abad

Contributor

@rodrik_28

M

ANILA FAME is all set once again for its second leg this year as it put from October 20 to 22 a bigger show for international and local buyers that will highlight the Philippines’s rich cultural heritage and design excellence. Center for International Trade Expositions and Missions (Citem) Executive Director Clayton Tugonon said this 66th edition is focused on how the country’s culture has influenced generations upon generations of Filipino artisans. “Manila FAME has always stood as a canvas to which the best of Philippine lifestyle and design talents embellish their work to showcase the country’s vibrant and multilayered cultural heritage,” he said. Among the eight show features expected in this three-day event to be held at the World Trade Center Metro Manila and the Philippine Trade and Training Center in Pasay City is the new-generation weaves to be helmed by Paris-based design specialist Nelson Sepulveda. He will work with over 30 small and medium enterprise-participants to invoke harmony and balance through Philippine craftsmanship and the beauty of natural raw materials. Great Women Project 2 will also make a comeback to display the works of women artisans across the country. It was launched by the Philippine Commission on Women in collaboration with the Department of Trade and Industry Project Management Team and funding from the Canadian International Development Agency. International designer Tony

Gonzalez will also have his own curated setting that will show his versatile collection made to match a variety of material requirements, techniques and price points. Design Commune: Patterns and Palettes will be presented in four themes­—Blues and Whites, Ethnic Nomads, Green Tinted and Natural Black and White. “Small and medium enterprises from across our country will join us in October to showcase the best artisanal products the Philippines has to offer,” Tugonon noted. “Through Manila FAME, we will work toward supporting the success of our artisans and uplifting the Philippine brand internationally.” Organized by Citem, Manila FAME is the second longest-running trade show in the Asia Pacific, and the only trade event in the Philippines approved by Union des Foires Internationales—a French association of trade fair organizers founded 90 years ago in Italy.

Manila FAME has always stood as a canvas to which the best of Philippine lifestyle and design talents embellish their work to showcase the country’s vibrant and multilayered cultural heritage.” —Tugonon

upcoming events Compiled by Louise Kaye G. Mendoza DTI-EMB Knowledge Processing Division

OCT 18

Time: 10 a.m. Event: Presscon with PwC for Announcement of Philippine Startup Survey Venue: QBO Innovation Hub, G/F, DTI International Building, 375 Sen. Gil Puyat Avenue, Makati City

PHL joined 14th China-Asean Expo S PEARHEADING promotion efforts under the blooming economic relations with China, the Philippine Department of Trade and Industry (DTI) Undersecretary for Trade and Investments Promotion Group Nora K. Terrado led the Philippine Delegation to the 14th China-Asean (Caexpo) and 14th China-Asean Business and Investment Summit held from September 12 to 15 at the Nanning International Convention and Exhibition Center in Guangxi province, China. Comprising the Philippine contingent of over 100 participants were local export companies, investment-promotion agencies (IPAs), such as the Board of Investments (BOI), Bases Conversion and Development Authority, Subic Bay Metropolitan Area, Clark Development Corp. and the Mindanao Development Authority, as well as businessmen and government sector representatives aiming to promote Philippine tourism and business opportunities to the huge Chinese and Southeast Asian market. “This is an opportune time for the Philippines to fully present its potential as an investment destination to the Chinese market. It is also a chance for Philippine exporters to meet with potential partners and buyers of their products and services and see how they can maximize the booming trend in China,” Terrado said. The country’s contingent in China highlighted the Philippines’s trade potential through an exhibit of products and commodities from various sectors, including home, fashion and wearables, gifts, handicraft, personal care and food. Among the products exhibited at the 14th Caexpo were Cavendish banana and banana chips, coconut preserves and by-products, durian, cacao, coffee, sugar, pili nuts, milkfish, sardines and tuna, and other food supplements. Fashion items, such as shoes, sandals, bags and souvenir items, were also sold at the commodities hall of the Philippines.

THE Philippine country pavilion at the 14th China-Asean Expo and 14th China-Asean Business and Investment Summit in Nanning, Guangxi, China. Leading the Philippine delegation was Department of Trade and Industry Undersecretary for Trade and Investments Promotion Group Nora K. Terrado (fifth from left) with Philippine Consulate in Guangzhou Consul General Marie Charlotte Tang (second from right) and Philippine Trade and Investment Center Guangzhou Commercial Counselor John Paul Inigo.

Moreover, the Philippine participation also gave the spotlight to this year’s Philippine featured destination, the province of Aurora. Tagged as the “Province of Charm”, the Aurora provincial government led by Vice Gov. Rommel Angara, presented its booming tourism industry and economic potential particularly its agriculture sector. “High on our agenda as we send Philippine trade missions abroad is opening more opportunities for countryside development. That is why we are happy to introduce Aurora province to the Chinese and Southeast Asian market as it has tremendous potential in the tourism and agriculture sector,” Terrado said. At present, a primary source of growth in Aurora province is agriculture. The sector employs about half of its population with about 49,991 hectares, or 15 percent, of

the provincial land area classified as cultivated farmlands. It is home to several primary products that include rice, coconut, coffee, bananas, root crops, corn, citrus fruits, peanuts and abaca. It is also among the country’s major producers of coconut-distilled alcoholic drink known as lambanog and tuba. Terrado ser ved as the key speaker at the China-Philippines Production Capacity and Investment Cooperation Forum coorganized by the National Development and Reform Commission of China and the National Economic and Development Authority of the Philippines. Meanwhile, a Philippine Investment Promotion Conference was held at the sidelines of the Caexpo on September 13, jointly organized by the DTI-BOI, Center for International Trade Expositions and Mission and Philippine IPAs.

The 14th Caexpo is considered as the second-biggest trade event in China, with a total exhibition space of about 122,000 square meters with 4,600 exhibition booths and around 57,000 visitors. Caexpo has grown into an event that plays an important role in promoting the China-Asean friendly cooperation. For this year, Caexpo had a theme of “Jointly Build the 21st Century Maritime Silk Road, Promote Regional Economic Integration through Tourism”. It highlighted the vast potential of tourism industry between Asean and China. Through this international trade fair, China eyes to connect and boost its investments in Asean countries and provide infrastructure networks particularly for micro, small, and medium enterprises to participate in the global value chain.

PHL intensifies partnership with South Korea in ICT By Gliceria N. Cademia

Trade and Industry Development Specialist DTI-EMB

T

HE Department of Trade and Industry Export Marketing Bureau (DTI-EMB), the Korea Ministry of Science and ICT, through its National IT and Promotion Agency (Nipa), and the Philippine Software Industry Association (PSIA) coorganized an Inbound Business Matching Mission (IBMM) on September 7 and 8 at Makati Shangri-La Hotel. Dubbed as the “2017 PhilippinesKorea ICT Partnership Program”, the event was highlighted by a businessto-business matching session between and among 13 Korean delegates and 25 Philippine companies. The main areas for business opportunities among the Philippine ICT and the 13 Korean delegates covered digital advertising solutions, IoT cloud-platform provision, smart-center platform solutions, database-encryption solutions, geographic-information systems, education technology and software digitalsignage solutions, among others. On the first day, Korea Ministry of Science and ICT Director Jung Monyon and DTI-EMB Division Chief Maria Teresa Loring delivered congratulatory remarks. They looked forward to bigger things happening in the ICT sector of their countries. Business contracts were signed between Philippine Long Distance

PARTICIPANTS to the “2017 Philippines-Korea ICT Partnership Program” held on September 7 and 8 at the Makati Shangri-La Hotel are (from left): Natasha Avecilla, assisstant manager, Jones Lang LaSalle Philippines Inc.; Paulo Cheung, country site head, Personiv; Rhys Jason Manapat, trade and industry development specialist (TIDS) of the Department of Trade and Industry’s Export Marketing Bureau (DTI-EMB); Maria Teresa Loring, division chief, DTI-EMB; Roberto Panganiban, CPI Outsourcing; Maria Luz Medialdia, assistant chief, DTI-EMB; Troy-Hyoung Kyoung Choi, executive director, Global Business Division, KAIT; Antonie Lyka Manaloto, TIDS, DTI-EMB; and Arselyn Palad, administrative aide VI, DTI-EMB.

Telecommunication Co. (PLDT) and Cobalt-Ray Co Ltd. for productsupply agreement and between PLDT and AbeTree for the Android POS system and payment solution. On the second day, Korean delegates had a meeting with PLDT/ Smart Communications and Globe Telecommunications Inc. PLDT presented the products and services they would like to offer, particularly

PayMaya, an application that gives a virtual prepaid card for shopping online, booking flights and more, and Takatack, an online marketplace similar to Zalora. The Philippine companies who joined the IBMM were Alliance Software Inc., Collabera, NorthstarSolutions Inc., Dynaquest Technology Services Inc., Personiv, Jones Lang LaSalle Philippines Inc., Land Regis-

tration Systems Inc., Robinson’s Land Inc., Ammex Isupport Worldwide, CPI Outsourcing, CAI-STA Philippines Inc., Xurpass Enteprise, RR Donnelley Inc., Cheq Systems Inc., Optel Ltd., Red Core Solutions, Stratpoint, i-Tech Global Business Solutions Inc., HKT Teleservices (Philippines) Inc., PLDT Enterprise, MetroBank, Globe Telecommunications, IL&FS, Payreto and ADEC Innovations.

A10 Wednesday, October 11, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

It takes money to make money in agri

A

ny businessman understands that he is required to shell out money before profiting from his ideas. If he intends to expand, he would have to spend more money to earn more. There is a Filipino expression which goes, “Laway lang ang puhunan”. But rare is a business venture that succeeds just by investing only laway, or all talk. Just like businessmen, governments know that they need to spend so they can stimulate the growth of their economies. Washington did this in 2008, when then-President Barack Obama unveiled a $832-billion plan to jumpstart the economy of the United States and create more jobs. In the Philippines the Duterte administration has rolled out an ambitious infrastructure plan, which entails spending more than P8 trillion on various public projects to sustain economic growth. The country’s economic managers have presented a list of big-ticket flagship projects included in the “Build, Build, Build” (BBB) program. Of the 75 flagship projects, only 11 are for the agriculture sector and are mostly focused on irrigation. Flagship projects are considered “high impact” or “game changing” because of their potential to create more jobs and cut poverty. These projects will be financed by overseas development assistance (ODA). The government had also unveiled a list of projects that seek to expand economic opportunities in agriculture, forestry and fisheries (AFF). These projects were identified under the Public Investment Program (PIP) 2017-2022, a six-year programming document that accompanied the economic blueprint of the Duterte administration, dubbed as the Philippine Development Plan (PDP). According to the National Economic and Development Authority, the PIP contains the “rolling list” of priority programs and projects to be implemented by the government within the medium term that contributes to the achievement of the targets in the PDP. The AFF projects are geared toward improving the productivity of farmers and fishermen and to help them cope with climate change. Some of the AFF projects include a crops research and development (R&D) program and revitalizing R&D to boost inland aquatic resources as frontiers for food security. The PIP list indicated that the government is targeting to spend P682.4 billion until 2022 for these projects. As of July 25, the PIP list showed that most of the projects will be locally funded, although the government had said it also intends to tap the private sector and ODA. It is hoped that the government would attain the targets of the PDP and fund AFF projects included in the PIP list. While the projects look good on paper, these would count for nothing if they are not be implemented for lack of funds. The Duterte administration would do well to heed the advice of the Food and Agriculture Organization (FAO) of the United Nations to increase investments in agriculture. During the opening ceremonies of the World Food Week on October 9, FAO Representative in the Philippines Jose Luis Fernandez noted that “much needs to be done” to encourage rural families to stay in their communities. Filipino farmers are aging and many of their sons and daughters do not want to take the place of their parents because of the perception that farming would not allow them to earn a decent income. The problems confronting the farm and fisheries sector will not be solved overnight, but at the very least, the Duterte administration should start laying the groundwork to make farming a profitable venture. And this will not happen if the government will not take the lead in spending for R&D, which will allow more farmers to go into value-adding, and to put in place the right policies to help them cope with climate change, such as the amendment of the Philippine Crop Insurance Corp.’s charter.

Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua Founder Publisher

T. Anthony C. Cabangon

Editor in Chief

Jun B. Vallecera

Managing Editor Associate Editor City & Assignments Editor

Max V. de Leon Jennifer A. Ng Vittorio V. Vitug

Senior Editors

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Rolando M. Manangan

BusinessMirror is published daily by the Philippine Business Daily Mirror Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines. Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025. (Advertising Sales) 893-2019; 817-1351, 817-2807. (Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

Printed by brown madonna Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila MEMBER OF

Art Amansec

All About Social Security

T

hese days, the Social Security System (SSS) has been in the limelight mainly due to the ongoing media discussions on a possible contribution hike. As expected, there are groups who oppose this, saying that it is an additional cost or burden to employers and employees. From my standpoint, there is one missing argument in the debate on increasing SSS contribution—that by increasing your savings with SSS, you are also increasing the amount of benefits that you will enjoy. Building up one’s retirement and emergency fund, after all, starts when one becomes part of the labor force. In fact, the relationship between the SSS and a salaried worker is made stronger every time he receives his pay slip with his contribution to his own pension fund. I stressed on his own retirement fund because that is how the SSS works. The contribution you put in largely determines the amount of benefits you receive, whether for short- or long-term needs. So, whatever the circumstances or age one is in, saving for the future should ideally be a major priority, and this is where the SSS comes in. Workers covered by the SSS benefit from a safe and secure means to financially prepare for their retirement, as well as other contingencies such as sickness, maternity, disability and death. With the SSS, members can

gradually add to their retirement or emergency funds and earn generous returns for what they contribute. At present, monthly SSS contributions range from P110 to P1,760, which is based on 11 percent of their reported earnings per month with the coverable income capped at P16,000. If the coverable income or Monthly Salary Credit (MSC) is increased, benefit increases will also follow as mandated by the social security law. For example, based on the latest pension simulation by the SSS Actuarial and Risk Management Group, a member with an actual monthly salary of P30,000 at the time of his retirement with 45 credited years of service will have a basic monthly pension of P15,700, or only 52 percent of his last salary, under the current P16,000 MSC ceiling. This amount includes the first tranche of P1,000 pension increase and the average of last 60 months of contributions is P16,000. But, if the MSC ceiling will be adjusted to P30,000 by 2022, his estimated monthly pension will be at P29,300, or about 98 percent of

More kung fu wisdom

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

Online Editor Social Media Editor

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

SSS is an investment destination

Teddy Locsin Jr.

Free fire Continued from A1

‘B

E a calm beholder of what is happening around you,” Lee advised. “There is a difference between the world and our reaction to it. We are conditioned to react a certain way that is not always correct.”

In correcting that condition, do it not from the outside by the way you behave “but from the inside—by dissolving the wrong attitude”, putting a better one in its place. I disagree. I think that changing the outside first is easier. Better behavior becomes habit, which reconfigures the inner side. Habit is character. Lee said, “Look around you, and you will see that there is no

one to fight, only an illusion to see through. No one can hurt you unless you let him.” He is right. Why pick fights with nobodies? You can even get hurt. Yet, the philosopher Kwame Appiah warns in his book on honor that gentlemen of the old school warned against picking fights with just anybody and punished as plain violence a duel between a gentleman and a social nobody. Indeed, many

his last salary at retirement. This amount includes the first and second tranche of the P1,000 pension increase and the average of the last 60 months of contribution is P30,000. Short-term benefits will also increase for those who will pay under a new maximum MSC. Sickness benefit amount per day, for instance, will increase from the current P480 to P900 by 2022 under a P30,000 MSC. Maternity benefits for those delivering through caesarian will receive P78,000 from the current P41,600, while normal childbirth will jump from P32,000 today to P60,000 by 2022 if the MSC will be increased to P30,000. Payment of regular contributions may not be a worry among covered employees, since they have their respective employers to do it for them as mandated by law. However, selfemployed workers and voluntary members are advised to motivate themselves to jump-start—or resurrect—their habit of saving for their future through an active SSS membership by paying their monthly contributions regularly. With these possible benefit increases, it is a must to save more with the SSS. Truth is, the clamor for higher SSS savings came from mostly young professionals today who earn more than P16,000. The issue on low SSS pension last year was actually a wake-up call to many of our young millennials who are now more aware of their finances, having been bombarded with aggressive marketing of private insurance firms. They have come to realize that the SSS is still the most affordable savings investment destination. Members’ contributions is consid-

ered as the lifeblood of the pension fund as they comprise the majority of SSS earnings. Benefit payouts are from members’ contributions. After benefits have been paid, excess amount is invested and placed in a reserve fund. For the past two years, SSS collection has increased by about 10 percent. From P130.8 billion in 2015, collection increased to P142.5 billion. This year, estimated total collection would be P156 billion. Increase in collection was made possible through several interventions, most remarkable was the Race Against Contribution Evaders (RACE), which includes posting of a show cause order in stores as a stern warning to employers that they are accountable if they fail to comply with their social security obligations. Delinquent employers are ordered to show cause within a nonextendible period of 15 days from posting, before the nearest SSS branch to explain why no legal actions should be taken against them. Another component of RACE is the “Oplan Tokhang” against delinquent employers. Together with the Philippine National Police, the SSS takes part in the arrest of erring employers who have been convicted based on decisions of the Regional Trial Courts. Maximum sentence for noncompliance with social security law is up to 12 years, without probation. As a result of these interventions, collection from delinquent employers has been increasing every year from P18.44 billion in 2016 to an estimated P20 billion by year-end. SSS pension payments, in particular, attest to the generous rate See “Amansec,” A11

times there is really no one worth fighting. And while this might be an excuse for cowardice, never mind. If he is a nobody, he is a nobody. If you took up his challenge, you would just be diminished even by killing him. Indeed, if you begin to doubt your courage, pick a fight with your social equal. Lee thinks inner humility generates external greatness. “Inwardly, psychologically, be a nobody,” he wrote. And he meant it. Don’t just pretend to be humble; be humble. And then do right. “But never think, better yet never feel, that you have achieved anything completely. That leaves space for improvement.” In short, don’t rest on your laurels, they will flatten and dry out and all you will have is a bunch of crumpled dry leaves. “The dominating thoughts of my mind will eventually reproduce themselves in outward acts. They gradually transform themselves into physical reality.” He is right. Thoughts inevitably find release in actions. Or you get cognitive consti-

pation, which, like the usual kind, is not good; it gives you a sense of heaviness and if you take a laxative, well, make sure no one is using the bathroom after you. “Therefore, I will concentrate my thoughts for 30 minutes daily upon the task of thinking of the person I intend to become thereby creating in my mind a clear mental picture” of what I want to be. “Any desire I persistently hold will eventually seek expression through some practical means of attaining the object at the back of it.” Same thought as earlier, which is to say, that nothing happens on its own accord except laziness of body and spirit. Only nothing comes into its own without prodding. “Therefore, I will devote 10 minutes daily to the development of selfconfidence.” Now that sounds like a platitude, but insecurity does lead us to abandon what we want to be and settle for something easier and less. I could go on. But enough for the day are its troubles. And solutions.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Build transportation infra in countryside, not only in Metro Manila Michael Makabenta Alunan

on the contrary

B

uilding massive transport infrastructure to ease horrendous traffic is, indeed, a must, but neglecting rural infrastructure may only reinforce bias for development in the big city that only creates a magnet for massive rural-tourban migration. n Metro subway, a welcome move. The Japan-funded Mega Manila Subway Project (MMSP) costing initially P355.6 billion or $7 billion, up from an original cost of P227 billion, is a welcome development as traffic gridlocks in Metro Manila are costing P2.4 billion a day some years back and could soar to P6 billion a day soon, a Japan International Cooperation Agency (Jica) study says. Already approved by President Duterte, it will carry daily 500,000 to 750,000 passengers on a full 25.3 kilometers stretch from Mindanao Avenue in Quezon City to Parañaque, and will break ground by mid-2018 and completed by mid2025. Japan will fund it at an interest rate of 0.10 percent per annum payable in 40 years, with a grace period of 12 years. Hopefully, parking buildings are built near each station so motorists can park their cars and take the subway. Better still, leave their cars at home and take any feeder transport to the railways. n But build “road trains” in countryside. Mass transits in Metro Manila are, indeed, urgent, but we must not neglect building transport infrastructure in the countryside, particularly the rural south corridor all the way to Southern Luzon, the Visayas and Mindanao, where provinces with the worst poverty incidence are located. Francis Yuseco Jr., developer of “Philippine Trackways” in the mid1980s, the precursor of the Bus Rapid Transit (BRT) now increasingly adopted in 189 cities in 39 countries worldwide, argues that for the same investment for the subway, “we can build a National Trackway of 5,000 kilometers and operate “road trains” or “bus trains”. (BRT is grammatically wrong and be called RBT, instead, to aptly describe a bus transit that’s rapid.) Unlike the subway carrying a maximum of 750,000 commuters, the trackways with road trains (elongated buses) designed by the Department of Science and Technology (DOST) with existing prototype ready for show, can move 2 million to 5 million passengers a day on an 80-kilometer per hour average speed. It will also carry cargo and refrigerated truck-trains, hastening and increasing the volume of interisland trade, thus, enabling impoverished rural folks to market almost directly their produce. Along the way, industrial economic zones, farm estates, public markets with postharvest facilities and self-sustaining townships can be set up to provide jobs for both urban poor and excess labor in the farms. n Bus-trains edging out railways? The trackway with the road trains are only a fraction of the railway costs as you only need designated road tracks, not rail tracks, and special elongated buses/trucks for maximum capacity, similar to trains, and no longer need the 20 to 40 time costlier inter-locking railway tracks, power generators, electronic signal systems and train coaches. What takes five to six years to build a railway can be done in less than a year with a bustrain trackway. If one major system breaks

down, the entire railway stops; but with bus-trains, when one unit breaks down, you simply replace it. Thus, RBT has gained popularity worldwide. Some cities, like Xiamen in China, have converted their elevated Light Rail Transits into the RBT road tracks. Malaysia, a neighbor and good model, built recently an elevated RBT, instead of a railway. Yuseco said worldwide railways are being subsidized. Germany spends €17.0 billion a year in railway subsidies; Switzerland, €4.3 billion; France, €13.2 billion; China, $130 billion; Italy, €7.2 billion; Spain, €5.1 billion; the United Kingdom, €4.5 billion; Japan Cumulative, $300 billion; and the Philippines, P21 billion, mainly because we are raising more pesos paying the same dollar debts incurred when exchange rates were half of what they are today. n Railroading the trend. Apparently, the trend is away from trains, although I support future development of magnetic levitation (Mag-Lev) trains to replace airplanes in speed and volume capacity. So are we railroading the trend toward bus-trains by sticking to trains? Perhaps, or maybe not, as subways, although costlier, are different as they don’t compete for above-ground road space. Japan’s train makers must have sought their government’s help to market-dump their old train systems through sweeteners like the low 0.1-percent interests and 12-year grace period. n Learn from Lincoln’s railway. It is wise to learn from US President Abraham Lincoln, who built the 3,000-kilometer transcontinental East-to-West Coast railway, cutting travel time from six months to six days. Were he market oriented and influenced by “Free Market” ideology, he would not have built the railways as there were no markets in those frontier inlands. But what he did angered the British Empire, whose port-based ma r it ime colonia l trade was threatened. The British did not forget losing to the 1776 American revolution, and, thus, incited the South to a stupid Civil War that cost over 600,000 American lives from 1861 to 1865. Southerners were made to believe they were threatened and different. On the contrary, all Americans were different and too busy with their respective ethnocentric communities to bother about slavery emancipation, although Lincoln fought for it. It took over 100 years for America to wake up to race issues after Martin Luther King’s assassination in 1968. The railways did not only create markets for steel and the industrial North, they developed cities like Denver along the way. Lincoln showed exemplary leadership as he straddled the divide of waging a war, while uniting America toward industrialization and building the railways, which were ironically the same issues that triggered the war. Similarly, road trains can develop towns and bail out agriculture and heIp wipe out poverty as it is here where 76.1 percent of those living in poverty are based.

Personalized learning Edgardo J. Angara

I

N December 2015 Facebook CEO Mark Zuckerberg and his pediatrician wife Priscilla announced they would found their own philanthropic project called the Chan Zuckerberg Initiative (CZI), by donating 99 percent of their earnings from Facebook shares (roughly $45 billion at the time).

The couple outlined in a published letter to their newborn daughter Max that one of CZI’s focus areas would be personalized learning. According to the United States’s 2016 National Education Technology Plan, personalized learning is a new way of teaching where the pace of learning and the instructional approach are “optimized for the needs of each learner”. The Zuckerbergs wrote in their letter that for better personalized learning, educational technology (edtech) that understands how individual students learn best should be developed and made widely available. Such edtech would allow students to advance quickly in subjects that interest them most and get

as much help as they need where they are most challenged. Teachers would also gain better tools and data to help their students achieve personal goals. These ideas have already earned the backing of groups like the Bill and Melinda Gates Foundation and the Omidyar Network of eBay-founder Pierre Omidyar. The Economist recently reported that up to 3,000 school district superintendents in the US, representing up to a third of public-school children, signed a pledge to transition to “personalized, digital learning”. Some educators are already pilottesting this new model. In India tens of thousands of students use the cloud-based application Mindspark

Wednesday, October 11, 2017 A11

to learn math and language. The key difference of Mindspark from other online “test” applications is that it uses big data and machine learning to identify patterns in the way students answer questions. If the software picks up a student’s weaknesses, it recommends remedial exercises. Another example is the Siyavula Practice, which is used in many South African schools for teaching math and science. Similar to Mindspark, Siyavula Practice uses big data and pattern recognition to help students work on areas where they’re weakest. Recently, the learning platform received a $1.5-million grant from Google to provide free access to 300,000 low-income students from South Africa and Nigeria. A particular exemplar in edtechdriven personalized learning is the Khan Lab School (KLS) in Mountain View, California, which is the brickand-mortar experiment of pioneering online-education provider, Khan Academy. At KLS, students do not spend their entire day seated in classrooms listening to regimented lectures. Instead, they share common spaces with other students (not necessarily of the same age or academic level), as they pursue what The Economist described as “individual goals and schedules”. They use so-called adaptive

software where they can watch video lessons produced by the Khan Academy and answer worksheets or take tests, from which they and their teachers receive immediate feedback. That allows both students and teachers to track progress. Since the teachers no longer have to spend much time making lesson plans or checking test papers, they devote more effort to tutoring their students individually and developing social skills and character. With the data they receive from the software being used, the teachers can also better gauge the strengths and weaknesses of their students, and plan their tuition style accordingly. Several studies show that such initiatives in edtech and personalized learning are resulting in better test scores and outcomes for students—although it is admittedly still too early to make any definitive conclusions. What is, perhaps, most exciting—and equally daunting—is the potential for this new approach to evolve what it means to be a good teacher. That should be food for thought for many of us, a few days after World Teachers’ Day on October 5. E-mail: angara.ed@gmail.com, Facebook and Twitter: @edangara

International Financial Reporting Standards

At present, the IFRS differs from

the generally accepted accounting principles (GAAP). However, the IFRS may become the global norm. The GA AP also differs among several jurisdictions. Thus, the US GAAP differs from the Canadian GAAP. In other words, there are several and different national accounting standards used by accountants across the world. The primary objective of the IFRS is “to maintain stability and transparency throughout the financial world”. It seeks to provide a common language to allow greater transparency and understanding across various jurisdictions. The IFRS is the adopted standard by many countries in the world, such as the European Union, India, Hong Kong (2005), Canada (2011), Australia (2005), Russia (2012), Japan (2009), South Africa (2005), Malaysia (2008), Saudi Arabia (2017) and the Philippines. About 120 countries practice the IFRS and about 90 of those have mandated their adoption. More countries are expected to transition to IFRS in the coming years. However, the US has not adopted it due to some issues raised by its Securities and Exchange Commission. The IFRS used to be called the International Accounting Standards (IAS). The IAS was adapted from 1973 to 2001. The primary benefit of the IFRS is that it allows for more transparency and, thus, would encourage

of safety, good yield and liquidity, in line with the strict provisions of the social security law. Abiding by best corporate practices, SSS maintains a diversified investment portfolio that includes placements in government securities (40 percent), equities (23 percent), salary loans (15 percent), bank deposits (6 percent), corporate bonds and notes (8 percent), real-estate properties (4 percent) and development and housing loans (3 percent). Prudence dictates that strong earnings should result in greater savings, instead of bigger expenses, to achieve and maintain long-term sustainability that is critical for the SSS. While contribution collections and investment income have remained strong, the SSS, in its fiduciary role, abides by its responsibility to ensure that the fund has ample revenues and savings to fulfill its benefit obligations for generations of Filipino workers. Many of us are guilty of tolerating personal habits that are detrimental to our own well-being and even to the welfare of others, such as our loved ones. Among the possible areas for deep reflection and improvement is

our personal list of priorities, which greatly influences our habits, as well as our daily and long-term decisionmaking. A clear reflection of where our priorities lie is how and where we spend our hard-earned money. For many workers at the early stages of their employment years, such as the current millennial generation, starting a retirement nest egg ranks low in their list of priorities, perhaps, knowing that retiring is still several decades away and that they can just worry about it later in life. Building up one’s retirement and emergency fund can also be shelved in favor of more tempting options to spend one’s earnings, such as splurging for trendy clothes, high-tech gadgets and leisurely travel. There are also workers at the middle or latter stages of their working life who forgo saving up for retirement and future emergencies due to family obligations, such as paying for household expenses, children’s tuition and monthly rent or mortgage. To make it easy for members, the SSS offers a diverse menu of payment options. Members can remit

Dennis B. Funa

INSURANCE FORUM

I

nternational Financial Reporting Standards (IFRS) is the “set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements”. The IFRS is maintained by the IFRS Foundation, whose mission is “to bring transparency, accountability and efficiency to financial markets around the world”.

International accounting standards board The IFRS was developed by the International Accounting Standards Board (IASB), an independent and not-for-profit organization and arm of the IFRS Foundation. The IASB is overseen by the trustees of the IFRS Foundation. The IASB used to be known as the International Accounting Standards Committee (IASC) until it was replaced by the IASB on April 1, 2001. Several IASC standards are still in effect today. The IASC was formed in 1973 by various professional accounting bodies for cross-border listings. The board of IASC, however, operated on a part-time basis. In 2000 the IASC agreed to restructure itself into a full-time IASB. After the IASB became operational, it started calling its new standards as the IFRS. The

Amansec. . .

continued from A10

of return for the amount members saved up as SSS contributions during their employment years. As example, let’s cite a female member who has paid the P110 minimum contribution over a span of 10 years, or 120 months, for a total contribution of P13,200. Upon retirement, she would be entitled to a minimum pension of P1,200. It would only take her less than one year—or only 11 monthly pensions, to be exact—to recover the entire P13,200 that she had contributed to the SSS. Based on the average period for pension payments, she would continue to receive P1,200 for monthly pensions—13 times a year given the 13th-month pension—for 20 years. It is worthy of note that this excludes possible availment of other types of benefits, such as sickness and maternity. Income from investments help fill in the imbalance between the contributions collected and benefits paid to members. SSS investment activities are guided by the principles

IASB is composed of 16 members. There are two other entities operating with the IFRS Foundation: the IFRS Foundation Monitoring Board and the IFRS Advisory Council.

IFRS Foundation

The IFRS Foundation was incorporated as a tax-exempt organization in the United States State of Delaware on February 6, 2001. Its primary objective is to develop a single set of high-quality, understandable, enforceable and globally accepted International Financial Reporting Standards based on clearly articulated principles. It is financed through contributions.

International Financial Reporting Standards

more investments. It also benefits companies with international businesses and cross-border transactions as it makes “international comparisons” of financial statements easy. A single standard will provide for a more cohesive view of financial statements prepared in various jurisdictions worldwide. In other words, it will “increase the quality of information”. The IFRS, though, is not a set of rules but rather provides for general guidance for the preparation of financial statements. The IFRS has impacted several accounting activities. For example, the IFRS “influence the ways in which the components of a balance sheet are reported”.

History of IFRS

The IFRS originated in the European Union as an attempt to harmonize the different accounting systems across Europe. By 2005 a total of 7,000 companies in 25 countries have transitioned to the IFRS Standards. The International Organization of Securities Commissions has recommended to its members the adoption of IFRS Standards in year 2000. It has, in effect, become the de facto global accounting language. Dennis B. Funa is the current insurance commissioner. He was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.

their contributions over-the-counter at SSS branches and through various SSS-accredited partners, including banks, Bayad Centers, SM Business Centers, authorized cooperatives and microfinance institutions, to name a few. Members can even make online payments, or use their “virtual wallets” for those duly enrolled in Globe GCash—the latest in the SSS’s expanding list of payment options. For SSS members with higher incomes who have the capacity to save more, the SSS Personal Equity Savings Option (Peso) Fund allows them to remit additional funds for retirement and emergencies on top of their regular SSS monthly contributions. The Peso Fund offers guaranteed and tax-free earnings and can be tapped for contingencies and purposes, such as retirement, total disability, medical needs, education, housing, livelihood and unemployment. In a span of a few months since its nationwide launch in September 2015, the SSS Peso Fund already has attracted over 700 enrolled members who have saved up over P10 million to date.

2nd Front Page BusinessMirror

A12 Wednesday, October 11, 2017

www.businessmirror.com.ph

Drilon: Tap ‘excess fats’ in 2018 budget bill to bridge housing gap S By Butch Fernandez

@butchfBM

enate Minority Leader Franklin M. Drilon, citing “excess fats” in the P3.7-trillion 2018 budget bill, on Tuesday moved to realign the surplus funds to solve the country’s ballooning housing backlog now estimated at close to 6 million units.

Lamenting the huge cut in the housing sector’s 2018 budget as an “injustice”, Drilon deplored the proposed P4.4 billion allocated for

housing next year, pointing out that this is 70 percent lower than the P15.3-billion budget given to it in 2017.

Drilon: “For every peso spent for housing, P7 flow back to the economy. From the social point of view, housing is very important. From the economic point of view, it is very beneficial.”

“Budgetary support is crucial in addressing the poorest sector of our society, and the huge budget cut is the ‘wrong policy thrust’,” Drilon said, protesting that “this is criminal neglect if we look at the budget of the housing sector”. Drilon disputed the justification given by Sen. Joseph Victor

Ejercito, who noted that the National Housing Authority’s (NHA) “low absorptive capacity” prompted the move to decrease the NHA’s 2018 budget allocation “as proposed by the Department of Budget and Management”. “The absorptive capacity of the NHA is being blamed for this refusal by the economic managers to provide sufficient budget for the housing sector,” Drilon bemoaned, adding: “We should not let our people suffer from these alleged inefficiencies of a bureaucracy, which is even open to question.” In response, Ejercito affirmed that the NHA has, in fact, obligated 85 percent of its funds in 2016,

Govt agencies told to expedite implementation of export plan

By Cai U. Ordinario

@alyasjah

he export sector received a boost from Malacañang with President Duterte’s newest memorandum instructing concerned government agencies to double efforts on implementing the Philippine Export Development Plan (PEDP). Under Memorandum Circular 27, the President has directed 18 government agencies and entities to “collectively work, review, institute reforms and implement all relevant policies” in harmony with the PEDP. The PEDP is a three-year rolling plan that lists the government’s annual and medium-term export thrusts, strategies, programs and projects, which are implemented in cooperation with exporters and other sectors. The memorandum mandated the Department of Trade and Industry to monitor and implement the strategies leading to the achievement of trade targets, particularly exports of goods and services. It was also instructed to lead in export development through internationalization of small and medium-sized enterprises and to continue promoting competitiveness and ease of doing business. The Department of Finance was directed to fully roll out Republic Act 10863, or the Customs Modernization and Tariff Act, and to “automate, streamline and integrate the import and export processes” so as to streamline trade activity. To cut the cost of transporting goods, the memorandum tasked the Department of Transportation to make land, air and maritime transportation systems “flawless”. The Department of Public Works and Highways was instructed to prioritize connectivity programs to make it easier to deliver products and services. This includes the Road Leveraging Linkages for Industry and Trade Program, the Tourism Road Infrastructure Programs, and the construction and improvement of access roads leading to airports and seaports. The President also directed the Department of Labor and Employment to pursue tripartite industrial peace councils at the industry and regional levels intended to establish “voluntary codes of good practices”. See “Govt,” A2

leader suggested the funds could be “sourced from the excess fats” in the 2018 budget bill. For instance, Drilon cited the proposed P3.7-billion budget for intelligence funds the senator notes “has grown tremendously” under the Duterte administration. He justified his proposed solution by stressing “the importance of housing as an economic tool, which has the highest multiplier effect on the economy”. “For every peso spent for housing, P7 flow back to the economy,” Drilon added. “From the social point of view, housing is very important. From the economic point of view, it is very beneficial,” he concluded.

‘REFORMS TO REVERSE DECLINE IN H1 FOREIGN DIRECT INVESTMENTS’

By Elijah Felice E. Rosales

T

contrary to claims that the agency has low absorptive capacity. D r i lon , d r iv i ng home t he point, warned that “social problems will just continue to worsen if we continue to commit criminal neglect in our treatment of the housing sector.” Ejercito, in turn, acknowledged that the housing backlog is projected to reach 6 million by 2022. This prompted Drilon to insist that the Senate restore the housing sector’s budget cut. “With that kind of backlog, why are we not providing enough resources to our housing sector?” Prodding the Senate to restore the housing sector’s original budget for next year, the minority

@cuo_bm

& Catherine N. Pillas @c_pillas29

T

HMAS ‘Adelaide’ port call Capt. Jonathan Early, commander of the Joint Task Group and skipper of the Royal Australian Navy HMAS Adelaide, addresses the media from the deck of the amphibious assault ship and landing helicopter dock, after docking at the South Harbor for a five-day port call on Tuesday in Manila. The visit of the HMAS Adelaide, along with another Australian Navy ship, the HMAS Darwin, a guided missile frigate, was aimed at strengthening relations between the two navies, as well as maritime security and stability in the region. Story on B3. AP

DENR backs bill granting tax perks to biodiversity donors Continued from A1

conservation of the country’s rich biodiversity and help the government bridge the big gap in biodiversity financing. “If it will encourage private-sector support in the management of our protected areas, it is a welcome development; as long as it will increase revenue generation for the protection of our environment,” Lim said. She added that donation from the private sector will be a big boost to the management of PA, especially with the law allowing the retention of 75 percent of the revenue generated in the management of a particular PA, called Integrated Protected Area Fund (Ipaf). The DENR-BMB is closely coordinating with three different committees in refining the consolidated Expanded-National Integrated Protected Areas System (E-Nipas) bill. It was learned that the House Ways and Means Committee has introduced a provision in the consolidated E-Nipas bill, particularly Section 16-A, which states that, “All grants, bequest and endowments, donations and contributions made

to the Ipaf to be used actually, directly and exclusively by the Protected Area shall be exempt from donor’s tax and shall be considered as allowable deduction from the gross income of the donor for the purpose of computing the taxable income of the donor in accordance with the provisions of the National Internal Revenue Code of 1997, as amended.” The new E-Nipas bill, a consolidation of two earlier bills—House Bill (HB) 177 filed by Rep. Josephine Y. Sato-Ramirez of the Lone District of Occidental Mindoro and HB 133 of Party-list Rep. Rodel M. Batocabe of Ako Bicol—was approved by the Committees on Natural Resources, Appropriations and, lately, the Ways and Means. In a statement, Sato-Ramirez said the consolidated E-Nipas will institutionalize funding support through Ipaf and the annual General Appropriations Act to 94 PAs listed under the proposed measure. The E-Nipas also proposes to strengthen protection measures by imposing stiffer penalties and fines for violators of various environmental laws, particularly the Nipas and the Wildlife Act. There are 240 PAs covered

under Nipas, but only 13 are backed by legislation. Expanding the coverage of the law with the inclusion of 94 PAs is expected to boost the country’s efforts to protect endangered wildlife and their habitats. The Philippines is one of the 17 mega-diverse countries in the world, but is also suffering from rapid rate of biodiversity loss, because of massive destruction of habitats due to mining and logging, illegal wildlife trade and land conversion for agriculture. Through ecotourism, the Philippines is hoping to strengthen its biodiversity conservation and protection, which is part of its commitment as a party or signatory to international environmental treaties, such as the Convention on Biological Diversity, the Convention on the Conservation of Migratory Species of Wild Animals, also called the Bonn Convention, and the Ramsar Convention on Wetlands of International Importance or Ramsar Convention. The Senate version of the E-Nipas, Senate Bill 144, was approved on third and final reading early this year.

he National Economic and Development Authority (Neda) said the revisions that seek to shorten the Regular Foreign Investment Negative List (RFINL) and the tax-reform program will boost foreign investor’s confidence in the country. Neda Undersecretary Rolando G. Tungpalan said the country can make up for the 14-percent drop in foreign direct investments (FDI) in the first semester. The Neda said in a statement that a “sharp decline in net equity capital” caused the drop in FDI inflows to $3.6 billion in the first half, from $4.2 billion posted in the same period last year. “While the data on equity placements serve as a gauge of new FDI entry and overall investor confidence, the figure is not com-

DOT. . .

Continued from A1

In an interview with Undersecretary for Tourism Development Planning Benito C. Bengzon Jr., he said the agency is looking for more “opportunity markets” which it can nurture. He stressed though, due to limited resources of the government, the DOT has to be very selective in recommending a new destination where it can promote the Philippines heavily. “So before we move to a new opportunity market, we have to be able to get the numbers up to a comfortable level, which will make it viable for the partners from the private sector to conduct business with their counterparts in those markets.” As an example, he pointed to India, which the DOT projects will reach 100,000 arrivals by the end of 2017. “So the private sector from the Philippines has developed their network in the main cities in India, and second-tier cities and even third-tier cities. The fact that we’re doing Hyderabad, Chennai, Calcutta, etc. is already an indication there is business to generate.” He said the DOT has written the Department of Justice (DOJ) anew “for them to seriously consider visa-on-arrivals for Indian travelers. This comes after the DOJ and the BI [Bureau of Immigration], fortunately for us, agreed to relax the visa requirements for China.” The BI recently announced the visa-on-arrival program

14%

The rate of decline in foreign direct investments attracted by the Philippines in the first half plete. The figure does not show the total inward investments made by foreign investors in the country,” Tungpalan said. The Neda has already completed an “aggressive” RFINL draft, which seeks to ease restrictions on foreign investments. The list is up for review and adoption by the Neda board, chaired by President Duterte. The present administration’s economic team is also pushing to strengthen the country’s Continued on A2

for “qualified” Chinese tourists. This covers tour groups organized by DOT-accredited tour operators; businessmen endorsed by local and foreign chambers of commerce, as well as government agencies; athletes; and delegates to conventions and exhibits. Aside from India, the DOT sees an opportunity in nurturing Saudi Arabia, Bengzon said. “Maybe in the same category as Russia and India [whose arrivals have] grown above the curve, is Saudi Arabia, which is currently about 60,000 to 70,000 arrivals. With the right promotions mix, we can bump it up to 100,000.” Arrivals from Saudi Arabia grew by 4.25 percent to 32,783 in January to July 2017. Meanwhile, the DOT report showed that South Korea continued to top the list of source markets with arrivals reaching 927,228 in the first seven months of the year, an increase of 11.8 percent from the same period last year. This was followed by the United States, with 599,480 arrivals, up by 13.3 percent; China with 545,725 (+29.4 percent); Japan with 341,457 (+11.9 percent); Australia with 150,977 (+3.8 percent); Taiwan with 147,156 (+8.4 percent); Canada with 123,402 (+18.6 percent); the United Kingdom with 110,903 (+6.79 percent); and India with 54,300 (+20.2 percent). The DOT recorded dips, however, in three traditional source markets: visitor arrivals from Singapore fell by some 8 percent to 97,742; Malaysia was down 1.75 percent to 82,843; and Hong Kong dropped 8.3 percent to 65,463.