Issuu

“I don’t really see it as me changing the world or changing the US, even. I just kind of see it as the school allowing an American student to practice her faith while also training to be an officer in the Navy.”—Sana Hamze, the first woman allowed to wear a Muslim headscarf beneath her military uniform at Vermont’s Norwich University, the nation’s oldest private military college. AP

media partner of the year

“The United States listens to everything, and looks at everything. All of you are objects of exploitation for the special services.”—Russian President Vladimir Putin, telling journalists in the Russian press corps that they are possibly being watched by American intelligence agencies. AP

“Randy stared death in the face, but death blinked. Today God’s proof of a miracle stands before you.”—Mary Davis-Travis, country singer Randy Travis’s wife, speaking about the numerous procedures and surgeries to save his life and a six-month stay in the hospital after a viral infection caused his stroke. Travis found his distinctive voice three years after a life-threatening stroke and sang “Amazing Grace” during his induction on Sunday into the Country Music Hall of Fame. AP

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2015 environmental Media Award leadership award 2008

A broader look at today’s business

www.businessmirror.com.ph

Tuesday, October 18, 2016 Vol. 12 No. 6

Lopez to keep ‘protected areas’ off-limits to mining By Jonathan L. Mayuga

BusinessSense BusinessMirror

analysis, ideas and commentary from

E1 Tuesday, October 18, 2016

LOPEZ: “No more mining in any protected area.”

PHL renewing initiatives to protect children online

were he seeking any other job, trump would be flagged by hr www.businessmirror.com.ph

Were He Seeking Any Other Job, Trump Would Be Flagged by HR

The real pro-poor strategy

the entrepreneur Manny Villar

BMReports

inside

By Andrew Ross Sorkin

ONALD TRUMP describes himself as a businessman. And he says he wants to run the government more like a business.

But would any business hire Mr. Trump? It isn’t a trivial question. Given the Republican presidential nominee’s vulgar boasts about sexually assaulting women and trying to coerce a woman to commit adultery with him—among other things—it is hard to believe he could get past the human resources department of a Fortune 500 company. Over the last decade, much of corporate America has put in place strict policies to deal with sexual harassment and other offensive behavior, trying to make amends for an abhorrent history of letting such conduct go unchecked (remember Mad Men?). Hiring procedures at large companies, particularly for senior positions, include extensive

background checks, which typically include interviewing former colleagues and combing through articles, court records and, yes, social media. Thousands of employees have been fired or pushed out for using far less repugnant language than Mr. Trump’s words about how he gropes women. Walmart, the nation’s largest employer, with some 2.2 million employees, has explicit policies, for example, that prohibit “sexually explicit language, off-color jokes, remarks about a person’s body” as well as “using slurs or negative stereotyping,” “verbal kidding, teasing or joking” and “intimidating acts, such as bullying or threatening.” By those definitions, it is not clear if Mr. Trump would qualify to be hired

as a janitor, let alone a senior executive. A spokesman for Walmart, asked whether Mr. Trump’s comments would disqualify him from employment there, said: “We’ve got a policy of not entertaining hypotheticals.” Mr. Trump has apologized for his language, which he described as “locker room talk.” But he used the language while on the job; he was recorded on a live microphone while working to promote The Apprentice, his popular reality show. Many actors’ and “talent” agreements include a “morality clause” that explicitly makes using such language a fireable offense. Here’s the standard, boilerplate language that’s often included in such agreements, according to a sample published by Eric Goldman, a professor at Santa Clara University School of Law: “The actor shall not commit any act or do anything which might tend to bring actor into public disrepute, contempt, scandal or ridicule, or which might tend to reflect unfavorably on the network, any sponsor of a program, any such sponsor’s advertising agency, any stations broadcasting

or scheduled to broadcast a program, or any licensee of the network.” By that definition, an employer might be able to use Mr. Trump’s catchphrase: “You’re fired.” Something just short of that happened to Billy Bush, the host who played along with Mr. Trump on the 2005 recording. NBC announced his suspension from the Today show after the clip surfaced nationally last week. (I should note here that I co-anchor Squawk Box on CNBC, which is another unit of NBCUniversal.) Jack Welch, the former chief executive of General Electric, which owned NBC when Mr. Trump started The Apprentice, was an impassioned supporter of Mr. Trump’s presidential campaign before the lewd comments were made public. Afterward, he took to Twitter to say, “Party must change nominee now.”

Mr. Trump says the country has become “too politically correct.” His surrogates, like Rudy Giuliani, have defended him by saying he shouldn’t be held accountable because he wasn’t running for president when he made those statements over a decade ago. But times have changed. The days of corporate America and Wall Street as swashbuckling, cigar-chomping, liquor-swilling—and female harassing—playgrounds à la the 1980s and ’90s are long over. Susan Antilla wrote a book, Tales From the BoomBoom Room: Women vs. Wall Street, that chronicled a pattern of horrific behavior at Smith Barney. The tale ended with $150 million in awards and settlements. Mr. Trump’s casual line on the 2005 tape—“When you’re a star, they let you do it, you can do anything”—reminded me of a passage from an interview Mrs. Antilla conducted earlier this year for The Times, in which she quoted Lisa Mays, a Smith Barney executive involved in the suit, about how she had been cornered by a male coworker. “Before I knew it, he was lifting my skirt to get into my tights, and I was begging him to stop,” Ms. Mays said, adding

that it had quickly ended when another employee arrived. “And then, he just walked away like nothing happened.” Mr. Trump says his words were just words, and that he has never assaulted any women. Still, that’s not the standard to qualify for a job—either in the private sector, or as the highest official in the land. “It would be a significant risk for a Fortune 500 company to bring in someone like this,” said Tom Spiggle, a former prosecutor who is now a discrimination lawyer who has sounded the alarm about Mr. Trump on social media. “It could be a tremendous liability,” he added. Lawyers say that hiring Mr. Trump now could pose huge problems for a company because if an employee were to ever accuse him of harassment, his earlier comments could be used not only to show a pattern, but also that the company was aware of the issue when it signed him on. “We have these statements,” Mr. Spiggle said, adding that if he were litigating such a case, “We’d use them all day long. It doesn’t matter it was 11 years ago.”

businesssense Like Republican message on Economy, Security and Supreme Court... Unfortunately, wrong messenger... Party must change nominee now. —Jack Welch (@jack_welch) October 8, 2016

Continued on A10

CORN SHORTAGE LOOMS AS PRICES CONTINUE TO FALL

is this a real jackson pollock?

THESE days children frequent computer shops, like this one in Las Piñas City, to do surfing and gaming. Many young Filipinos are hooked on the computer, forgetting the old games that require physical movement. NONIE REYES

steele in napa

By Dennis D. Estopace @DennisEstopace

& Oliver Samson Correspondent

sports

By Jasper Emmanuel Y. Arcalas

@jearcalas

art

Conclusion

reating jobs is the most effective and long-lasting way to reduce poverty, and pro-poor programs do not necessarily mean direct aid, financial or in other forms, which generally provide only temporary relief.

DonalD Trump during the second presidential debate at Washington university in St. louis, october 9, 2016. Doug Mills/The New York TiMes

business news source of the year

P25.00 nationwide | 5 sections 32 pages | 7 days a week

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nvironment Secretary Regina Paz L. Lopez has placed all permits issued to mining operations in so-called protected areas (PAs) under review, as she vowed to make sure miners will be kept out of biodiversity sites under her watch. Continued on A4

2016 ejap journalism awards

Part Two

NE click. That’s all that it takes to scar a child for life. According to cyber-security consultant Angel T. Redoble, it’s when children click on a button to accept a “friend” request on social-networking sites that the torturous journey of exploitation begins. Some cyber criminals target chil-

PESO exchange rates n US 48.3410

dren who openly express on socialnetworking sites, like Facebook and Instagram, their ambition to become clothing models, Redoble, president of non-governmental group Philippine Institute of Cyber Security Professionals (PICSPro), told the BusinessMirror. Disguised as modeling agencies, cyber criminals develop friendship with kids, he said “Once the trust is built, the kids are enticed into showing their ‘modeling’ talent,” he said. “The cyber criminal will then tell their targets that they have promising lingerie modeling ca-

reer and the payoff is very attractive.” According to Redoble, the child will be sweet-talked into getting videoed to “show what he or she got.” “Unmonitored by parents and the kids totally clueless, the cyber criminals are making money from the video clips, which can be converted into photos.” When the victim finally realizes his or her videos and photos are circulating on the Web, he or she undergoes depression, Redoble explained. Some may commit suicide, he said, sans citing statistics.

orn farmers on Monday issued a dire warning about a possible corn shortage, if the government fails to address the persistent drop in prices. “Our farmers could be discouraged, given the initial developments of falling prices of corn. Should that happen, it would affect their planting intentions, and we may not be able to reach our production target,” Philippine Maize Federation Inc. (Philmaize) President Roger V. Navarro told the BusinessMirror. Navarro said the National Food Authority (NFA), which is mandated to ensure stability of supply and prices of staple cereals both in the farm and consumer levels, should buy more corn from farmers to normalize the price of the crop and prevent farmers from incurring losses. “The issue right now is the continuous drop in the price of corn. That’s why we need the NFA to buy more corn from the affected farmers,” Navarro said. “There are areas where the farmers are pleading, because their harvest are being bought at a low price,” Navarro added, referring to corn farmers in the province of Palawan. In its August forecast for crop production, the Philippine Statistics Authority (PSA) has lowered its projection for the country’s corn production in the third quarter of the year to 2.673 million metric tons (MMT), from the 2.696 MMT it forecast earlier in July. However, the agency’s new forecast is still 11 percent higher than last year’s same period production of 2.407 MMT. “The probable drop in corn output could be attributed to contraction in harvest area brought about by dry spell in Cagayan and Isabela,” the PSA report said. Continued on A12

Continued on A2

n japan 0.4634 n UK 58.7875 n HK 6.2313 n CHINA 7.1860 n singapore 34.7727 n australia 36.8310 n EU 53.0397 n SAUDI arabia 12.8882

Source: BSP (17 October 2016 )

A2 Tuesday, October 18, 2016

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PHL renewing initiatives to protect children online

lance of this issue, so that parents and others understand that child abuse—in any form—is not just morally wrong, it is also extremely harmful to children’s health and development,” Sylwander said.

Continued from A1

Web hosting

ONE of the worst cybercriminals belongs to those operating online pornography, according to Rosalie Dagulo of the Department of Social Welfare and Development (DSWD). Others are just plain abusive, Amelia Gowa, an independent cyber-security policy analyst specializing in child online protection (COP) issues, said. According to Gowa, 23.8 percent of children observed cruel behavior on Twitter, 92.6 percent on Facebook, 17.7 percent on MySpace and 15.2 percent on Instant Messenger. Seventy-five percent of victims were female, she said during a conference on COP in Quezon City in September. Gowa said the Philippines is the fifthlargest population in Southeast Asia that is into online social media with 47 percent of respondents saying they have socialmedia accounts and are active in these platforms. These are monthly active users on the most active social network in the country, compared to total population. The highest number, at 69 percent of its population, is Brunei Darussalam, Gowa said, citing data from an International Telecommunications Union (ITU) research in November last year. Data from the COP revealed that six out of 10 children view pornographic links by way of social media. Two in 10 online bullies use false identity and three out 10 children post personal information, conference documents revealed. Gowa revealed that the United States remained the biggest source of commercial and noncommercial web sites providing child sexual abuse materials (CSAM). Commercial refers to web sites hosting or giving access to CSAM, which require payment for further access. Noncommer-

Privacy challenges

In this January 17, 2014, file photo, Philippine National Police Senior Superintendent Gilbert Sosa uses a slide presentation software to reveal different locations of production and distribution of child-pornographic materials in the country at a news conference at Camp Crame in Quezon City. Child-abuse investigators in Britain, the United States and Australia have dismantled an organized-crime group that streamed live webcam footage of child sexual abuse from the Philippines for paying viewers around the world. An international investigation broke up the ring, which abused impoverished children as young as 6, Britain’s National Crime Agency said. Authorities made 29 arrests, including 11 people in the Philippines who had facilitated the crime. AP/Bullit Marquez

cial refers to free access. The US has 59 commercial web sites and 25 noncommercial web sites hosting CSAM, Gowa said.

Morally wrong

ONLINE child pornography most of the time is elicited by poverty, according to Redoble. “Some parents pimp their kids to strip naked in front of a camera for $100 an hour,” he said. “Intense explicit sexual acts are paid higher amount.” The conference on COP cited the case of a 22-year-old mother in Cordova, Cebu,

who was reported arrested on July 30 for allegedly selling online videos and photos of her two children ages 5 and 2 to foreigners. The case could be qualified trafficking, which is a nonbailable offense, Redoble said when told about this. The mother was reported by the police to have transacted with no less than 70 foreign clients. In a statement on June 7 this year, the United Nations Children’s Fund (Unicef) has expressed alarm over the growing reported cases of child pornography in

the Philippines. During the conference on COP in September, Unicef Representative Lotta Sylwander revealed that children in the Philippines earn as much as P150 per appearance in webcam shows. Live streaming of COP in the country is getting alarming, Sylwander said citing a survey that involved 400 children age 18 from the cities of Manila, Davao, Angeles and Cebu. The Unicef placed the Philippines as the No. 1 source of child pornography. “We need to raise awareness and vigi-

ACCORDING to Ginno Corral of nongovernment group End Child Prostitution in Asian Tourism (Ecpat) Philippines Inc., they have experienced difficulties in identifying victims in the community “because no one is willing to report.” Corral, Ecpat community development officer, pointed to the lack of knowledge and capacity of children and community members on how to report as a reason for this problem. Likewise, there is also difficulty in the accessibility of reporting mechanism, he added. “Children and communities are also not aware of the ‘red flags’ in Osaec [online sexual abuse and exploitation of children],” Corral said during the conference. He added that it also doesn’t help encouraging reports if the investigation of a case is more focused on the offender. Patdu said this is related to the law that protects personal data privacy, even of an accused. However, this is not the case in online child abuse, exploitation and child pornography. “Online child abuse, exploitation and child pornography are not protected activities, and are recognized limitations on freedom of expression and right to privacy,” Patdu said. “Under the Data Privacy Act, law-enforcement activities will not be unduly restricted, subject to requirements of due process. Existing laws safeguard the privacy of victims of child abuse and impose obligations on different sectors to cooperate in law enforcement investigations.” To be concluded

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DOT positioning PHL as sports-tourism hub T By Ma. Stella F. Arnaldo | Special to the BusinessMirror

HE Department of Tourism (DOT) will be marketing the Philippines as a sportstourism hub in Asia, hoping to attract international events, such as boxing bouts and more surfing competitions, as well as encouraging more scubadiving enthusiasts to visit the country. “The Philippines has a huge potential to become one of the world ’s great adventure travel destinations. With our country’s natural attractions and the Filipinos’ love for sports, we certainly have the competitive edge to make it big in this fast-growing niche market of sports tourism,” Tourism Secretary Wanda Corazon T. Teo said in a news statement. One upcoming event is the 11th Surfing Break, from October 28 to 30, held annually in Urbiztondo in San Juan, La Union, which attracted about 12,000 domestic and foreign travelers last year. “Surfing is one of the aqua-based activities that has lured locals and foreign tourists alike to the Philippines’s numerous surf destinations,” the DOT chief noted. “La Union’s strong product offering is hinged on the reliable supply of affordable services of

$600B The size of the global sportstourism market, which is projected to grow 6 percent annually

surf schools and shops and accommodation establishments conveniently located along the beach, on top of the good quality waves 10 months a year, from May to March. This is just one among the many offerings that strengthens our competitiveness for sports tourism,” she added. According to the United Nations World Tourism Organization (UNWTO), sports tourism is a $600-billion market, and is pro-

jected to grow at 6 percent annually until 2021. It also estimated that sports tourism accounts for 25 percent of global tourism receipts, and about 76 percent of sports travelers said the primary purpose of their trip is to attend a sports event. “Now that surfing is officially an Olympic sport, this would augur well to further stimulate our local industry, with the surge of interest to learn the sport and the determination to excel and compete in the world arena. More impor tant, this development serves to support the sector’s viability and sustainability, which will redound to the community’s enhanced welfare,” Teo said. For his part, DOT Region 1 (Ilocos Region) Director Martin Valera said in a recent press conference that they intend to surpass last year’s number of participants for the three-day event. “We promise our local and foreign guests that they will get their money’s worth from the music, local arts and crafts, day tours and other fun activities available during the event,” he said. Further boosting the Philippines’s bid to become a sports tourism hub, Teo also expressed hope for the country to be able to host international boxing bouts, with the help of Sen. Manuel D. Pacquiao, also a professional boxer. T he l a st t i me t he Ph i l ip pi nes hosted a m ajor i nter n at io n a l b o x i n g m at c h w a s t he t it le showdow n bet ween

heav y weights Mu ha mmad A l i a nd Joe Fra zier at t he A ra net a Col iseu m in October 1975. “Senator Pacquiao, no doubt, can help us score a knockout victory in terms of international visitor arrivals, if he were to fight in the Philippines. Imagine how the world stops to watch it against the backdrop of, let’s say, Cebu City,” the DOT official said. She added that any of Pacquiao’s top rivals, like Floyd Mayweather Jr. and Jose Manuel Marquez, “would be most welcome in the Philippines if only boxing promoters can make it happen.” The DOT is also seeking to host the next UNWTO Conference on Tourism and Sports, which was last held in Da Nang, Vietnam, on September 23. DOT Undersecretary for Administration and Special Concerns Katherine de Castro, who attended the conference, said: “Marine sports tourism, along with diving, is among the Philippines’s key tourism products. This alone can spur tourism growth in the country.” She also pointed to surfing and wake boarding as activities that can attract sports travelers to the country. T h e D O T r e c e nt l y b e g a n acc red it i ng resor ts a nd su r f c a mps t h at pro v ide s u r f i n g lessons, ensur ing ex per t sur fing instruction are available in these establishments, in a bid to professiona lize the sur fing industr y. (See, “DOT moves to pro-

fessionalize surfing industry” in the B usi n e s s M i r r o r , August 1, 2016.)

Lawmaker to economic managers: Build ‘safety net’ for farmers with QR lifting By Jovee Marie N. dela Cruz @joveemarie

he vice chairman of the House Committee on Economic Affairs on Monday urged the economic managers of the Duterte administration to prepare for various scenarios to help farmers with the lifting of the quantitative restriction (QR) on rice in 2017. Liberal Party Rep. Josephine Ramirez-Sato of Occidental Mindoro made a statement as Socioeconomic Planning Secretary Ernesto M. Pernia bared that Agriculture Secretary Emmanuel F. Piñol,

who favors another extension of the QR, may be “overruled” when the economic cluster of the Duterte administration votes on the matter. “Imported rice flooding the market would ‘kill’ local farmers producing the staple food [with the lifting of QR on rice],” she said. Sato added the government should put in place necessary “safety net” measures for farmers, particularly those with small landholdings, either in the form of more seed and fertilizer subsidies; or training to improve production, packaging of rice products; and access to emerging-market chains.

Fiera de Manila, Inc. President and CEO Bert Bravo (center) talks about their upcoming anniversary celebration during an intimate lunch with the media held in Makati City. Also present during the event are (from left) Diriector Vida Ty and Director Ding Doplayna. ALYSA SALEN

“Such programs would boost local rice production and allow farmers to compete against cheaper, imported rice, which consumers would surely prefer to buy compared to locally produced rice,” she added. While consumers would generally benefit from this scenario, Sato said rice farmers would not be able to compete against imported rice because of the high cost of production. Destruction caused by flood and typhoons, she added, aggravates the situation of small farmers with limited capital. Sato said the lifting of the QR on rice would force farmers to shift

to planting other crops, or worse, give up farming. “The unrestricted or unregulated importation of rice would not only affect farmers, but would also slow down agricultural production, affecting the country’s economic growth,” she said. Sato added that the DA should come up with ways to make the business of rice farming more profitable. Occidental Mindoro is one of Mimaropa region’s top rice-producing provinces, but Sato said farmers, like in other areas, remain poor because of low productivity vis the cost of production, such as seeds, fertilizers and pesticides.

Tuesday, October 18, 2016

House, D.O.F. comprehensive tax-reform package expected to be released this week

he House of Representatives and the Department of Finance (DOF) are eyeing to release this week a joint version of the comprehensive tax-reform package, which seeks to lower personal income tax (PIT), and impose additional taxes on certain commodities, a leader of the lower chamber said on Monday. House Committee on Ways and Means Chairman and Liberal Party Rep. Dakila Carlo Cua of Quirino said the lower chamber and the finance department are conducting meetings to settle contentious provisions in the DOF’s bill, which it submitted to Congress. “Hopefully, this week we can already produce the final version of the comprehensive tax-reform package,” Cua said in an interview. “We’ve already agreed on 60 percent to 70 percent of the provisions. The contentious provisions of the bill are not that many. We’re just trying to find the right schemes to broaden the support to the bill, and hasten its passage in Congress,” the lawmaker added. The imposition of excise tax on petroleum, removal of value-added tax (VAT) exemptions for senior citizens and persons with disabilities (PWDs) and ad valorem tax on automobiles are among the offsetting measures being pushed by the DOF, but opposed by lawmakers to cover up for the estimated P159 billion in foregone revenues from the planned PIT rates. Cua said the DOF has welcomed the decision of the lower chamber to retain the VAT exemptions for senior citizens and PWDs. “They welcome our proposal [to retain the VAT exemptions] because they realize the P6 billion [revenue from the removal of VAT] is not going to a dent in our revenue generation,” he said. Instead of removing the VAT exemptions, Cua said they told the DOF to include collectionefficiency measures. “One of the tax-collection efficiency measures we are proposing is the improvement of our point-of-sale system. We want large retail establishments to be directly connected to the revenue-collection agencies to address loopholes in the tax administration,” he said. However, Cua said there’s no final decision yet on the adjustment of personal income tax brackets. “They [DOF officials are] still studying if it’s possible to exempt from personal income tax workers earning P25,000 monthly,” Cua added. The lower chamber and President Duterete want to exempt workers earning P25,000 monthly, or P300,000 annually and below, from PIT. But this runs counter to the proposal of the DOF, which seeks to exempt from PIT only

workers with a monthly salary of P20,833, or P250,000 annually. In the current setup, those earning P10,000 or less per month pay a 5-percent income tax, while those with yearly earnings of P500,000 and above pay a 32-percent income tax.

Automobiles

Meanwhile, Cua admitted that the country’s car industry will be affected with the ad valorem tax on automobiles being pushed by the DOF as one of offsetting measures to cover up the revenue losses from lowering the PIT. “We have to admit that they will be affected. We will talk to [DOF] about this. Maybe there should be classification of vehicles [depending on the selling price]. We have to remember we are using cars as our economic tool and not just for luxury,” the lawmaker added. Cua said the government wants to impose ad valorem tax on automobiles to also address traffic woes in the country. “If you ask me, I do not 100-percent subscribe to that notion because this issue is limited to the urban areas like Metro Manila, Cebu and a few other parts of the country. In places like Quirino or maybe Mindoro, traffic is not much of a problem. So we would like also for the people who are in the provinces to have the option to purchase a vehicle at an affordable package,” Cua added. He said the imposition of an ad valorem tax on automobiles will give an additional P40 billion to P50 billion revenue to the government. Under the DOF bill, there shall be levied, assessed and collected an ad valorem tax on automobiles based on the manufacturer’s or importer’s selling price, net of excise and VAT. Under the measure, if the net manufacturer’s price/importer’s selling price is P600,000, the excise tax will be 5 percent. If the net manufacturer’s price/importer’s selling price is P600,000 to P1.1 million, the excise will be 20 percent of net manufacturing/importation price. If the net manufacturer’s price/importer’s selling price is P1.1 million to P2.1 million, the excise will be 40 percent of net manufacturing/importation price. If the net manufacturer’s price/importer’s selling price is P2.1 million, the excise will be 60 percent of net manufacturing/importation price. The bill said the brackets reflecting the manufacturer’s price or importer’s selling price, net of excise and VAT, will be indexed by the secretary of finance once every two years if the change in the exchange rate of the Philippine peso against the US dollar is more than 10 percent from the date of effectivity of this act.

We’ve already agreed on 60 percent to 70 percent of the provisions. The contentious provisions of the bill are not that many. We’re just trying to find the right schemes to broaden the support to the bill, and hasten its passage in Congress.” —Cua

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Duterte off to Beijing, but not on a Jet Ski

efore he was elected to Malacañang, President Duterte promised to use a Jet Ski to reclaim a disputed reef seized by China. Since taking office in June, he has extended the hand of friendship.

The tough-talking Mr. Duterte will bring up to 400 business leaders, including some of the Philippines’s wealthiest tycoons, on a four-day visit to Beijing starting on Tuesday. In doing so, he’ll become the first Philippine leader invited to the capital by Chinese President Xi Jinping for one-on-one talks. “Mr. Duterte’s visit is the strongest signal so far that tensions between China and the Philippines have eased off,” said Li Jinming, professor of international relations at Xiamen University’s Research School of Southeast Asian Studies. “He’s, right now, distancing the country from the US, but some of that is just rhetoric. We don’t think he will or can cut the US off. We’d be curious to know how long these icy ties can last. It might just be a temporary thing.” President Duterte’s visit will provide an opportunity for a reset of relations with the Philippines’s biggest trading partner, which have been strained by territorial disputes in the South China Sea, where as many as six claimants are vying for fish, oil and gas. In a speech on Sunday, Mr. Duterte said he looked forward to exchanging views with Chinese leaders on how to further improve relations, and pledged not to give up on his nation’s claims in the waters.

Shifting stances

Even though Filipinos of Chinese descent make up some of the Philippines’s most powerful families, China’s relationship with the Southeast Asian nation nosedived in 2012, after Beijing effectively took control of the Scarborough Shoal, a triangle of reefs and rocks just 340 kilometers from Manila. The move prompted then-President Benigno S. Aquino III to take a firm stance against China while moving closer to the US, its top military ally. President Duterte has sought to shift that stance since taking office, threatening to downgrade military ties and using foul language to repudiate concerns of human-rights abuses in his war on drugs that has seen more than 3,000 people killed. In terms of relations with China, Mr. Duterte’s policies are closer to the days when former President Gloria Macapagal-Arroyo ran the country from 2001 to 2010. Arroyo had cut a deal for China’s Export-Import Bank to finance a $500-million rail project linking Manila to fast-growing provinces to the north, which was eventually scrapped under Aquino. She also ap-

proved a 2004 agreement on joint seismic surveys in the South China between China National Offshore Oil Corp. and the Philippine National Oil Co. that has since lapsed.

Business ties

Aquino made two visits to China, once in 2011 to meet with thenPresident Hu Jintao, and in 2014 to attend an Asia-Pacific Economic Cooperation Summit. A planned visit by Aquino to China in 2013 was canceled due to tensions over the South China Sea. Arroyo made one state visit to China in 2004. Mr. Duterte’s business delegation includes San Miguel Corp. President Ramon S. Ang; JG Summit Holdings Inc. President Lance Gokongwei; Enrique Razon, chairman of gaming company Bloomberry Resorts Corp. and global port operator International Container Terminal Services Inc.; Hans Sy, son of the Philippines’s richest man Henry Sy, who controls SM Investments Corp.; and liquor and tobacco magnate Lucio Tan, who also owns Philippine Airlines Inc. “Both will try to avoid the mention of the South China Sea ruling, as that’s a nonstarter if two countries want to bring the bilateral ties forward,” Li said of the two leaders. “President Duterte will throw the word out there that he wants the Philippine fishermen’s fishing rights to be protected in the waters around the Scarborough Shoal, on which China may say joint fishing can be arranged.” In return for not raising the South China Sea ruling in his talks with Xi, Mr. Duterte will be hoping he can persuade China to bring muchneeded investment to lagging infrastructure projects in the Philippines. Voters have grown increasingly frustrated with worsening traffic jams, outdated public transport services and patchy electricity supply. China’s Foreign Ministry said on October 12 it hopes President Duterte’s visit will help increase political mutual trust and strengthen pragmatic cooperation. At least a dozen agreements have been finalized for the visit, according to Zhao Jianhua, China’s ambassador to the Philippines. “The Chinese side attaches importance to developing relations with the Philippines and stands ready to work with them to advance the bilateral relations in a sound and steady manner and create more benefits for both the two countries and peoples,” Foreign Ministry Spokesman Geng Shuang said at a briefing last week.

President Duterte

China said on Friday it wanted to strengthen its cooperation with the Philippines on combating drug use, with authorities planning for Mr. Duterte to attend several activities related to the fight against drugs during his stay in Beijing. Drugcontrol agencies in both countries have initiated talks that are soon expected to deliver outcomes, the foreign ministry said.

‘Soft ball’

References to the South China Sea in the joint statement will likely be vague, said Kang Lin, a deputy director of the National Institute for South China Sea Studies, China’s only state-backed research institution dedicated to research in the disputed waters. “The statement may pledge to boost dialogue and communication on mutually concerned matters in order to control disagreements,” Kang said. “They may say they’ve reached consensus on jointly exploring the resources in the South China Sea. In one word: Soft ball approach is the way to go.” Loans for railway or power-grid projects in the Philippines could be facilitated through institutions, such as the China-led Asian Infrastructure Investment Bank (AIIB) said Kang, adding that China may also roll out measures to boost agricultural imports, such as bananas and pineapples, from the Philippines. “The AIIB, for us, is the No. 1 priority,” Finance Secretary Carlos G. Dominguez III told reporters. “We will discuss with them our whole plan and we will match it with theirs. We’re just new, and I don’t know ex-

Mr. Duterte’s visit is the strongest signal so far that tensions between China and the Philippines have eased off.”—Xiamen University actly what they want to do. We have to go to them and see what their priorities are also so we can match our priorities with them.” The President acknowledged that he can be impeached if he concedes his country’s territorial claims in the South China Sea in talks with Xi and other Chinese leaders this week in Beijing. President Duterte said in a speech before leaving for Brunei Darussalam and China that, while he will not bargain the Philippines’s territorial claims, “there will be no hard impositions,” as he tries to renew his nation’s strained friendship with China and intensify two-way trade and investment. Supreme Court Senior Associate Justice Antonio T. Carpio, who has done extensive studies on the territorial conflict, warned last week that conceding the Philippines’s sovereign rights in the disputed waters is a ground for the President’s impeachment. Carpio said China may ask the Duterte administration to acknowledge Chinese sovereignty in contested South China Sea territories before agreeing to any business deals or joint exploration of potential sea resources. Asked to react to Carpio’s warning, Mr. Duterte said he agreed with him. “He is correct. I would be

impeached,” the President said at a news conference at the international airport in the southern city of Davao before embarking on his two-nation trip. “I said we cannot barter which is not ours [or what] belongs to the Filipino people,” said President Duterte, who is a lawyer and once served as a government prosecutor. “I cannot be the sole authorized agent, for that is not allowed under the Constitution.” Mr. Duterte, who was Davao’s mayor before assuming the presidency in June, has walked a tightrope in trying to mend damaged relations with China and defending his country’s claims in the disputed South China Sea. In July an international arbitration tribunal ruled that China’s massive claims to the sea on historical grounds were not valid under a 1982 United Nations treaty, handing a landmark victory to the Philippines, which had filed a complaint against Beijing under President Duterte’s predecessor. The tribunal in The Hague specifically ruled that China has violated the rights of Filipino fishermen, who have been blocked by the Chinese coast guard from fishing in the disputed Scarborough Shoal, off the northwest Philippines. “The international decision will be taken up,” Mr. Duterte said. But

he added without elaborating that “there will be no hard impositions.” When the tribunal’s July 12 decision was announced, President Duterte did not make any celebratory remarks that he said could offend China, which has ignored the decision as a sham and campaigned to discourage governments from recognizing the ruling. Mr. Duterte has not pressed the Chinese government to comply with the decision. Labeling himself a leftwing politician, President Duterte has announced step to scale back the Philippines’s military engagements with the US, including his opposition to joint patrols with the US Navy in the South China Sea and joint combat exercises with American forces. He has lashed out at President Barack Obama for criticizing his deadly antidrug campaign, but has reached out to China and Russia. Mr. Duterte will travel to Brunei before making a three-day visit to China that starts on Tuesday in the southern city of Xiamen. He’ll then fly to Beijing, where, President Duterte said, “We will stick toward our claim. We do not bargain anything.” Aside from Xi, Mr. Duterte said he would also meet Chinese Premier Li Keqiang and National People’s Congress Chairman Zhang Dejiang. “This is a matter of international comity when you go there, we only want to talk,” he said. “And remember, there are only two options: We go to trouble or we talk.” “We cannot choose the path there in between,” said President Duterte, who has ruled out any war with the Asian superpower. Bloomberg News, AP

Lopez to keep ‘protected areas’ off limits to mining Continued from A1

Lopez also ordered the Department of Environment and Natural Resources (DENR) to conduct an inventory of PAs already threatened by mining activities. Lopez wants to review the mining permits issued before and after their declaration as PAs covered under the National Integrated Protected Areas (Nipas) Act, underscoring the importance of protecting and conserving the country’s rich biodiversity. Lopez made the policy pronouncement as she announced on Friday the cancellation of the environmental compliance certificate (ECC) of Austral-Asia Mining Corp. for its nickel mine in Mati, Davao Oriental. Austral-Asia’s nickel mine is situated between two heritage sites—the Pujada Bay and Mount Hamiguitan. “Biodiversity is like gold,” the DENR chief said, as she reaffirmed her commitment and advocacy

to protect the habitats of unique, but threatened, wildlife species against destructive human activities under her watch. “No more mining in any protected area. We are going to review mining permits. If the permit was issued after the declaration of protected area, they should not have been issued at all. If the permits came prior to the declaration, then we will review it. We will always go for the common good,” Lopez said. Several PAs, considered as key biodiversity areas, are currently threatened by mining activities. Some of these are in Palawan, the country’s last ecological frontier, and the hinterlands of Mindanao. Executive Order 79 declares PAs as mining “no-go zone,” but some Mineral Production Sharing Agreements (MPSAs) were issued in favor of mining firms prior to the passage of the Nipas Act, which sets aside vast tracts of land

for conservation. “The way that the company [Austral-Asia] is doing its operation is putting at risk biodiversity in the area. They don’t have a place to put their stock piles,” Lopez added. Austral-Asia is the 11th mining operation slapped with suspension for failing to meet environmental standards. It is the first casualty for failing the criteria that involves biodiversity conservation. The cancellation of Austral-Asia’s ECC was based on the findings and recommendation of the DENR-Biodiversity Management Bureau (BMB), which conducted a biodiversity assessment in the area. “I’ve asked the BMB to conduct a biodiversity assessment in the area and they found out it is rich in biodiversity,” Lopez said. Environment Undersecretary for Legal Affairs Maria Paz Luna said that, while MPSAs are contracts, mining permits remain as privilege

issued to mining contractors that the government can revoke. “They can be revoked by the government anytime.” Environment Undersecretary for Policy and Planning Marlo D. Mendoza underscored the importance of protecting the country’s remaining pygmy forests. He said there are only a handful of pygmy forests in the country, so these should be protected against destructive human activities. According to the DENR chief, the nickel mine pose a serious threat to the rich biodiversity in the area, which is near the Mount Hamiguitan Range Wildlife Sanctuary (MHRWS), a PA under the Nipas Act one of eight Asean Heritage Parks (AHP) in the Philippines. Known for its rich ecosystem and white-sand beaches, Pujada Bay has been declared as a PA called Pujada Bay Protected Landscape and Seascape by virtue of Proclamation 431 on July 31, 1994, issued by for-

mer President Fidel V. Ramos. It covers 21,200 hectares protecting the bay and its coastal area, including its four islands. There are 25 genera of hard and soft corals in Pujada Bay. Mount Hamiguitan, meanwhile, has been declared as a PA under the category wildlife sanctuary called MHRWS. Among the wildlife found in the area are Philippine Eagles and several species of Nepenthes, or pitcher plants, endemic to the mountain. The MHRWS covers approximately 2,000 hectares. This woodland is also noted for its unique pygmy forest of century-old trees in ultramafic soil, with many endangered, endemic and rare species of flora and fauna. In 2014 the MHRWS was declared as a United Nation Educational, Scientific and Cultural Organization World Heritage Site. In 2015 it was declared an AHP. Director Theresa Mundita S. Lim of the DENR’s BMB was elated by Lopez’s policy pronouncement.

“We are very delighted with this development. We had a competent team composed of experts on mammals, reptiles, birds, plants and ecology, who conducted the assessment, with primary focus on the impact to the biodiversity, in the area,” Lim said. “It is about time that biological-diversity considerations are taken seriously when planning and implementing development activities, not only in mining, so that the appropriate mitigating measures may be formulated and the potential loss of millions of pesos in investments may be avoided,” she added. According to Lim, the country’s unique state of biological richness can be a source of wealth, as well, “providing rare and varied raw materials that can be harnessed for various industries, such as pharmaceuticals, food and cosmetics, and are even renewable, if properly extracted and utilized.” Jonathan l. Mayuga

AseanTuesday BusinessMirror

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Bank Indonesia says strong rupiah allows more reserves

outheast Asia’s best-performing currency is giving Indonesia’s central bank the opportunity to continue increasing foreign reserves from a four-year high, a senior official said. “If we see the chance to build our reserves, then surely we will take advantage of it,” Doddy Zulverdi, Bank Indonesia’s executive director for monetary management, said in an interview at his Jakarta office on Friday. “We don’t need to be too forceful about it, as our reserves are sufficient, but I wouldn’t say we have too much.”

If we see the chance to build our reserves, then surely, we will take advantage of it.” —Zulverdi Indonesia’s reserves have climbed 9.2 percent this year to $116 billion in September, the highest level since before the US Federal Reserve signaled in 2013 that it would cease a bond-buying program, causing the so-called taper tantrum that pushed the rupiah down 21 percent that year. The currency has gained 5.6 percent this year, beating its regional peers, as foreign investors poured almost $12 billion into bonds and stocks and the government encouraged Indonesians with money abroad to repatriate funds as part of a taxamnesty program. The currency declined 0.1 percent on Monday to trade at 13,055 a dollar as of 12 p.m. in Jakarta, prices from local banks show. Zulverdi estimated that the current-account deficit will probably narrow to below 2 percent of gross domestic product by the end of the year, from 2.4 percent at the end of 2015, due to fund inflows and an improvement in trade, reducing the need for larger reserve levels. A government report on Monday showed the trade surplus widened to $1.22 billion, the highest level since July 2015, even though exports declined. “The rupiah is currently in line with our fundamentals and its direction is in line with our macroeconomic situation,” he said. “So our reserves are sufficient according to measures we have, but as a net-debtor nation, we will never feel 100-percent safe.” The central bank has repeatedly said that it will keep the currency from strengthening too excessively. Policy-makers have cut interest rates five times this year to help support the economy and offset the effect of a stronger currency and spending cuts by the government.

Rate outlook

Bank Indonesia adopted the sevenday reverse repurchase rate as its benchmark in August to help better influence money-market rates. Economists are almost evenly split on whether the bank will keep the rate unchanged at 5 percent this week or lower it by 25 basis points, according to a Bloomberg survey. While lending rates in the economy have come down, the process is being hampered by bad loans in the banking system, Zulverdi said. The central bank has lowered interest rates by 100 basis points in the first eight months of the year compared with a 52 basis-point drop in average borrowing costs. “Transmission isn’t the issue here, it’s risk,” he said. “Banks are trying to rein in nonperforming loans, so they’re not in a position to bravely lower rates to give out more and more loans. Banks are still consolidating.” Bloomberg News

Editor: Max V. de Leon • Tuesday, October 18, 2016 A5

Thai bonds suffer record outflows as king’s death sparks concern

In this image made from a video taken on Sunday, Umaporn Sarasat, 43, pays respects in front of a portrait of Thailand’s King Bhumibol Adulyadej in Koh Samui, Thailand. She is accused of insulting the country’s late king and was forced to kneel before his portrait outside a police station on the tourist island of Samui, as several hundred people bayed for an apology. AP

lobal funds sold a record $1 billion of Thai bonds last week, as the passing of King Bhumibol Adulyadej marked the loss of a stabilizing influence in the nation’s political landscape. Overseas investors cut debt holdings for five straight days through Friday, trimming purchases for the year to $10.7 billion, data compiled by Bloomberg show. The baht slumped to the lowest since January last week with the death of the 88-year-old monarch, whose seven-decade reign helped unite the country rocked by 10 coups. “The selling is overdone because I just think that it’s not going to be a consequential economic development for Thailand,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. “It’s obvi-

ously a special time for Thai people and this is a very delicate transition, but I expect it to be a smooth one for financial markets.” National development efforts will continue while Thais mourn the passing of their king, and the Cabinet will meet as scheduled on Tuesday, government spokesman Sansern Kaewkamnerd told reporters in Bangkok on Sunday.

Baht weakens

The baht fell 0.1 percent to 35.361 per dollar as of 11:12 a.m. in Bangkok after sliding to 35.902 on October 12,

$1B

The record value of Thai bonds sold by global funds last week

the weakest level since January 26. The currency dropped 1.3 percent last week, the most since the period ended Sept. 25, 2015. The yield on Thailand’s 10-year bonds ended last week little changed at 2.21 percent after climbing to 2.32 percent on Wednesday, the highest level in eight months, according to data compiled by Bloomberg. The benchmark SET Index of shares retreated 0.2 percent on Monday after dropping 1.8 percent last week. Tens of thousands of Thais flooded the streets of the capital on the weekend to pay respects to the king

as his body was transported from the hospital to the palace. Prime Minister Prayuth Chan-Ocha said the monarch’s death and a delay in his son taking the throne will not derail plans for a return to elections, which had been scheduled from late 2017.

Grief turns to anger

Meanwhile, a Thai woman accused of insulting the country’s late king was forced to kneel before his portrait outside a police station on the tourist island of Samui as several hundred people bayed for an apology. The woman’s arrest and public shaming on Sunday was the latest of several such incidents since King Bhumibol Adulyadej died last week after a reign of 70 years, plunging Thailand into intense mourning. Two police officers led 43-yearold Umaporn Sarasat to a picture of Bhumibol in front of Bophut police station on Samui, where she knelt and prayed, both on the way into the station and the way out.

The crowd, some of whom held aloft portraits of the revered monarch, jeered when she first appeared. A line of police officers linked arms to keep them from surging forward. It is likely that Sarasat, a small business owner, who is alleged to have posted disrespectful comments online, will face charges of insulting the monarchy. “We are going to proceed with the case as best we can,” district police chief Thewes Pleumsud told the crowd. “I understand your feelings. You came here out of loyalty to his Majesty. Don’t worry, I give you my word.” Authorities are also urging calm as social media throbs with criticism of people who aren’t wearing black and white clothing to mourn the revered monarch and some arch-royalists take to reprimanding people in public. A government spokesman said some Thais can’t afford mourning clothes and urged tolerance. There have been reports of price gouging as demand for such clothing has surged since Bhumibol’s death on Thursday. Tens of thousands of Thais have descended on the Grand Palace in Bangkok where Bhumibol’s body is being kept, and a year of mourning has been declared by the government. Several foreign governments have warned citizens traveling in Thailand to avoid behavior that could be interpreted as festive, disrespectful or disorderly. On Friday police and soldiers on the Thai resort island of Phuket dispersed a mob of several hundred people seeking a confrontation with a man they believed insulted the king. Video showed the crowd blocking the road outside a soy milk shop and waving placards with slurs such as “buffalo”, a local slang word for stupidity. Some shouted for the man to come out. Thailand has draconian lese majeste laws that impose stiff prison sentences for actions or writings regarded as derogatory toward the monarch or his family. The operator of Thailand’s main cable TV network has blocked foreign news broadcasts deemed insensitive to the monarchy since Bhumibol’s death. Bloomberg News, AP

Floods kill 24 in Vietnam as Typhoon Sarika looms

loods triggered by heavy rains have killed 24 people and left four others missing in central Vietnam, disaster officials said on Monday, as Typhoon Sarika approaches after leaving at least two people dead and displacing more than 150,000 in the Philippines. In the worst-hit province of Quang Binh, 18 people died and authorities are searching for three others who are missing, disaster official Tran Le Dang Hung said. Six people died and one was reported missing in three other central provinces. “We are worried. We have instructed district governments to outline plans for evacuating people from high-risk areas to cope with the typhoon,” Hung said by telephone from Quang Binh. Heavy rains of up to 90 centime-

ters (3 feet) on Friday and Saturday submerged 125,000 homes in the region, temporarily disrupted the North-South Highway and damaged infrastructure, crops and fish farms. Hung said the floods have receded in most areas in Quang Binh. In the Philippines fast-moving Typhoon Sarika (local code name Karen) blew out of the northern Philippines on Sunday after leaving at least two people dead and displacing more than 150,000, though the region was spared a major disaster due in part to the storm’s speed. The typhoon is over in the South China Sea and was moving at the speed of 15 kilometers (9.3 miles) to 20 kilometers (12.5 miles) per hour heading toward northern Vietnam, according to Vietnam’s national weather forecast center. AP

MOURNING FOR KING

In this October 15 photo, mannequins display black clothing for sale at a shopping mall in Bangkok, Thailand. Authorities are urging calm as social media throbs with criticism of people who aren’t wearing black-and-white clothing to mourn the death of Thai King Bhumibol Adulyadej and some arch-royalists take to reprimanding people in public. AP

Singapore home sales climb in September on new projects

ingapore home sales rose in September as developers marketed more projects after a lull in sales in August, a month considered inauspicious by Chinese homebuyers. Developers sold 509 units last month, compared with a revised 468

units in August, according to data released on Monday by the Urban Redevelopment Authority. Singapore’s government has been steadfast in its commitment to cool the housing market, maintaining real-estate curbs rolled out since 2009 even as the city-state’s home prices

dropped for a 12th quarter. An index tracking private residential prices fell 1.5 percent in the three months ended September 30 from the previous quarter, the most in more than seven years, according to preliminary data from the Urban Redevelopment Authority on October 3. Residential

values are down 11 percent from their peak in September 2013. The existing stock of unsold homes may take three years to sell, according to Augustine Tan, president of the Real Estate Developers’ Association of Singapore. In addition to the oversupply, home-vacancy rates are at their

highest in more than 11 years, Tan said in September. Among developers that marketed new projects was MCL Land Pte.’s Lake Grande project, which sold 29 of 210 units offered, the data showed. Sims Urban Oasis Pte. sold 17 of 50 units offered. Bloomberg News

Tuesday, October 18, 2016 • Editor: Lyn Resurreccion

The World BusinessMirror

North Carolina GOP office burned, graffiti sprayed nearby

briefs

Japan panel begins to study emperor’s possible abdication TOKYO—Experts on a governmentcommissioned panel were set to hold their first meeting on Monday to study how to accommodate Emperor Akihito’s apparent abdication wish, in a country, where he is not supposed to say anything political. Unlike many European countries, where abdication of kings and queens are relatively common, Japan’s modern imperial law doesn’t allow abdication, and Japan’s postwar Constitution stipulates the emperor as mere “symbol” with no political power or a say. Allowing Akihito, 82, to abdicate would be a major change to the system, and raises a series of legal and logistical questions, ranging from laws subject to change to the emperor’s postabdication role, his title and residence. The six panel members—five academics and a business organization executive—are to compile a report early next year after interviewing specialists on the Constitution, monarchy and history. AP

Buses collide in central Pakistan, killing 25 people

MULTAN, Pakistan—Two passenger buses collided head-on in central Pakistan on Monday, killing 25 people and injuring 69, officials said. The accident, which occurred on a dangerous curve in Khanpur town in Rahim Yar Khan district, was likely caused by speeding, police official Jamshid Shah said. Several children, college students and women were among the victims, Shah said. He said the police and rescue officials were using cutters to retrieve bodies trapped inside the two buses. AP

Haiti council says presidential vote redo to be held Nov. 20

PORT-AU-PRINCE, Haiti—Authorities in Haiti have issued a new timetable for the country’s repeatedly postponed presidential election. The Provisional Electoral Council announced on Friday that Haiti’s presidential vote will be held on November 20. A second round would be held on January 29. There were 27 candidates vying to lead Haiti for the next five years in an election redo set for October 9. But balloting was suspended due to the destructive passage of Hurricane Matthew. Council chief Leopold Berlanger says five weeks are needed to prepare for the vote, since numerous voting centers were damaged or destroyed and some roads remain blocked. Many registered voters also lost their voting cards during the hurricane’s passage, so they will have to get replacements. AP

Iraqi forces launch military push to wrest Mosul from IS

HAZER, Iraq—Iraqi government and Kurdish forces, backed by United States-led coalition air and ground support, launched coordinated military operations early on Monday, as the longawaited fight to wrest the northern city of Mosul from Islamic State (IS) fighters got under way. Convoys of Iraqi, Kurdish and US forces could be seen moving east of Mosul into the early hours of the day. Along the front line, US-led coalition air strikes sent plumes of smokes into the air and heavy artillery rounds could be heard. Iraqi Prime Minister Haider al-Abadi announced the start of the operations on state television, launching the country on its toughest battle since American troops left nearly five years ago. Mosul, Iraq’s second-largest city, has been under IS rule for more than two years and is still home to more than a million civilians, according to United Nations estimates. “These forces that are liberating you today, they have one goal in Mosul, which is to get rid of Daesh and to secure your dignity. They are there for your sake,” alAbadi said, addressing the city’s residents and using the Arabic language acronym for the Islamic State group. “God willing, we shall win,” he added, dressed in the uniform of the elite counterterrorism forces and flanked by military commanders. AP

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Hundreds of protesters in green fatigues gather outside the Chinese Ministry of National Defense in Beijing. AP/Ng Han Guan

Veterans’ protests for pensions pose test for China’s leaders

EIJING—For Yu Shuiping and other Chinese veterans, the country they served has yet to show its gratitude. Fed up with paltry pensions and benefits, they’re taking to the streets, hoping to shame the government into recognizing what they say is its obligation to those who battled in harsh conditions along the country’s borders. While largely peaceful, the sporadic protests amplify concerns over labor unrest and threaten to undermine rank-and-file support for Communist Party leader Xi Jinping’s campaign to modernize the world’s largest-standing military by attracting better qualified and more highly motivated soldiers. “We support the party and the government, and we don’t oppose the party or hate society,” Yu said in a phone interview from his home in the central province of Hunan. “We just want better treatment.” Yu has for years been petitioning the government for more benefits, although he declined to discuss the specifics of his efforts. Activist Huang Qi, who tracks unrest in China, estimates that veterans have staged as many as 50 protests this year, highlighted by a demonstration last week outside the Defense Ministry in central Beijing, where such actions are extremely rare. Surrounded by police and plainclothes officers, roughly 1,000 veterans from across the country, many dressed in their old uniforms, sang and marched for hours before being taken away in buses. Behind the heavy security response lies the specter of street action by laid-off workers who has long haunted China’s communist leaders, obsessed with preserving social stability at all costs. Following a wave of worker protests

$60 The amount Chinese veterans receive per month

in the early 2000s, China faces a new round of cuts in coal mines, steel mills and other state firms, throwing millions of workers on the scrapheap. Such veterans’ protests go back decades and are now facilitated by adept use of social media. The government censors information about them and veterans are highly reluctant to discuss their plight with foreign media for fear of being accused of disloyalty. Thus far, however, their actions have borne little fruit. According to most accounts, the central government’s response has been to fob them off on local authorities, who then fail to act on their complaints. The authorities work to ensure some veterans are satisfied, thus, keeping them from forming a united front, said Neil Diamant, a professor of Asian law and society at Dickinson College in Pennsylvania, who studies the veterans’ issues. They also arrest emerging veterans’ leaders, infiltrate the groups and monitor their communications, detaining large numbers if necessary, he said. “So far, this has allowed them to muddle through. My guess is that

they just wait them out, hoping that age will eventually prevent many from becoming overly feisty,” Diamant said. Veterans also lack high-level contacts or powerful advocates, while the wars they fought in have never been particularly popular. Their status in society doesn’t come close to matching the prestige the ruling Communist Party bestows on them, and most Chinese are more likely to sympathize with causes, such as pollution and corruption, that affect their daily lives. Their appearances outside government offices are met with a firm, though nonconfrontational response from the security forces, who in Beijing tend to load them onto buses and drive them to the outskirts of the city where they are detained until agents from their local governments arrive to take them home. “Having served in the army and taken part in war, we hope only that the government not treat us harshly,” said Yu, who added he did not take part in the recent protest in Beijing. In a written response to a question from The Associated Press, the Defense Ministry said resolving veterans’ concerns were taken very seriously and that a new set of policies were being rolled out to address them at the local level. “The temporary living difficulties of a portion of retired soldiers will gradually be resolved,” the ministry said. For the military, the immediate priority is finding work for the 300,000 soldiers being cut under an order issued last year by Xi. While demobilized soldiers used to be given jobs in state companies, that possibility no longer exists. And with a slowing economy and tightening job market, there’s no certainty that the private sector will be able to absorb them in such numbers. While reemployment poses its

own challenges, for older veterans such as Yu, pensions and benefits are the main concern. Despite operating the world’s largest standing army, with 2.3 million personnel, China doesn’t have a central government body to handle veterans’ affairs, such as the US Veteran’s Administration. Instead, cash-strapped local government offices are responsible for their welfare, and treatment varies widely across the country. While the government requires that their incomes be marginally higher than the average in their home regions, that’s often not the case, especially in the countryside, where most veterans live and are provided as little as 400 yuan ($60) per month, according to Yu. Urban dwellers suffer from a huge disparity depending on where they live, ranging from a token amount to something closer to the local average income, he said. Given the lack of centralized information, it’s difficult to tell how many veterans are now receiving pensions, including those who fought in the 1950-1953 Korean War, the 1962 border war with India and the 1979 invasion of Vietnam. T he loca lized and scattershot nature of the system also precludes any unified figure on what the government spends on veterans. Meanwhile, China’s fast-growing defense budget hit $146 billion this year, making it the world’s second largest after the United States, and includes significant expenditures on welfare for troops currently serving. In the military’s quest for excellence, shoddy treatment of veterans could harm efforts to attract the best recruits. That’s part of the reason protesting veterans aren’t harshly treated, said Gao Wenqian, senior policy adviser for Human Rights in China, which has been monitoring the protests. “Stable mora le a mong t he military is one of [Xi’s] biggest concerns,” Gao said. AP

US, Britain consider new sanctions vs Syria, Russia

ONDON—The US and Britain said they are considering new economic sanctions against the Sy rian and Russian governments over the bombardment of Aleppo. US Secretary of State John Kerry and British Foreign Secretar y Boris Johnson all but ruled out a military response to end the siege in the Syrian city, where 250,000 people remain trapped in the rebel-held east. “I don’t see a big appetite in

Europe for people to go to war; we are pursuing diplomacy because those are the tools that we have,” Kerr y said on Sunday. “We are considering additional sanctions. President Obama has not taken any option off the table. We’ ll see where we are in the next few weeks.” The west has accused Russia of carrying out the indiscriminate aerial bombing of civilians in Aleppo in support of Syrian President Bashar al-Assad’s forces.

While countries, such as Italy and France, are urging caution, Kerry’s comments suggest that pressure is mounting to add to the punitive measures put in place after Russia’s annexation of Crimea in 2014. Sunday’s meeting included representatives of France, Germany, Italy, Turkey and Middle Eastern allies. It followed weekend talks in Lausanne, Switzerland, involving Russia. They ended without result. President Vladimir Putin said this month Russia won’t give in to

“blackmail and pressure” over its military campaign in Syria and accused the US and its allies of whipping up “anti-Russian hysteria.” Johnson urged Russia to “do the right thing by humanity” and end the “barbaric siege” of Aleppo. “This is their chance to go for a solution that will be in the longer-term interest of the people of Russia and, above all, Syria,” he said. “They are starting to feel the pressure and it is vital that we keep that pressure up.” Bloomberg News/TNS

ILLSBOROUGH, North Carolina—A local Republican Party office in North Carolina was torched by a flammable device and someone spray-painted an anti-GOP slogan referring to “Nazi Republicans” on a nearby wall, authorities said on Sunday. A bottle filled with flammable liquid was thrown through the window of the Orange County Republican Party headquarters overnight, according to a news release from the town of Hillsborough. The substance ignited and damaged the interior before burning out. No one was injured. On Sunday afternoon, the walls of the multiroom office were covered in black char, and a couch against one wall had been burned down to its springs. Shattered glass covered the floor, and melted campaign yard signs showed warped lettering. The news release from authorities said an adjacent building was spray-painted with the words: “Nazi Republicans leave town or else.” The graffiti had been covered in paint by late afternoon. Another business owner discovered the damage on Sunday morning. The Bureau of Alcohol, Tobacco, Firearms and Explosives is working with local investigators. State GOP Executive Director Dallas Woodhouse said people sometimes work after-hours, and he felt lucky that no one was there at the time. He said the bottle appeared to have landed on or near the couch where volunteers sometimes take naps. “They are working around the clock. It is a miracle that nobody was killed,” he said in an interview, calling the fire “political terrorism.” He said Republican offices around the state were reexamining their security. The violent act in the key battleground state was condemned by public figures across the political spectrum. Hillary Clinton, the Democratic nominee for president, said on Twitter the attack “is horrific and unacceptable. Very grateful that everyone is safe.” Republican nominee Donald Trump blamed the act on Democrats in a Tweet and also he encouraged local Republicans, saying: “With you all the way, will never forget. Now we have to win. Proud of you all!” At a news conference, Woodhou se u rged R e publ ic a n s to respond peacef u l ly by tur ning out to vote in November. He said he’ d received messages of suppor t from Democrats. Orange Count y GOP Chairman Daniel Ashley told reporters that no one had prev iously made v iolent threats against the office severa l miles from the tow n’s histor ic square. T he G OP of f ice i s se vera l doors dow n from a shuttered ice r ink in what was once a frontierthemed amusement park that is now a retail complex know n as T he Shops at Daniel Boone. Tom Stevens, mayor of the town about 40 miles northwest of Raleigh, said it was fortunate the fire didn’t burn the office and other adjacent buildings that are decades old to the ground. Stevens, a Democrat, said the act doesn’t represent the character of Orange County, which also includes much of Chapel Hill and the University of North Ca rol ina ca mpus. Reg istered Democrats outnumber Republicans by a 3-1 margin in the county that picked President Barack Obama by a lopsided margin in the 2012 election. “I’d like to believe we aspire to respect hearing differing views,” Stevens said in an interview. “This is very troubling.” Stevens said he wasn’t aware of any leads on suspects. AP

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Monday, October 18, 2016

Brexit costs UK its spot among top 5 investment destinations

ONDON—Britain has lost its place as one of the top 5 investment destinations in the wake of the country’s decision to leave the European Union, according to a survey released on Monday. In a half-yearly report of business executives, consulting firm EY said uncertainties related to the Brexit vote are discouraging potential investors, particularly from Europe, from planning deals in the country. According to EY, Britain is now ranked seventh in terms of investment destination over the coming year, behind the United States, China, Germany, Canada, France and Japan. In the previous survey in April, Britain was second. Steve Krouskos, EY global head of transactions, said there was a “knee-jerk” response, particularly in the immediate aftermath of the June 23 vote, but that he is optimistic that Britain’s ranking will improve by the time of the next survey in six months. “In the longer term, we would expect the UK to bounce back as a top M& A [mergers and acquisitions] destination of choice but the short-term uncertainty is giv ing investors pause for thought,” he said. “I don’t see a blackout coming.” His confidence can be illustrated by the fact that deal-making has not so far dried up since the Brexit vote—Britain has seen $88 billion worth of deals excluding real estate, EY said, citing data from sector specialist Dealogic. T hat’s in line w ith 2013 and 2014 but below the $255 billion registered in the same period of 2015, which was inf lated by the mega-merger of beer companies SA B Mil ler and A nheuser Busch InBev. British firms, according to EY, continue to be attractive to foreign buyers, especially high intellectual-property companies in industrials, technology and health care. And Britain remains the third most sought-after country for investment among executives surveyed in the US—that’s important as the US typically accounts for around 40 percent of global M&A activity. The biggest deal since the Brexit vote was the €24-billion takeover ($31 billion at the time) of British technology firm ARM Holdings by Japan’s SoftBank Group in July—a month or so after the Brexit vote. Another major deal was the near $8-billion takeover of Formula One’s commercial arm by American company Liberty Media. Many questions have been raised by the Brexit vote, notably surrounding

Britain’s trading relationship with the remaining 27 members of the EU after Brexit is actually enacted. That includes what types of barriers to trade, such as tariffs and new regulatory requirements, will be slapped on British-based businesses. That sort of uncertainty is why the pound has tanked by around 20 percent since the vote to near $1.20. Some firms, Krouskos said, may have opted to tweak the timing of their deals in light of the pound’s fall. One that many in the markets think was affected by the fall in the pound was the near €1-billion purchase of cinema chain Odeon and UCI by AMC Entertainment, majority owned by China’s Dalian Wanda. And while the drop in the pound makes British firms cheaper to buy, the uncertainty over Brexit looks will likely to last for months. Prime Minister Theresa May is looking to start by the end of March the official talks on Britain’s exit, which would last at least two years. She also signaled that her government would prioritize controls on immigration over access to the European single market, an approach informally called a “hard Brexit” that many business leaders have voiced concerns over. Brexit is just one of a slew of uncertainties that have unnerved investors this year. Others include uneven economic growth around the world and an array of geopolitical concerns, such as conf licts, sanctions and protectionist politics. Still, EY’s survey of 1,700 executives in 45 countries, found that 57 percent of companies expect to pursue deals in the next 12 months. That’s up from April’s 50 percent and the second-highest level in the survey’s seven-year history. EY said that was likely due to the fact that deals like takeovers are viewed as a fast way to generate growth in what is otherwise a low-growth world economy disrupted by nonstop technological advances. Accord i ng to E Y ’s su r vey, there’s a trend toward “smaller, smarter” deals as opposed to the mega blockbusters that capture the headlines. EY said 49 percent of companies already have an average of more than five deals in the pipeline and more than half expect to do deals between the value of $250 million and $1 billion. “With pipelines well-stocked, executives are opting for variety, rather than plain, vanilla in their deal intentions,” Krouskos added. AP

The Long March-2F carrier rocket carrying China’s Shenzhou 11 spacecraft blasts off from the launch pad at the Jiuquan Satellite Launch Center in Jiuquan, northwest China’s Gansu Province, on Monday. China has launched a pair of astronauts into space on a mission to dock with an experimental space station and remain aboard for 30 days. Li Gang/Xinhua via AP

In a bid to build and operate its first space station

China sends astronauts into space

hina sent two astronauts into space on Monday to dock with an orbiting space lab, marking a crucial step toward the country’s ambition to build and operate its first space station by 2022. The launch of the Shenzhou-11 spacecraft, witnessed by a group of foreign and domestic media from the Jiuquan Satellite Launch Center in western Gansu province, is Beijing’s third mission to space this year. At about 7:30 a.m. local time, mission commander and thirdtime visitor to space Jing Haipeng blasted off with novice astronaut Chen Dong. Both were selected from a short-listed group of 20 and will be tasked with testing equipment and themselves to ensure China is ready for long-term stays outside Earth. Over 100 different types of space food w ill be consumed while a range of technologies from exercise bicycles to broadband links will be used throughout the mission.

30 The number of days the astronauts will spend in the Tiangong-2 space lab

Gen. Zhang Youxia declared the launch “a complete success” at a press conference. The space agency said its equipment was working properly and is in good condition for the mission’s requirements. T he world ’s second-largest

economy has spent billions in the past decade to compete in a space race with the US and Russia, as well as Asian rivals India and Japan, with ambitious plans eventually to send an astronaut to the moon by about 2025 and to land an unmanned vehicle on Mars. President Xi Jinping, in a congratulatory note read at the press conference, called the launch a milestone in China’s work on manned space mission. “We still have a long way to go” to accomplish our goals of discovering the secrets of space and making China strong in space exploration, the note said The crew on the Shenzhou-11 is expected to spend 33 days in space, 30 of which will be spent in the Tiangong-2 space lab, a simpler version of a planned space station, which was launched last month. China Manned Space Agency Deputy Director Wu Gang said the latest mission would provide valuable experience to further develop the country’s space-station plans. But the launch is also a point of national pride with Wu declaring the entire mission was planned and executed by Chinese staff. During a tightly managed press conference with the astronauts themselves less than a day

before the launch, both closed with emphatic declarations of “see you in Beijing.” If China is able to reach its goal, the space station would be only the second in service, after the International Space Station, a multinational project launched in 1998, which is set to be retired in 2024. Another space station, the Mir, was in low Earth orbit from 1986 to 2001, and was operated by the Soviet Union, later Russia. The Chinese started development work on spacecraft docking devices in the mid-1990s, and its first astronaut ventured into space in 2003. China’s space science efforts accelerated from that point along with the country’s rapid economic growth. The country successfully completed its first docking mission in 2011, a moment that was broadcast live on national TV and obser ved by t hen-Pr ime Minister Wen Jiabao. At a seminar marking the 60th anniversary of China’s space program recently, Chinese Vice Premier Ma Kai said the country should promote the development of space science and technology to help modernize its national defense, as well as social and economic development. Bloomberg News

Homegrown fashion industry bursts onto scene in Cuba H AVANA—Like so much else in Cuba, shopping for clothes isn’t easy. Buying a simple pair of socks or a T-shirt means choosing between the wildly overpriced, shoddy offerings of state-run stores and the bales of low-priced clothing illegally imported by “mules” traveling from the United States, Ecuador or Panama. This year a third option is bursting onto the scene after years of growing quietly in backroom workshops and bedroom studios. A small homegrown fashion industry is winning renown and an increasing share of Cubans’ limited clothing budget with simple but fun-and-stylish clothing produced on the island with natural fabrics and sold at competitive prices. Hundreds of private designers are turning out gauzy wedding dresses, brilliantly decorated bathing suits, linen pants and even uniforms for state businesses.

Last week, dozens of designers displayed their wares at the five-day Havana Fashion Week at Cuba’s most elegant theaters, where hundreds turned out for runway shows, private fittings and cocktail parties. “The changes that have taken place in this country, the openings, make things easier,” said Jesus Frias, a designer who put on a swimwear runway show on Friday. “There’s a fashion renaissance in Cuba but it can’t be a priority for the state, so it’s we private designers who are bringing it back.” The growth of the artisanal fashion industry comes thanks to free-market reforms put in place by President Raul Castro after he took power in 2008. Unlike some new private businesses, the fashion industry is receiving a relatively warm welcome from the communist bureaucracy, perhaps because it doesn’t directly compete with the state.

After successful runs in the first decades of Cuba’s socialist revolution, state-run clothing businesses were hurt by the collapse of the Soviet Union and had largely disappeared by the mid-1990s. Celebrities and fashionistas have made Havana a hot destination over the last two years amid a boom in tourism set off by detente with the United States. In May, French label Chanel took over Havana’s Prado boulevard for a runway show that garnered global attention, and anger among many Cubans for its privatization of one of the main thoroughfares in the capital of a country that has declared socialist equality as its guiding principle. Pr ivately desig ned c lot hes remain out of reach for Cubans on state salaries of about $30 a month, but those with privatesector jobs or help from family overseas can afford them. Mario

Models present the collection of Cuban fashion designer Analu during the Havana Fashion Week at the Alicia Alonso Grand Theater in Havana, Cuba. Cuba’s designers are hoping that their lightweight blouses and fringed swimsuits will become popular items for visitors to take home. AP/Ramon Espinosa

Freixas, a well-known designer who dresses many of the stars of state-run television, sells shirts for $20 and men’s and women’s pants for $30. Alongside the domestic market, Cuba’s own designers are hoping that their lightweight

blouses and fringed swimsuits will become popular items for visitors to take home. “We all have high hopes for the tourism boom,” Frias said. “I don’t think anyone comes to Cuba to buy imported clothing.” Havana Fashion Week began

in 2015 with 30 designers, organizer Catherine Dorticos said. This year’s edition had twice as many. “It’s a way to motivate people, for people to see other options and for artisans to produce more and feel inspired to do new things,” she said. AP

A10 Tuesday, October 18, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

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Economic managers must walk the talk in removal of rice QR

he rice-import quota—a nontariff barrier that the Philippines has enjoyed for more than two decades—would expire in less than a year. If we are to believe the recent pronouncements of economic managers pushing for the removal of the quantitative restriction (QR) on rice traded under the World Trade Organization (WTO), it appears that it is already a done deal. All it lacks is the nod of the President to fasttrack the process of eliminating the power of the government to limit the entry of rice imports. Those advocating for its removal point to the need to feed millions of poor Filipinos who cannot afford to buy meat products, such as pork and chicken. With the removal of the import quota, experts and economic managers expect that rice sold at the retail level would be cheaper. Consider this: The Philippines recently bought milled rice from Vietnam and Thailand at an average of $450 per metric ton, or $0.45 a kilogram. At the current exchange rate, $0.45 is equivalent to P21, cheaper than the local regularmilled rice being sold at P36 per kilo, according to the latest data from the Philippine Statistics Authority. The Cabinet and the President himself have yet to make a pronouncement regarding the scrapping of the rice QR. While economic managers appear to have made up their minds not to negotiate for its extension, they have yet to present a viable plan on how to help the 2.6 million Filipino rice farmers compete with their Vietnamese counterparts, who enjoy subsidies from their government, such as exemptions from irrigation charges and tariff rates of 0 percent to 5 percent for imported agricultural machines and equipment. The government’s strategies must also focus on ensuring the country’s food security amid the challenges posed by climate change. Philippine officials were taught a lesson in 2008, when they were forced to buy rice at more than $1,000 per metric ton because international supply was tight, following the export restrictions imposed by India and Vietnam. India had to limit its rice exports after its wheat crop was destroyed by a typhoon, while Vietnam banned new export sales due to unseasonably cold weather in the first quarter of 2008, according to the Food and Agriculture Organization. Unfortunately, more than 20 years and three administrations later, farmers’ groups complain that they remain unable to compete with their Asean counterparts. The Duterte administration has less than a year to prepare 2.6 million Filipino rice farmers for a major change. The same determination exhibited by economic managers in scrapping the QR must also be seen in the preparations to help rice farmers survive the removal of the protection they have enjoyed for decades. Consistency in words and actions on the part of the government will give the rice farmers something to lean on as they prepare for the deluge of imported cheap rice. As the cliché goes—walk the talk. Since 2005

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THE Entrepreneur Continued from A1

n the other hand, promoting and developing industries that generate a lot of employment is a pro-poor and a more permanent solution to the poverty problem, because jobs empower poor families to generate income for their own needs. At the same time, providing jobs to the poor also preserve their dignity, in contrast to doleouts, which foster dependence and mendicant mentality.

In last week’s column I discussed manufacturing as one of the laborintensive industries that should continue to receive support, especially now that rising labor costs in China are making Philippine industries competitive. Tourism is another labor-intensive industry, which creates job opportunities in many areas in the provinces, where tourist destinations are located. In addition, tourism stimulates small businesses, which promote entrepreneurship and add to employment generation.

The tourism industry directly employed about 5 million workers in 2015. The Philippine Statistics Authority (PSA) estimates that tourism accounts for more than 12 percent of employment in the country. The number of directly hired tourism employees is expected to increase with the growing number of foreign and domestic visitors, which stood at 5.4 million and 68 million, respectively, last year. This year the Department of Tourism is targeting a total of 6 million foreign visitors and 71 million domestic travelers.

The election of 1722

Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug

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The real pro-poor strategy

John Mangun

OUTSIDE THE BOX

he British general election of 1722 was just an ordinary election to elect members of the Parliament. As in all “modern” democracies then and now, the system was designed to favor the politicians in power and there was little difference between political parties in terms of policies. Only the names changed. The previous Prime Minister was Robert Walpole, and his Whig Party was victorious again in 1722. In fact, Walpole was the longest-serving prime minister in British history. Walpole, like the opposition candidate—Sir William Wyndham, 3rd Baronet—came from the economic and politically elite class. The 1722 election, though, was a battleground not seen in previous elections and the public was highly interested. However, the Whig Party controlled virtually all parts of the government and used all the resources available to insure the outcome. British elections had always been under the strong influence of

corruption and political patronage, but until this time the vote had usually reflected at least a part of the voters’ opinion. The big difference in the 1722 election was the writings of two men—Scotsman Thomas Gordon and Englishman John Trenchard— called Cato’s Letters after the Roman politician who was strangely ethical and not corrupt. Gordon and Trenchard belonged to a group called the Commonwealth Men. It was also sort of a political party that had the crazy idea that corruption and lack of morality in British political life was prevalent and wrong. It was “crazy” because

The tourism industry directly employed about 5 million workers in 2015. The number of directly hired tourism employees is expected to increase with the growing number of foreign and domestic visitors, which stood at 5.4 million and 68 million, respectively, last year. This year the Department of Tourism is targeting a total of 6 million foreign visitors and 71 million domestic travelers. I already mentioned last week that construction accounts for 48.1 percent of total employment in the industry sector. The PSA estimates 3.5 million workers in the construction and housing industry, or about 8.5 percent of total employment. Just like in the manufacturing sector, the majority of workers in the tourism and construction and housing industries are blue- collar or skilled workers and laborers, whose families belong to the poor segment of the population. In addition to employment generation, the housing industry also fills the need for decent shelter for Filipinos. At present, both the government and private developers estimate a shortage of 5.5 million housing units, particularly for low-

The 1722 election, though, was a battleground not seen in previous elections and the public was highly interested. However, the Whig Party controlled virtually all parts of the government and used all the resources available to insure the outcome. British elections had always been under the strong influence of corruption and political patronage, but until this time the vote had usually reflected at least a part of the voters’ opinion. nearly all British politicians and thinkers rejected their ideas. But in 1722, their writings became popular and they weren’t into campaign speeches. “Let us not again be deluded with false promises and deceitful assurances; but let us judge what men will do by what they have done.” When it came to actually voting, Trenchard and Gordon advised, “Throw your choice upon such who will neither buy you, nor sell you.” While believing that “Our country abounds with men of courage and understanding; nor are there wanting those of integrity and public spirit,” there was also another reality. “In corrupt administrations, your su-

income households. In effect, housing may be considered a propoor industry for two reasons: by generating employment and providing low-cost and socialized housing for the poor. Incidentally, this is one of the primary reasons the National Economic and Development Authority (Neda) is opposing the proposed moratorium on the conversion of idle or unproductive agricultural lands to other uses, such as for factories, commercial centers and housing projects, among others. On the part of the government, the new administration’s focus on increasing and accelerating infrastructure development will also create a lot of jobs and livelihood opportunities in many areas outside the congested urban areas, while developing new growth centers throughout the country. Providing direct financial support to the poor through the Conditional Cash-Transfer Program is a necessary measure, but which can only provide temporary relief. On the other hand, promoting labor-intensive industries should be given high priority as a true and lasting propoor strategy.

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

periors of all kinds make bargains, and pursue ends at the public expense, and grow rich by making the people poor.” They also had the unusual idea that the people held the future of the country. “Many begin to be tired, sick, and ashamed of those who only sell and betray them. It is yet in our power to save ourselves.” However, Great Britain ignored their admonitions and ideas, but not so for the colonies that became the United States. Historians have concluded based on the writings and letters of early American colonists, half of the private libraries in the colonies included copies of Cato’s Letters. Gordon and Trenchard thought that only the people with a high standard of behavior and virtue could protect a country from despotism and ruin. Politicians have not changed in 300 years and neither has the necessity for the people to take responsibility. This almost sounds like “Better Filipinos can make a better Philippines.” E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

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Tuesday, October 18, 2016 A11

President Duterte is both On social pensions and retirement patriot and nationalist Cecilio T. Arillo

database

SN’T he a psychopath, the way singer-actress Agot Isidro described him to be? What comes next to my mind apropos Isidro’s diatribe was my exclusive interview on December 24, 1976, of the late Libyan President Muammar Gaddafi in a tent at the outskirts of Tripoli. I was then the only newspaperman allowed to cover the Tripoli Mission, headed by then-Defense Undersecretary Carmelo Barbero, that discussed the Mindanao problem with the Moro National Liberation Front, as an official observer and recorder of that historical event in Tripoli, Libya, from December 16 to 23, 1976. After the signing of the Tripoli Agreement, my request for an interview with President Gaddafi was granted and in that interview, the first question I asked him was his reaction on the statement of his bitter Arab political enemy, thenEgyptian President Anwar Sadat, who repeatedly called the North African leader a “Mad Man.” Gaddafi’s curt answer was: “How can he call me a Mad Man when he’s not even a physician!” Mr. Duterte got exposed to the intractability of the gutter language and inequities in life in his more than 25 years as a jurist and more so as a mayor of Davao City, then one of the poorest and largest urban centers in the world, a favorite playground and hangout for terrorists, leftist insurgents, robbers, gold smugglers, snatchers, prostitutes, and had more bombings and killing incidents than any other cities in the country before he turned it into the fifth livable and peaceful metropolis in the world and then becoming the first promdi President in a country whose presidency was usually dominated by the elites and the caciques, from the Senate and the House, known for their elegant manners and beautiful language, since Aguinaldo’s time. Actually, President Duterte is both a patriot and a nationalist, and for those who do not understand the terms, their meanings are likely to equate Mr. Duterte to a psychopath or a bipolar. Although patriotism and nationalism have different meanings, they are inextricably linked with each other if you sparingly use them to describe some people, for example, the likes of President Duterte and the late well-loved, sharp-tongued and outspoken Sen. Miriam Defensor Santiago, who was also noted for being foulmouthed. Patriotism is not to be confused with nationalism. Both words are normally used in an amorphous

Patriotism is not to be confused with nationalism. Both words are normally used in an amorphous way that any definition is liable to be disputed and, therefore, one must draw a clear distinction between them as two or more conflicting meanings are involved. way that any definition is liable to be disputed and, therefore, one must draw a clear distinction between them as two or more conflicting meanings are involved. “By patriotism,” said Eric Arthur Blair, who used the pen name George Orwell, a well-known English novelist, essayist and journalist, “it is an expression of love toward one’s country, while he defined nationalism as striving for independence and is inseparable from the desire for power.” “I mean devotion to a particular place and a particular way of life, which one believes to be the best in the world but has no wish to force on other people. Patriotism is of its nature defensive, both militarily and culturally,” Orwell said. He further described patriotism as an expression of love toward one’s country, while he defined nationalism as striving for independence and “is inseparable from the desire for power”. “By nationalism,” Orwell said, “I mean, first of all, the habit of assuming that human beings can be classified like insects and that whole blocks of millions or tens of millions of people can be confidently labeled ‘good’ or ‘bad’. But, second—and this is much more important—I mean the habit of identifying oneself with a single nation or other unit, placing it beyond good and evil, and recognizing no other duty than that of advancing its interests.” “The abiding purpose of every nationalist is to secure more power and more prestige, not for himself but for the nation or other unit in which he has chosen to sink his own individuality,” Orwell argued. To reach the writer, e-mail cecilio.arillo@ gmail.com.

Edgardo J. Angara

his is the second of a series of columns on aging. My last column talked about how rapid aging across the East Asia and Pacific region could increasingly put a strain on society and government finances, particularly through rising health-care costs. However, financing elderly health care is not the only area where a rapidly aging population will have significant impact on society. Another would be on social pensions and everything else related to how individuals, families or governments invest money so that the elderly will live comfortably and with dignity during their retirement. Filipino families usually have their grandparents live in the same household, instead of shipping them out to nursing homes. And it is common practice that the extended family continues to play a significant role in securing an elderly person’s retirement. A 2015 Global Aging Institute and Pru Life UK survey affirms this, finding that in the Philippines over 70 percent of retirees aged 60 and above live with their grown children and that up to two-fifths (40 percent) of today’s retirees are dependent on them. The survey further found that

up to 60 percent of Filipino respondents answered that grown children and other family members should be mostly responsible for providing personal care to retired people. In this regard, it appears that the Philippines (with Vietnam) is going against the trend among the 10 East Asian countries surveyed, which include Thailand, Hong Kong, Malaysia, South Korea, Taiwan, Indonesia, Singapore and China. Overwhelming majorities in these other countries were found to reject the traditional model of family-centered retirement security. However, only 10 percent of today’s workers in the Philippines expect that when they retire, they will be dependent on their children or become so-called net recipients of their children’s incomes. The survey’s findings point to the double financial burden imposed on those who earn today—the pressure to care for their elderly loved ones and the pressure to have enough

PCC: Part of the problem? Ernesto M. Hilario

ABOUT TOWN

t’s a given that the Internet is a powerful tool, as it allows us to harness information and tools to accelerate economic development—and much more.

Of late, the newly created Department of Information and Communications Technology (DICT), headed by Secretary Rodolfo A. Salalima, a former telecommunications executive, said the Duterte administration is now considering building a national broadband network (NBN) following a failed venture in a previous administration. The NBN plan requires an investment of up to P200 billion, and needs at least three years to put up. Can we wait that long? In the first place, where would the Duterte administration get the P200 billion, as Congress allocated P335 billion of the proposed national budget for 2017 for debt and interest payments? The Duterte administration has allocated P861 billion for its infrastructure program in 2017. This would be used to improve road networks, railways, seaports and airport

systems. Salalima has acknowledged that the 2017 budget does not support an ICT upgrade. As things now stand, the only way for faster and cheaper Internet— and accelerated economic development—is for the two telco firms to improve their services. Both PLDT/Smart and Globe already have the means to do this under their agreement to jointly use the 700-megahertz (MHz) band from San Miguel Corp. (SMC) in May. The 700-MHz spectrum delivers high-speed Internet and penetrates a wider range of areas than the current bands that the two telcos are using to provide broadband services. Both telco firms are confident they can deliver much-improved Internet services of up to 100 megabytes per second using the 700-MHz band after the P70-billion joint use deal was signed on May 30. But the Philippine Competition

Six reasons to be wary of Brexit optimism By Victoria Bateman Bloomberg View

any of the prominent Conservative Party politicians who led the “leave” campaign in Britain’s referendum on the European Union (EU) did so with good intentions. They argued that leaving the EU would allow Britain to escape growth-shackling European policies, freeing markets both internally and externally. It is on this basis that “Economists for Brexit” predicted a Brexit boost of up to 4 percent of United Kingdom GDP. It’s a comforting thought for those of us who would like to see a positive outcome to Britain’s withdrawal from Europe. But there are six good reasons to be skeptical of this kind of free-market boast from Brexiters. First, and beginning with internal markets, removing all the supposed EU red tape and regulations is of questionable benefit. Britain

is already a top performer when it comes to economic freedom. According to the Organisation for Economic Co-operation and Development product market regulation index, Britain has a score of 1.08 (on a scale of zero to six, where zero represents no impediments). Only the Netherlands does better. In terms of the ease of doing business index, Britain ranks sixth out of 189 countries, one position ahead of the US. And while Britain will have the freedom to dismantle EU regulations after Brexit, it will also have the freedom to add more: to subsidize failing businesses and prioritize domestic firms in public procurement, neither of which should be welcomed by free-marketers and neither of which is possible under EU law. One of the most economically damaging sets of regulations in the UK at present—that which restricts planning for new buildings—does not originate in Brussels. Second, it’s unrealistic to expect Britain to

walk into global markets on better terms than if it remained a member of the EU. Britain accounts for only 2.5 percent of global trade in goods and services compared with 16.3 percent for the EU. While the EU accounts for 14 percent of global imported goods and 20 percent of global imported services, the equivalent figures for the UK are just 2.2 percent and 2.9 percent. Britain has much less to offer foreign countries in return for them giving British firms tariff-free access to their own markets. Third, Britain seeks to be a globalizing force at a time of rising protectionism and a slowdown in global trade growth. The pro-Brexit British member of the European Parliament, Dan Hannan, argues that given the declining share of British exports (now 44 percent) going to Europe, Britain’s future exports will be better served by growth outside of Europe, where 90 percent of future global growth is predicted to come from. But trading free access to European markets with

what is hoped will be improved access to the rest of the world is wishful thinking at a time of increased protectionism outside of Europe. Fourth, it’s hard to exaggerate the difficulty the UK will encounter trying to negotiate eight separate bilateral-trade agreements to cover the majority —80 percent—of its present trade, and another 150 to cover all of its existing trade. Given that Britain’s export mix is complex and multifaceted, compared with, say, Norway and Switzerland, negotiating these trade agreements will take considerable time. This matters because history shows that regaining markets after even temporary disruption can be very difficult, a phenomenon known as trade hysteresis. Fifth, there’s history. What the globalizing Brexiters seem to think is a bold new plan has, in fact, been tried before. In the first half of the 20th century, and following an earlier period of integration, the world began to de-globalize. By the 1930s, global trade was collapsing, fall-

stashed away for one’s own retirement in the future. This burden was, in part, what I sought to help alleviate in pushing for the Senior Citizens Act and the seniors’ discounts and social benefits it prescribed. But it appears many other factors are exacerbating the problem. One is the fact that over half of senior citizens in the Philippines do not receive any kind of pension at all, as estimated by the Council of Services for the Elderly. And the very few who do, receive very little. For instance, according to the 2015 HelpAge International Social Pensions Database, the social pension (a direct cash transfer of P500 a month, or around $12) in the Philippines introduced in 2011 for indigent senior citizens—but only for those 77 years old and above—is only 5 percent of our 2012 GDP per capita. In contrast, a similar pension scheme in Indonesia—available to senior citizens at 70 years old (60 if chronically ill) at around $27—is 9 percent and 10 percent in Malaysia (at around $94 also for 60-year-olds). Ongoing discussions on raising the minimum Social Security System (SSS) monthly pension from P1,200 to P2,000 have put the spotlight on key issues regarding the management of the SSS—including the failure to collect millions, if not billions, of unpaid contributions. Meanwhile, there have been reported huge backlogs in the payment of military pensions—which in 2015, amounted to around P18

billion accumulated since 2000 for up to 123,471 military pensioners. The other factor adding to the double burden is poor financial literacy and a high “unbanked” rate among Filipinos. According to the latest data from the Bangko Sentral ng Pilipinas (BSP), only 3 out of 10 Filipino adults have an account in a formal financial institution. More than 6 out of 10 (65 percent) of those people said that not having enough money was the reason they did not have a bank account. Although a little more than 4 out of 10 (43.2 percent) Filipinos save for a rainy day, nearly 7 out of 10 (68.3 percent) of those people keep their savings at home, hidden in bedroom closets or kitchen shelves—unsecured places that do not earn any money for the saver. Up to 2 out of 10 Filipinos, in fact, have never saved a penny in their life. Contrast these with the finding of the mentioned 2015 Global Aging Institute and Pru Life UK survey that up to 66 percent of Filipino respondents expect government to be mostly responsible for providing income to retired people versus only 10 percent who said it should be the retirees themselves. All these highlight the very urgent need to revisit and reform the country’s overall pension system, especially when studies project that our senior population will balloon to 12 million by 2025, from only 6.2 million in 2010.

E-mail: angara.ed@gmail.com.

The NTC wants the two telcos to show “substantial improvement in the quality of their service” within one year for them to fully use the 700-MHz band. Both PLDT/Smart and Globe, according to reports, have already started installing additional cell sites using the 700-MHz band in June, in compliance with the NTC’s condition. During the election campaign, presidential candidate Rodrigo R. Duterte expressed frustration over the quality of mobile phone and Internet services we have in the country. The PCC, an independent quasijudicial body, enjoys vast powers. But it appears to be the single biggest stumbling block to President Duterte’s goal of providing affordable, fast and reliable Internet service to Filipinos. The commission’s move to review the deal, despite having been greenlighted by the NTC, may be an example of a confusing policy that discourages prospective investors from putting their money in businesses here. Is the PCC erecting a barrier to PLDT/Smart and Globe’s buyout agreement with SMC because it wants to give a favored player a slot in the highly lucrative telecoms market?

Commission (PCC) has insisted on reviewing the buyout, a move that PLDT/Smart and Globe said violates the implementing rules and regulations (IRR) of the very law that created the PCC. The agreement on the joint use of the 700-MHz band by the two telecom providers has already been approved by the National Telecommunications Commission (NTC). The PCC insists that the deal is “anticompetition,” since SMC could have given the two established telcos a run for their money and become the third player in the market. Do we have a duopoly in the telecom sector? The international creditratings agency Fitch Ratings doesn’t think so, as it noted that the cutthroat competition between PLDT/ Smart and Globe could intensify in the years ahead. This, therefore, raises the question: Does the PCC want a favored third party to enter the picture? If that’s the case, what will happen to the 100 million subscribers of PLDT/Smart and Globe who have been asking for improved and more advanced mobile services? Under the agreement reached by the NTC with PLDT-Smart and Globe, the two parties should significantly improve their Internet services as one of the conditions for allowing them to use the 700 MHz spectrum that SMC had returned to the NTC.

ing 25 percent between 1929 and 1933. In an effort to boost its own exports, Britain entered into a system of preferential-trade deals with its vast global empire, known as Imperial Preference. The system sought to promote trade and specialization as advocated by the classical economist David Ricardo. However, what this system did not do was to expose British firms to countries with a similar enough production structure to its own. It is this intraindustry as opposed to interindustry trade that is key to rich economies staying at the cutting edge. Unsurprisingly, therefore, Britain’s trade arrangements with its colonies and dominions did not prove sufficient to stop British firms falling behind their competitors. Between 1891 and 1973, Britain’s productivity deficit in industry relative to the US increased to over 100 percent from 40 percent. Competition is vital for productivity growth and, as the University of Warwick

economic historian Nick Crafts has shown, competitive pressures were lacking in 20th-century Britain until the 1970s, which brought membership of the European Union (EU) followed by Margaret Thatcher’s promarket reforms. Only then did British productivity begin to recover. Sixth, trade has benefits not only through the countries with which one directly exchanges goods, but also through the fact that domestic firms are disciplined by the market to keep up with rival producers, many of which in Britain’s case are in the EU. If British firms cannot sell to foreign consumers on the same terms as its rivals in Europe, British firms will not have the sharpening benefit of that competition. That is why bilateral trade deals with countries outside of Europe are not enough. Optimism is positive, when not misplaced. But in an effort to free Britain to do more and better deals, the Brexiters may well have slowed it down.

E-mail: ernhil@yahoo.com.

2nd Front Page BusinessMirror

A12

Tuesday, October 18, 2016

LRT speed to increase to 60 kph in Q3 of 2017

By Lorenz S. Marasigan

@lorenzmarasigan

AILWAY operator Light Rail Manila Corp. (LRMC) is moving to increase the speed of the oldest overhead train system in Metro Manila from 40 kilometers per hour (kph) to 60 kph by the third quarter next year. This, documents showed, will be made possible with the completion of the 26.5-kilometer railreplacement program for the Light Rail Transit Line 1 (LRT 1) by September 2017. The project covers 21 km of rail tracks on the northbound route and 5 km on the southbound route. These replacements will be the final phase to complete the overall rehabilitation of the LRT 1’s tracks system. The Light Rail Transit Authority, the previous operator of the train system, completed the first phase of rail replacements along the southbound route in December 2015 on top of the 8 km already replaced in previous

26.5 km The length of LRT 1 rails targeted to be replaced by September 2017

years. The replaced rails will also increase the lifespan of the light rail vehicles (LRVs), avoid wear and tear of the rolling stock, and ensure the reliability of the whole train system. “This is equivalent to adding up to four to seven trains in theory, depending on headway assumptions,” the document read. B esides t h i s, t he pr iv ate

company—controlled by Metro Pacific Investments Corp. and Ayala Corp.—is gearing toward the further augmentation of the capacity of the railway system. In more than a year since it took over the train line, the company was able to increase the number of available train cars from 77 to 92 coaches, or an 18-percent increase, from when it started to operate the system. “With minimal spare, engineering was able to reverse this declining trend and bring it up to 92 LRVs,” the document read. LRMC is embarking on a multibillion-peso project to rehabilitate and improve the current state of the 31-year-old rail line. It is also set to extend the line to Bacoor, Cavite. Targeted for completion in about four years after the delivery of right-of-way, the 11.7km Cavite Extension will connect into the existing system immediately south of the Baclaran Station and run in a southerly direction to Niyog, Cavite. It will consist of elevated guideways throughout the majority of the alignment, except for the guideway section at Zapote, which will be located at grade. Eight new stations will be provided with three intermodal

facilities across Pasay City, Parañaque City, Las Piñas City and Cavite. The new stations are Aseana, MIA, Asia World, Ninoy Aquino, Dr. Santos, Las Piñas, Zapote and Niyog. The intermodal facilities shall be at Dr. Santos, Zapote and Niyog. The commercial speed of the Cavite Extension will be 60 kilometer per hour. The horizontal alignment shall be designed for a train speed of 80 kilometers per hour for the mainline track; 60 km/h through stations; and 30 km/h for secondary and depot tracks. The new stations will be accessible to and from nearby community facilities, such as shops, schools, stadium, park, etc., and be located to suit passenger flow routes from residential areas. Pedestrian access to all new stations will be direct, safe and easy. Details, such as lighting to distinguish access points, pedestrian cross striping and curb cuts for handicapped access, will be provided. The private company holds the concession for the operations, maintenance and the extension of the train line. It signed the agreement with the government in October 2014. The company will operate and maintain the oldest train system in the Philippines for 32 years.

Corn shortage looms as prices continue to fall Continued from A1

Based on farmers’ planting intentions, the PSA said the corn production in the fourth quarter of the year will increase by 4.78 percent, from 1.73 MMT in 2015, to 1.81 MMT. For the second half of the year, the PSA said corn production will expand by 8.98 percent. “Probable increases in harvest areas and yields may be attributed to more plantings with anticipation

of rainfall and availability of seeds,” the PSA report said. The country’s corn production in the first half declined by 16.35 percent to 2.83 MMT, from 3.38 MMT recorded a year ago. The latest cropping season for corn started in September and may last until early January, according to the DA’s Agriculture and Fisheries Market Information System. Navarro also said the DA should address the situation of corn farm-

ers in Isabela province, who were greatly affected by El Niño. “We have a forecast shortfall in Region 2, especially in Isabela province, because of the effect of the prolonged drought,” Navarro said, adding that the forecast is yet to be validated by concerned officials. “ We a re hopi ng t h at t he planting intentions will not drop, given the case in Isabela. We’re hoping that the farmers in Isabela will not be discouraged from planting

corn again,” Navarro added. Isabela province is the country’s top producer of corn. Isabela has been under the state of calamity after its Sangguniang Panlalawigan assessed that the dry spell has caused the province some P1 billion worth of damage on corn and palay. Isabela’s agriculture office has called on the DA to help the farmers by providing at least P200 million worth of fuel and corn seeds.

www.businessmirror.com.ph

ESPINOSA MANHUNT ENDS IN ABU DHABI ON TIP FROM OFW By Rene Acosta

@reneacostaBM

A NTED a l leged drug lord Kerwin Espinosa has been arrested in Abu Dhabi by Filipino and local policemen, even as another Filipino-fugitive kidnapper was collared in Thailand. B ot h a r rest s were a nnounced by Director General Ronald dela Rosa, National Police chief, in a news conference on Monday morning. Espinosa, the alleged No. 1 drug lord in Eastern Visayas, has been the subject of manhunt by the police since President Duterte named him as one of the country’s drug lords. His involvement in the illegal-drugs trade was admitted even by his own father, Mayor Rolando Espinosa of Albuera, Leyte, who is also facing drugs and illegal possession of firearms charges. The elder Espinosa earlier surrendered to dela Rosa after Mr. Duterte issued a shoot-to-kill order against him and his son. “Just this morning, around 2 a.m., our team from anti-illegaldrugs group, in coordination with criminal investigation division of Abu Dhabi Police, arrested the drug lord Kerwin Espinosa,” dela Rosa said. “So he’s already in the custody of the Abu Dhabi Police and ready to be shipped to Manila,” he added. Dela Rosa said the arresting team from the National Police is already processing the documents needed for the return flight of Espinosa. “I don’t know if they could finish the documentary requirements today [Monday]… maybe tomorrow, they could already travel. If not, it depends on the first available flight right after

ESPINOSA

the suspect is cleared to travel to the Philippines,” he said. Dela Rosa said Espinosa’s arrest came after an overseas Filipino worker (OFW) in Abu Dhabi called up the National Police general headquarters to inform authorities that the reported drug lord was living near the building where the caller lives. With the tip, dela Rosa said he immediately dispatched a team to Abu Dhabi. Meanwhile, fugitive sus-pected kidnapper Alexander Pangilinan was arrested on October 13 by the Royal Thai Police for violation of immigration laws. Pangilinan was turned over to dela Rosa on Saturday at the headquarters of the Royal Thai Police in Bangkok, Thailand. The National Police Antikidnapping Group said Pangilinan has a standing warrant of arrest issued by Judge Bayani V. Vargas of Branch 219 of the Regional Trial Court in Quezon City on May 11, 2006 on kidnapping for ransom with homicide charges. Pangilinan carried a reward of P250,000 on his head. The Anti-Kidnapping Group acting commander, Senior Supt. Manolo Ozaeta, said Pangilinan was involved in the kidnapping and killing of Michael Chan, a Chinese man, on September 15, 2005, in front of Citadel Church on Katipunan Road, Quezon City.

Russian mega India deal takes oil battle to Mideast backyard A

$13-billion deal involving Russia in India threatens to weaken the grip of Middle East crude suppliers in the world’s fastest growing oil market. Rosneft PJSC is part of a group of investors that beat suitors from Saudi Arabia and Iran to buy Essar Oil Ltd.’s Vadinar refinery, India’s secondbiggest, in a deal announced over the weekend. Russia’s largest oil producer is following a strategy by resource-rich firms and nations to secure outlets for their output, and may supply the facility with Venezuela crude and challenge Middle East exporters that provide about two-thirds of the country’s imports. “India will be the most important product-growth market over the next 25 years, making it important to Russia,” according to Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co. With the Essar deal, Rosneft is targeting a market of 1.3 billion people that imports more than 80 percent of its crude requirements and which is forecast by the International

Energy Agency to be the world’s fastest-growing oil consuming nation through 2040. The country has emerged as a bright spot for global demand as the quickest economic expansion among major economies spurs increased use of trucks, cars and motorbikes. Rosneft on Monday fell 2.2 percent to 346 rubles as of 12:58 p.m. in Moscow. Essar Oil shares were delisted last year. The transaction also includes about 2,700 Essar Oil retail stations, a market that has attracted top oil companies, such Royal Dutch Shell Plc .and BP Plc. Most of Essar’s output is sold domestically, either through its own outlets or to government-owned fuel retailers. “The access to the Indian market attracted Rosneft the most,” Prashant Ruia, chairman of Essar Oil, said in an interview in Mumbai on Sunday. “It is one of the world’s largest markets. They wanted to have a piece of the market.” Rosneft also sees the potential to expand in the AsiaPacific region by supplying

fuels to Indonesia, Vietnam, the Philippines and Australia, it said in a statement. The deal will enable Russia to have “greater influence over the Asian market,” said Abhishek Kumar, an analyst at InterfaxEnergy’s Global Gas Analytics in London. “This would be in response to Saudi Arabia’s attempts to penetrate the European market, which is dominated by Russian oil.” The need for oil-rich nations to invest in overseas refineries to secure market share has intensified amid a global glut. Saudi Arabia is buying stakes in refiners through its stateowned oil giant Saudi Aramco in countries from Indonesia to the US. Kuwait is also investing in processing facilities. Essar Oil’s Vadinar refinery in the western state of Gujarat can process about 400,000 barrels a day. It was designed to run on low-quality crudes from Venezuelan or the Middle East, rather than Russian grades. Venezuela made up almost half the refinery’s supplies in the first six months of the year, followed by Iran, according to shipping data ob-

tained by Bloomberg. “The best way for Rosneft to supply crude to Essar is via its equity in Venezuela,” said Tushar Tarun Bansal, director at Ivy Global Energy, an industry consultant in Singapore. “Bringing this crude to India helps Rosneft and Russia the most by securing their equity crude supply and not adversely impacting its own market in Europe.” By comparison, Middle East exporters, led by Iraq and Saudi Arabia, provided more than 65 percent of India’s overall crude imports during the April-toJune quarter, according to Oil Minister Dharmendra Pradhan. Rosneft and Petroleos de Venezuela SA, the state oil company, agreed earlier this year to terms on swapping crude oil and fuels. The Russian oil giant also has interests in five projects in Venezuela— Petromonagas, Petrovictoria, Petromiranda, Boqueron and Petroperija—that contain estimated oil reserves that exceed 20.5 billion tons (about 150 billion barrels), the company said in February. Bloomberg News