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Friday, September 1, 2017 Vol. 12 No. 323
‘Foreign players in PHL media to benefit public’ L
By Cai U. Ordinario
@cuo_bm
ocal economists and media experts on Thursday said they see merit in allowing foreign firms to compete with Philippine media outfits, noting that a “more global voice” will make it harder for anyone to influence an industry considered as a vanguard of democracy.
T his is in reaction to Socioeconomic Planning Secretar y Ernesto M. Pernia’s pronouncement t h at t he gover nment
plans to open up media to foreign players as part of its efforts to shorten the countr y’s R eg u l a r Foreig n I nvest ment
TEROSA: “The economic advantages outweigh the disadvantages because it can raise media standards, improve technology and foster competition.”
Negative List (R FINL). Economists said that, if the government can change the constitutional restrictions on media ownership, the local media industry could even benefit from allowing foreign players to operate in the Philippines. Continued on A12
House panel eyes CMTA review, BOC reinvention
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Tax on sugar-sweetened beverages hits the poor Dr. Jesus Lim Arranza
Make Sense
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ast week, as chairman of the Federation of Philippine Industries (FPI), I was invited to attend the Senate Committee on Ways and Means hearing on the proposed excise tax on sugarsweetened beverages (SSBs). Headed by its Committee Chairman Sen. Juan Edgardo M. Angara, I found the invitation very timely and a great opportunity to push our advocacy for equal opportunities in business and trade, as provided for in Article IV of the Philippine Constitution or the Equal Protection Clause, which guarantees that “No State shall deny to any person within its jurisdiction the equal protection of the law.” And while I was in high spirit when I came to the Senate for the hearing, knowing that we would be able to push for the equal protection of the law on FPI member-organizations and companies that would be affected by the proposed tax on sugar-sweetened beverage (SSBs), I was, however, disappointed, frustrated and a bit embarrassed, after the Honorable Senator Angara stopped me, politely though, from reacting to the lengthy position paper read by former Health Secretary Teresita Cabral on the excise tax on SSB, where about 80 percent of what she read was about the cigarette tax.
Brazil exporters seek speedy resolution of salmonella issue
@joveemarie
Continued on A12
business news source of the year
Continued on A11
By Jovee Marie N. dela Cruz
he Hou se Com m it tee on Dangerous Drugs on Thursday recommended the abolition of the Bureau of Customs (BOC) and the creation of a new revenue-collection agency, as well as amendments to the Customs Modernization and Tariff Act (CMTA). In a 57-page committee report on the entry of 604 kilograms of shabu, Rep. Robert Ace S. Barbers of the Second District of Surigao del Norte, the panel chairman, said a legislation is needed to replace the BOC with a new agency or instrumentality of government with a different system of collection to avoid corruption and to increase revenue collection. “A system may include fixing a
2016 ejap journalism awards
By Jasper Emmanuel Y. Arcalas
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Megaworld sets opening of P2-B Southwoods Mall Megaworld Senior Vice President and Head of Lifestyle Malls Kevin L. Tan (center) tours the Southwoods Mall with other company executives during the exclusive media preview in Southwoods City, Biñan, Laguna. The P2-billion, w three-level Southwoods Mall is set to open on September 30. Story on B1.
PESO exchange rates n US 51.1660
@jearcalas
ão Paulo, Brazil—The Brazillian Animal Protein Association (ABPA) is urging Manila to fast-track the investigation into the contamination of some meat shipments with salmonella to the Philippines in July. A BPA V ic e P re s id e nt a nd Technical Director Rui Vargas made the appeal after the Philippine mission that would inspect some meat establishments in Brasilia last week was postponed due to the discovery of avian inf luenza (AI) in some towns of Central Luzon. “The audit of the Philippines is important because more than 30 listed Brazilian establishments
MO 32
The memorandum order issued by Agriculture Secretary Emmanuel F. Piñol suspending the accreditation of all Brazilian foreign meat establishments
export to them. And we had a document from the Philippines this year notifying us of our problems at five exporting establishments in a range of companies that we think are noble,” Vargas told the BusinessMirror in an interview here. See “Brazil,” A2
n japan 0.4642 n UK 66.1423 n HK 6.5388 n CHINA 7.7564 n singapore 37.6691 n australia 40.4416 n EU 60.8108 n SAUDI arabia 13.6443
Source: BSP (31 August 2017 )
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Banking&Finance BusinessMirror
Editor: Jun B. Vallecera • Friday, September 1, 2017
A5
M3 expansion helps explain continued economic growth
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ash circulating in the financial system continued to accelerate in the second half, aggregating P10 trillion in July, according to the Bangko Sentral ng Pilipinas (BSP). Domestic liquidity, broadly measured as M3, rose to P10 trillion in July, representing growth of 13.5 percent year-on-year. This was faster than the 13.3-percent revised expansion in the previous month. The continued growth in domestic liquidity parallels the country’s continued economic expansion averaging 6.5 percent in terms of the GDP in the April-to-June period this year. A growing cash supply often signals beneficial expansion as liquidity fuels the productive sectors in the economy and increases the nation’s capacit y to grow. Howe ver, e xcessive c a sh- supply growth could prove worrisome as it could fan inflationary fires in the real economy. Latest data from the BSP show inflation still within the 2-percent to 4-percent target, averaging only 3.1 percent in the first seven months.
Tepid cash-supply growth, on the other hand, could be just as bad for the economy, especially if it does not provide sufficient financing that keeps the productive sectors going. Amid the accelerating money-supply growth, the BSP assured the public that M3 growth remained consistent with expectations on price movements and local output growth. “The growth in M3 remains in line with the BSP’s prevailing outlook for inflation and economic activity,” the BSP said in a statement. “Going forward, the BSP will continue to closely monitor monetary conditions in order to ensure that domestic liquidity stays adequate to support the BSP’s price and financial stability objectives,” it added. Demand for credit continued to be the main growth driver of domestic liquidity expansion as domestic claims grew
by 15.7 percent in July, faster than the 15.3-percent expansion in June. In a separate report, the BSP said the outstanding loans of banks also registered continued acceleration in July, mirroring movements in the country’s overall cash stream. In particular, the outstanding loans of commercial banks grew 19.7 percent in July, up from the 19 percent in June 2017. The credit expansion was fueled mainly by loans for production activities, which accounted for more than 88.4 percent of the banks’ aggregate loan portfolio. The growth in production loans was driven by increased lending to the information and communication sector, electricity, gas, stream and the airconditioning supply sector, real-estate activities, wholesale and retail trade, repa i r of veh ic les a nd motorc yc les and manufacturing. Loans for household consumption, meanwhile, slowed to 22.3 percent in July, from 232.5 percent in June. The BSP said the growth in household loans was driven by growth in auto loans, credit card loans and other types of household loans, as well a s sust a ined g row t h in auto loa ns a nd s a l a r y - b a s e d ge ne r a l - p u r p o s e loans. Bianca Cuaresma
ING named Best Bank in the World
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lobal Finance magazine has announced the winners of its World’s Best Global Banks 2017 Awards, where, for the first time ever, it has named the Best Bank in the World. The winner is ING. Winners were selected together with corporate financial executives, analysts and bankers throughout the world, based on the banks’ performance over the past year, reputation and management excellence. “It’s a great honor to accept Global
Finance’s Best Bank in the World award on behalf of all my colleagues, who work hard every day to give our customers the best possible experience.” said Ralph Hamers, CEO of ING. “We constantly look for ways to make banking easier and help our customers make sound financial decisions.” Global Finance regularly selects the top performers among banks and other providers of financial services. These awards have become a trusted standard of excellence for the global financial community. Global Finance’s audience includes senior
No change in govt revenue if indirect exports are levied VAT-study
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hanging the value-added tax (VAT) status of indirect exporters from the current zero rating to VAT-able as proposed under three pending legislative bills will not have any effect on government revenues, according to new research from the Philippine Institute for Development Studies (PIDS). The study, entitled “Assessment of the 2017 Tax Reform for Acceleration and Inclusion”, analyzes the tax-reform provisions in House Bill (HB) 4774, HB 5636 and Senate Bill 1408, including those pertaining to the VAT regime.
The study, authored by Rosario G. Manasan, PIDS senior fellow II, noted that the bills seek to reform the Philippine VAT system to “eliminate numerous exemptions that have significantly narrowed the VAT base [and] resulted in numerous breaks in the VAT chain, thereby making it more difficult to collect the VAT efficiently and [resulting] in a substantial tax gap [i.e., the difference between actual and potential tax revenues]”. All three bills propose to change the VAT treatment of indirect exports from zero rated to VAT-able.
BDO to issue $700 million senior notes
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DO Unibank Inc. (BDO) is set to issue $700 million in fixed rate senior notes under the bank’s Medium Term Note (MTN) Program. This will be the second drawdown under the program following the $300 million issued in October last year. The senior note issue is part of the bank’s liability management initiatives to tap longer-term funding sources to support BDO’s lending operations and general corporate purposes. The notes will have a coupon of 2.950 percent and will be issued at a price of 99.909 per 100, with a maturity of five-and-
a-half years. The bonds were rated “Baa2” by Moody’s. The transaction was overwhelmingly oversubscribed, with orders reaching $2.2 billion. Settlement will be on September 6. With a wide distribution across Asia Pacific and Europe, this transaction represents the largest single issuance by a Philippine bank to date. Bank of America Merrill Lynch, HSBC and Wells Fargo Securities acted as joint lead managers and joint bookrunners, while Mizuho Securities and MUFG acted as comanagers for the transaction.
Case clippings
By Justice S J Ranada Jr. CIRCUMSTANTIAL EVIDENCE–interwoven pattern Circumstantial evidence is like a tapestry made up of strands which create a pattern when interwoven. Each strand cannot be plucked out and scrutinized individually because it only forms part of the entire picture. Thus, in a criminal case, the events that transpired prior to the burning incident should not be disregarded; a stoning incident and a burning incident cannot be taken and analyzed separately, and should be viewed as a whole. Bacerra v. People 03 Jul 2017
GR 204544 Leonen, J
corporate and financial officers responsible for making investment and strategic decisions at multinational companies and financial institutions. The full World’s Best Global Banks 2017 report will be featured in Global Finance’s October issue. In December 2016 ING Bank was named Best Global Bank by The Banker, another global financial magazine.
UPSE seen helping Phl Tax Academy T
he Department of Finance (DOF), to speed up the creation of the first Philippine Tax Academy (PTA), is exploring a possible tie up with the University of Philippines School of Economics (UPSE). The PTA has existing ties with the University of Makati (UMak). According to DOF Undersecretar y Gil S. Beltran, the PTA was seen admitting trainees by January next year using funds from the excess income of the Bureau of the Treasury (BTr) as recommended by the Department of Budget and Management (DBM). The PTA could begin operations on a budget estimated at P20 million. “We are now meeting with officials from the UP School of Economics for a possible partnership in establishing the PTA alongside our existing one with UMak,” Beltran said in his report to Finance Secretary Carlos G. Dominguez III at a recent DOF Executive Committee meeting. Earlier, Dominguez said the PTA will provide revenue and customs authorities a learning platform dedicated to their continued training and study in improving tax collection competence and efficiency. Republic Act (RA) 10143 signed during the 14th Congress enabled the DOF to set up the PTA to provide continued training and education to personnel of the bureaus of Internal Revenue (BIR),
Mahathir is coming
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un Dato’ Seri Dr Mahathir bin Mohamad was the fourth Prime Minister of Malaysia serving for 22 years, from 1981 to 2003, a record stretch. He was known for his fiercely nationalistic stance when pursuing his dream of placing Malaysia at the forefront of progressive economic development on a par with Western countries and with its own Asian neighbors. During his watch, Mahathir tried to transform his country into a modern industrialized nation, which, for a long time, just depended on its palm-oil and rubber plantations and mining activities as major economic resources. So he built highways and power projects, and encouraged the establishment of electronics and telecommunications companies and also car manufacturing (remember Proton, which was introduced in the Philippines?). Malaysia was recording 8-percent to 10-percent GDP-growth rate in his time, the five years before the 1997 Asian financial crisis, and everything looked very promising. Mark L. Clifford and Pete Engardio, both of Newsweek, have this revealing comment in their book, Meltdown (Prentice Hall Inc. 2000, P.61): “Mahathir’s greatest passion was infrastructure…. In the twilight of his political career, Mahathir wanted epic public works that would be remembered for generations. In August 1995 he broke ground on a new $8-billion city, Putrajaya, that by 2005 would serve as the nation’s new capital and home to 250,000 people. More controversial was his plan for a $5.5-billion hydroelectric dam in the heart of Borneo that would transmit electricity across the South China Sea through a 400-mile underwater power cable. Besides the engineering obstacles, the project would require the destruction of thousands of acres of primeval rainforest.… Malaysia also set to work on Mahathir’s ultimate dream project, the Multimedia Super Corridor. The plan was to invest $20 billion in facilities and state-of-the-art telecoms to build Asia’s equivalent of California’s Silicon Valley.” These authors were writing in August 1999, and we note their slightly deri-
FINEX free enterprise Santiago F. Dumlao Jr. sive skepticism. But today, Putrajaya is a reality, 25 kilometers south from Kuala Lumpur, a modern city of government, commercial, residential and religious structures, part of the Multimedia Super Corridor conceived in Dr. Mahathir’s time. “World’s Best Garden City”, they label it. It is indeed a propitious time for Mahathir to come visit the Philippines when the Duterte administration has declared its own dream of a golden age of infrastructure—“Build, Build, Build”. Yes, the former Malaysian Prime Minister will be the special guest and keynote Speaker of the Financial Executives Institute of the Philippines (Finex) during its weeklong celebration this October 2017. At the ripe age of 91, he is still spunky and continues to stay in the mainstream of Malaysia’s political affairs. He has publicly launched an attack against the current Prime Minister Najib Razak who has been embroiled in widely publicized corruption charges. Mahathir, in fact, is reported to be ready to challenge the incumbent Prime Minister in elections expected next year, if no one is willing. It was Mahathir who, during the start of the July 1997 Asian Financial Crisis, lashed out against rogue speculators, pointing out George Soros, the global financial player, as the culprit who led the speculative attack on the Malaysian ringgit. (Soros responded by calling Mahathir a menace to his own country.) We might indeed recall that the Malaysian ringgit was trading at 2.4 to 2.5 to the US dollar before the crisis. In July 1997 the Malaysian ringgit dived to a 38-month low of 2.653 to a US dollar, hitting 3.40 in October and even 4.88 to a US dollar in January 1998. So upset was Dr. Mahathir at the state of the East Asian currency that he called out to make forex
Customs (BOC) and of Local Government Finance (BLGF). The United States Agency for International Development (USAID) has expressed its intent to assist the DOF and its attached agencies in identifying the training programs to be offered at the tax academy. “[The ta x academy] shall develop and implement a curriculum, which includes those pertaining to: [a] the technical aspects of tax collection, administration and compliance; and [b] the career orientation and development for civil ser vants,” an excer pt from RA 10143 said. All applicants from the revenue generating agencies are required to pass the basic courses offered by the PTA before they can be hired either on contractual or permanent status in government offices. “All existing officials and personnel of the BIR, the BOC and the BLGF shall be required to undergo the retooling and enhancement seminars and training programs to be conducted by the PTA,” according to the legislation. Beltran said the DOF has already began receiving entries for the PTA Logo Making Contest, in which the winner will get a cash prize of P10,000. The winning logo should convey simplicity, future-proof and easily memorized and recognized as the symbol of the PTA. Rea Cu
trading illegal during an International Monetary Fund (IMF) Conference in Hong Kong in September 1997. The IMF played a prominent role in the Asian region’s response to the financial crisis by offering rescue packages to Thailand, Indonesia, South Korea and the Philippines. The IMF conditions were strict, including particularly the tightening of credit and the reduction of government budgets. Malaysia rejected the IMF formula, arguing that increasing interest rates, restricting credit and cutting down on public spending would be counterproductive to the recovery of the economy. Instead, Malaysia went on its own separate tack, imposing capital controls in September 1998. Bank Negara Malaysia initially intervened in the foreign-exchange market like the other central banks did, raising interest rates, but this did not stop the ringgit’s deterioration and, in fact, precipitated an economic slowdown. The capital-control measures banned offshore-market trading of the ringgit, aimed at forcing offshore-ringgit deposits back to Malaysia, thereby depriving currency speculators the opportunity of speculative currency transactions. The Malaysian ringgit was pegged at 3.8 to the US dollar on September 1, 1998, to establish foreign-exchange stability. It’s a long, interesting story, but Mahathir was proven correct in his decision, rather, in his series of decisions. The capital controls were gradually lifted and, in July 2005, the ringgit was unpegged in favor of a managed-float system. (The ringgit is now trading at about 4.2 to the US dollar.) Ahead of the Asian Financial Crisis, I personally heard Mahathir castigate the Western credit-rating agencies during one K.L. conference, even as he was seeking out Moody’s representative in the audience. He could be extra forthright in his words, and age does not seem to have mellowed him down. So we expect a good dose of peppery advice and wisdom from our Finex guest who, in fact, is a medical doctor and, therefore, is welcome to give us prescriptions.
BMReports BusinessMirror
A2 Friday, September 1, 2017
www.businessmirror.com.ph
‘Foreign players in PHL media to benefit public’ Continued from A1
“The economic advantages outweigh the disadvantages because it can raise media standards, improve technology and foster competition. I believe that we should be more concerned with social and cultural disadvantages than economic disadvantages, since [the] media is a potent force that can influence lifestyles, perspectives and ways of thinking,” University of Asia and the Pacific School of Economics Dean Cid Terosa said. Terosa added that greater competition will encourage local media outfits to develop their competitive advantages. He said the current media landscape provides only a few big players operating media companies. He noted that Filipinos need “better media services” from these few big players. The fear of competition, he added, is a “building block of mediocrity”. For his part, Philippine Institute for Development Studies President Gilberto M. Llanto said in an e-mail to BusinessMirror that this will also be good for
“capable journalists”, because competition promises better pay and working conditions. Asian Institute of Journalism and Communication President Ramon Tuazon agreed, saying allowing foreign individuals or “juridical persons” such as corporations to operate media companies would also increase access to new capital. Tuazon said this is an advantage that would be good, even for local media workers. “The upside is that foreign inputs [capital, expertise, networks, contacts] invested into local media players expands the earning envelope. If those guys are allowed to set up shop and compete with local media players, the latter will be affected only to the extent that they cannot stand up to the competition,” Llanto said. One of the greatest threats in allowing foreign players in Philippine media is the further loss of revenues that local media outfits could incur. University of the Philippines Department of Journalism Chairman Rachel Khan said local media companies are not earning
Brazil. . .
Continued from A1
“We are now awaiting and expecting that, by end of September, there should be a visit by the Philippine mission. It is still being confirmed,” Vargas added. Vargas said they find the Philippine government’s action in addressing the issue with Brazil and salmonella somewhat “slow”. “They told us they postponed because it has to be necessary to be quarantined because they came from avian influenza [AI] problem, and we have a restrictive rules here on AI. We do not allow entry for people who visited establishments with poultry in the last 15 days,” he said. “I am not satisfied on the rate they are addressing this. I find it a little bit slow, but we accept it because it is reasonable,” he added. The ABPA official noted that the Philippines’s zero tolerance on salmonella policy is “unreasonable”, as the bacteria could be easily killed through thorough cooking or processing of meat. “It should be zero tolerance in cooked. Here in Brazil, we have zero tolerance in cooked and in ready-to-eat, because these are dangerous,” he said. “We don’t have zero tolerance in raw.” Despite these remarks, Vargas added they would do their best to comply with the importation policies of their trading partners, even if they are too stringent in nature. Vargas said that countries such as South Korea, South Africa and some European countries also impose zero tolerance on raw meat. “I think the country who is going to buy our
Metro Pacific. . . Continued from A12
upgrade the facilities of the MRT 3. “No, they haven’t talked to us yet about their planned buyout,” Sobpreña, who is on a personal trip to Italy until mid-September, told the BusinessMirror.
Different vehicle
Singson noted, however, that LRMC will not be the vehicle for the said transaction, as issues linked to the MRT might affect the private company negatively. “It has to be a separate special-purpose vehicle because it will be a different concession agreement, so that our concession will not be affected by any issue on the other. It is very possible that the ownership will be the same,” he said. Should Metro Pacific win the said deal, there will be synergies between MRT 3 and LRT 1, which could result in cost and operation efficiencies. “We can have synergies between Line 1 and [MRT] 3 in terms of suppliers, depot management, logistics management—like one machine does not have to be bought by two entities. There will be a lot of synergies that can reduce the cost and improve efficiency,” he added.
Why invest?
The MRT 3 has been a big problem for the government for over half a decade now due to congestion relating to operations and maintenance issues. On one hand, the maintenance provider of the MRT 3, Busan Universal Rail Inc. claimed that breakdowns, glitches and passenger off-loading incidents happen because,
well as it is. This, Khan added, could “endanger local business with further competition”. Khan also doubts the timing of this plan, and that revising the Constitution may not be wise, given that this could open the floodgates to revisions that the Philippines does not need at this time. However, she recognized that one advantage is the independence foreign media organizations can bring to Philippine media. Khan said with foreign owners and a more global view on various issues, it will be more difficult for the government to influence these companies. She added that Philippine media could also have a “more global voice”, which can be useful in certain issues such as human rights. Tuazon, who worked with Constitution framer Florangel Braid, said the decision to restrict foreign corporations or individuals from owning media companies in the Philippines was brought about by cultural reasons. He explained that at that time— 1986 to 1987—the framers of the Constitution wanted to prevent
products can set up whatever policies they want to guarantee that their people are safe. If the Philippines feels that it’s good to contain this kind of situation [through zero tolerance] then we will try to follow, to comply,” he added. “But the Philippine government must understand that we have control here. We know exactly what we are doing in terms of controlling salmonella—we will never send products that have salmonella problems.” Vargas said they are confident that the Brazilbased meat-packing plants exporting to Manila will pass the inspection to be conducted by the Philippine government. “We will answer all the questions of the Philippine government. We are not afraid of this because we have a good system, and we just have to show them that we have a strong system of production,” he added, “because if we really have problems, then we ourselves will take precaution before things get much worse and could cause more problem with our production. In Brazil, we work with truth, transparency and prevention,” he said. On August 7 the Department of Agriculture (DA) temporarily suspended the accreditation of all Brazilian meat establishments to export meat products to the Philippines, after some shipments from the Latin American country tested positive for salmonella. Agriculture Secretary Emmanuel F. Piñol issued Memorandum Order (MO) 32, dated July 31, which authorized the temporary suspension of the accreditation of all Brazilian foreign meat establishments (FMEs). “According to Memorandum Circular 9-20085, Series of 2008, entitled ‘Microbiological limits
intrinsically, the train facility’s design is flawed. Transportation Undersecretary Cesar B. Chavez, on the other hand, said these issues—reaching more than 2,000 incidents per year—are related to the poor maintenance of the train line. Chavez has said that the government is keen on ending its contract with Busan Rail. It is also entangled in legal tussles. There is a pending case before a Singaporean arbitration court, which aims to result in the government’s P53.9-billion corporate buyout. With all these issues at hand, why does Metro Pacific want to take over the line? The answer, according to Singson, is simple: It is part of the company’s thrust for nation building. “Believe it or not, it is really part of their desire to contribute to nation building. They are all convinced that it is what is needed today. They are even willing to take all the reputational risk attached to it,” he said. LRMC operates the oldest overhead railway facility in Southeast Asia. It recently received two international certifications on management and environmental standards from TUV Rheinland. It is on the lookout for railway deals in the Philippines, syncing its expansion plan to the Duterte administration’s massive infrastructure thrust. The Duterte administration has lined up several rail-infrastructure deals in its huge pipeline of projects: the Mega Manila Subway, the Mindanao Railway, the Philippine National Railways South Long Haul Line and the LRT Line 2 Extension, among others. A number of these projects originated from the Aquino administration, mostly under the PPP Program. The current administration, however, wanted to place these projects under state funding to hasten their construction.
the “cultural domination of media content” by foreign companies or persons. However, in recent years, Tuazon said this provision has already been overtaken by events, especially with the arrival of cable television and social media, where foreign companies can freely peddle their content not only to Filipinos but also the world. Instead of focusing on opening media to foreign players or placing a cap on foreign ownership in the country, Tuazon added the government should look more closely at cross-media ownership. He said some countries have already placed restrictions on crossmedia ownership, or the ownership of one or more media companies by single persons or juridical persons, such as corporations. The move, Tuazon said, has been supported by the United Nations Educational, Scientific and Cultural Organization to promote pluralism and diversity. “It’s not only cross-media ownership but the issue of ownership and control of the same platform, the same media platform. If you are controlling one newspaper and [you
for assessment of microbiological quality fresh, chilled and frozen meat’, microbiological limits for salmonella spp. must be absent in a 25-gram sample”, Piñol said in MO 32, a copy of which was given to reporters on August 7. “A total of 246 out of 492 container vans were sampled and subjected to laboratory analysis from March 1 to June 30 wherein samples from 18 containers [7 percent] tested positive for salmonella spp.” he added. Piñol noted that under Republic Act 10611, or the Food Safety Act of 2013, the DA is responsible for the development and enforcement of foodsafety standards and regulations for food in the primary production and postharvest stages of the food-supply chain. “[The DA] shall monitor and ensure that the relevant requirements of the law are complied with by farmers, fishermen and food-business operations,” MO 32 read. Piñol said the temporary suspension of the accreditation of all Brazilian FMEs will remain place, pending the results of an investigation to be conducted by the DA. The government has already suspended the processing, evaluation of the application and issuance of sanitary and phytosanitary (SPS) import clearance for meat from Brazil and canceled the SPS import clearance of meat products that have not left Brazil. “Shipments of meat in transit upon the issuance of this order will be allowed to enter subject to 100-percent physical and laboratory examination inspection,” MO 32 read. Based on the list available on the National Meat Inspection Service web site as of September 16,
also] own one or two other newspapers, that is very dangerous in terms of pluralism and diversity,” Tuazon added. Pernia said his statement only means liberalizing media ownership. He added the government just wants to ease foreign restrictions in media. Pernia said this is one of the plans of the Duterte government when it comes to cutting the country’s RFINL, which is scheduled to be presented in the next National Economic and Development Authority (Neda) Board. “We have to liberalize. Other countries have liberalized already,” Pernia said in a phone interview. “I don’t know what the proportions [of foreign and local ownership] would be. When a bill is proposed, it doesn’t mean it will be passed in its entirety.” This is not the first time an administration attempted to open media to foreign players. The Arroyo administration also wanted to liberalize the industry, and even included this in the government’s 2004 to 2010 Medium Term
2016, there are about 57 accredited Brazil-based FMEs allowed to export meat and meat products to the Philippines. However, the document showed that the validity of the accreditation of all 56 FMEs in Brazil are “for revalidation”. Earlier Agriculture Assistant Secretary for Livestock Enrico P. Garzon Jr. said 10 DA personnel will be sent to Brazil to conduct the inspection in some 25 FMEs in Brazil. Garzon added the DA will lift the export ban on meat-packing plants that will be cleared by the inspectors. Meat Importers and Traders Association President Jesus C. Cham urged the government to expedite its investigation, as any delays in the process could result in higher meat prices. “To minimize the impact, we urge [the] DA to inspect the plants expeditiously, at the same time adhering to the standards of the international Codex Alimentarius Commission, of which the Philippines is a member,” Cham told the BusinessMirror in an earlier interview. Data from ABPA showed that Brasilia’s chicken-meat exports to Manila from January to July 2017 expanded by 35 percent to 32,339 MT, from the 23,954-MT recorded volume at the same time period last year. The ABPA is the biggest animal-protein chain association in Brazil comprised of 147 membercompanies, among which are producers and exporters of poultry meat, pork, eggs, genetics and equipment, as well as state-level entities and other associations. The ABPA’s estimated annual meatexports revenue is pegged at $8 billion.
Philippine Development Plan. The Neda is tasked to review and revise the country’s RFINL, which contains restrictions on foreign investments and the practice of professions based on the Constitution and Philippine laws. The RFINL contains investment areas/activities where foreign equity is limited by mandate of the Constitution and specific laws. It also consists of investment areas/ activities where foreign-equity participation is limited for reasons of defense, security, risk to public health and morals and protection of small- and medium-sized domestic-market enterprises. The amendment of the list is headed by the Neda Secretariat, as provided for under Section 8 of Republic Act 7042, or the Foreign Investments Act of 1991, which states that amendments may be made upon the recommendation of the secretary of national defense or the secretary of health, or the secretary of education, endorsed by the Neda, approved by the President and promulgated by a Presidential Proclamation.
Stakeholders. . . Continued from A12
generation charge is provided by RE facilities. The DOE will impose sanctions against mandated electric power-industry participant for noncompliance. The GEOP is one of the priority policies of the DOE. Another priority is the RE Trust Fund, which is yet to be implemented nine years after the RE law was enacted into law. Under the law, the fund shall be sourced from proceeds from the emission fees collected from all generating facilities consistent with Republic Act 8749, or the Philippine Clean Air Act. The creation of the RE Trust Fund is meant to enhance the development and greater utilization of RE. It shall be administered by the DOE as a special account in any of the government financial institutions that shall be exclusively used to finance the research, development, demonstration and promotion of the widespread and productive use of RE systems for power and nonpower applications. The fund shall also support the development and operation of new RE resources to improve their competitiveness in the market.
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IBP to PNP: Be transparent in antidrugs operations By Joel R. San Juan @jrsanjuan1573
Editor: Vittorio V. Vitug • Friday, September 1, 2017 A3
Gordon poised to file ethics case vs Trillanes for ‘defaming’ Senate
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HE 60,000-strong Integrated Bar of the Philippines (IBP) has raised the alarm over the numerous killings during the Philippine National Police (PNP) anti-illegal drugs operations, dubbed as “Operation One Time Big Time”, in Metro Manila and in the nearby provinces of Bulacan and Cavite from August 13 to 20. In a news statement released on Thursday, the national leadership of the mandatory organization of lawyers, also urged the PNP leadership for transparency in its operations in light of the killing of student Kian de los Santos during an antinarcotics operation in Caloocan City on August 16. It noted that Kian’s case may not be isolated about 91 persons were reported dead as a result of police operations. The IBP invoked Executive Order (EO) 2, issued by President Duterte, which guarantees the people’s constitutional right to information and the state policies to full public disclosure and transparency in the public service. “We thus urge the National Police forces to release information such as preoperation and spot reports on the afore said Operation One Time Big Time, in line with EO 2, Series of 2016,” the IBP statement read. It also cited Article III, Section 7 of the 1987 Constitution, which guarantees the public’s untrammeled right to information. “We are desirous of a favorable response from the Philippine National Police, which prides itself to be among the agencies that have enthusiastically taken the cudgels of transparency,” the group said. The IBP said it has released formal requests on the matter while it expressed support to the government efforts to curb the problem on illegal drugs.
Sen. Richard J. Gordon, chairman of the Senate Blue Ribbon Committee, engages fellow lawmaker Sen. Antonio Trillanes IV in a verbal tussle on the Senate floor on Thursday, as Sen. Vicente C. Sotto III tries to pacify the two during an inquiry into the smuggling of P6.4 billion worth of shabu shipment from China. ROY DOMINGO
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By Butch Fernandez
@butchfBM
en. Richard J. Gordon on Thursday said he is formally filing an ethics case against fellow lawmaker Antonio Trillanes IV for maligning the Gordon-chaired Senate Blue Ribbon panel inquiry into the P6.4-billion shabu shipment as the “committee de abswelto”, implying that the hearing will end up clearing all suspects linked to the illegal drugs from China.
“I am lodg ing an ethics comp l a i nt t o d a y [T h u r s d a y] o r Monday,” Gordon told repor ters after adjour ning the hearing, say ing he is doing it to “protect the integrity of Senate proceedings”. “There is a concerted effort to distract our investigation into the shabu shipment,” Gordon added. “It is the dignity of the Senate proceedings that is being attacked, not me.” Gordon reminded Trillanes that the Senate Committee Inquiry, in aid of legislation, cannot move to “convict anyone without evidence.” “We are also interested to know if members of President Duterte’s
family are involved in this case,” he added. Senate probers, looking into the shabu shipment from China, later opted to conduct a separate hearing on the alleged role of the Duterte administration personalities in the controvery. To break the impasse, Senate Majority Leader Vicente C. Sotto III suggested that a separate hearing can be scheduled regarding the alleged involvement, if any, of Duterte administration officials, including the so-called Davao Group of President Duterte’s relatives and provincemates. Sotto made the motion after Trillanes moved to summon the President’s son Paulo Duterte and and son-in-law Manases Carpio for questioning at the Senate hearing into the shabu shipment. This developed as the Blue Ribbon Committee is set to convey to the Chinese embassy in Manila the senators’ concern that the huge shabu shipment was allowed to leave its port of origin in China undetected. Gordon indicated the committee is also verifying reports that the shipment seized by Philippine authorities at a warehouse in Valenzuela was first received by Chinese contacts in Manila. In an interview, Gordon confirmed he is finalizing the formal complaint to cite Trillanes in contempt for defaming the Senate committee tasked to look into government anomalies. “He
has been accusing everybody. I am asking Majority Leader Vicente C. Sotto III to convene the Ethics Committee to remind the Bicol Sen. [Trillanes] to behave himself.” Trillanes, however, shot back at Gordon, complaining that “you have been doing a one-man show” in running the Blue Ribbon inquiry. In the middle of the Senate hearing, Trillanes walked out after failing to get the committee to summon Paulo Duterte. “I will deal with this. It is obvious they do not want to summon Paulo [Duterte],” Trillanes complained adding the President’s son [and his group] will, in fact, be given a chance “to clear their name if they come here”. After the marathon hearing, Gordon indicated to Senate reporters he is also looking to submit a preliminary report on the Blue Ribbon Committee’s findings by Monday, including recommendations on reforms in the Bureau of Customs and the Bureau of Internal Revenue. The senator intimated the panel report is likely to be submitted in the form of a resolution embodying “adjustments in the law on attrition, incentives and rewards for the bureaus of Customs and Internal Revenue.” “We are completing the report by Monday,” Gordon said, adding he did not want to be “distracted from the drug issue” by reported anomalies involving so-called tara, or bribes, given by importers to Customs men.
There is a concerted effort to distract our investigation into the shabu shipment. It is the dignity of the Senate proceedings that is being attacked, not me.”—Gordon
Group to Bautista: Quit Comelec post Duterte urges Filipino Muslims to aim for genuine, lasting peace
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ONTRARY to the claim of Commission on Elections (Comelec) Chairman Andres D. Bautista, poll watchdog group Kontra Daya believes that the impeachment case filed against the official is not that easy to hurdle. In a news statement issued on Thursday, Kontra Daya convener Prof. Danilo Arao said the issues raised against Bautista, particularly his alleged ineptitude in addressing a hacking attack of the Comelec web site back in March 2016, are serious allegations that cannot be easily defended. “Evidence of Comelec Chair[man] Andres Bautista’s negligence and incompetence is strong. We wonder where he got the idea that he can overcome [an] impeachment case,” Arao said. Arao cited the December 28 findings of the National Privacy Commission (NPC) on the voter data-breach controversy. The NPC, it can be recalled, had recommended the criminal prosecution of Bautista due to his...willful and intentional disregard of his duties as head of agency, which he should know or ought to know, is tantamount to gross negligence. “The NPC findings validated our analysis of his incompetence and negligence,” Arao added. Kontra Daya has been a vocal critic of Bautista for his failure to protect the privacy of millions of voter registration data in the controversy known as “Comeleaks”. The Comeleaks controversy is one of the issues cited in the impeachment case filed against Bautista in the House of Representatives by former Rep. Jacinto Paras of Negros Oriental. Joel R. San Juan
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resident Duterte on Thursday told the Filipino Muslim community he is one with them in their aspiration for a “genuine and lasting peace”. In his Eid’l Adha message, Duterte urged Filipino Muslims to live up to the spirit of brotherhood their religion teaches them. “With the adversities we face as a nation, let us bring forth the spirit of soli-
darity in our shared hope of attaining genuine and lasting peace,” the President said. Duterte reminded Filipino Muslims should take cue from “Ibrahim’s admirable act of obedience to the will of Allah,” which said, “exemplifies the necessity to surrender personal comfort for the greater good. To this, the former Davao City
mayor told Filipino Muslims to joyfully commemorate Eid’l Adha, which is the second of two Muslim holidays celebrated worldwide annually. “This celebration is an opportunity for our Muslim countrymen to renew their faith and reaffirm their devotion to the virtues of Islam,” Duterte said. “ Together, let us become catalysts of unity and harmony in
Navy, Coast Guard join Seacat naval exercise
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he Navy and the Coast Guard are participating in the United States Navy-led multilateral exercise codenamed Southeast Asia Cooperation and Training (Seacat) together with the navies from Malaysia, Singapore, Thailand, Indonesia, Brunei, Sri Lanka and Bangladesh. The Seacat 2017, which started on August 28, was the 15th exercise since it was launched in 2002. In the country, the exercise is currently being held within the areas of the Naval Forces West and Naval Forces Northern Luzon, particularly in Eastern Palawan and Subic, Zambales. The Seacat is a scenario-driven tracking exercise that focuses on real-time information exchange between navy units involved, coordinated surveillance operations, tracking and conduct of visit, board, search and seizure. “This exercise has put into view some of the Philippine Navy’s [PN] surface, air and special operations units interoperating with other navies as they aim to expand information-sharing capabilities,” Navy Acting Spokesman Col. Ricardo D. Petrola said. Petrola added the Seacat also improves the “interoperability among military and law-enforcement agencies in the region and provide opportu-
nities to participating navies to gain good working experience in a multilateral environment.” “Seacat 2017 also aims to enhance the PN’s capability in its fight against global terrorism, transnational crimes and other maritime threats in the region, as well as to promote regional coordination, and cooperation,” he said. Meanwhile, the military promoted on Thursday Air Force Brig. Gen. Restituto F. Padilla Jr. by elevating him to the position of Armed Forces Deputy Chief of Staff for Plans and Program (J5), although he would still concurrently serve as military spokesman. The military is yet to announce Padilla’s replacement, who, until his promotion, was the assistant deputy chief of staff for Civil-Military Operations (CMO), a post that he has held since November 2014. Padilla, a member of the Philippine Military Academy Class of 1985 and an aviator, was formerly the military’s liaison officer to the US Pacific Command in Honolulu, Hawaii, before he was appointed to the military’s CMO office. As an aviator, Padilla has more than 2,800 flight hours to his credit. He has flown the T41D, SF260M, T-28, B-205A, UH-1H, CH-46, Bell 212 and 412, the Bell 206 Jet Ranger and Long Ranger and the Robinson R22 and R44. Rene Acosta
our respective communities as we firmly strive for the realization of our collective aspirations for our nation,” the President added. Filipino Muslims will celebrate their so-called sacrifice feast on Friday, at a time a conflict is still raging in Marawi City, Lanao del Sur. Government troops and Maute Group terrorists are presently
engaged in a firefight in southern Philippines, as the latter is attempting to establish a caliphate in the municipality in the name of the Islamic State. Three months into the conflict, more than 700 were reported dead and as many as 300,000 were displaced. The military said the Maute Group is now down to its last few men. Elijah Felice Rosales
Davao okays tax perks to ₧12-billion projects
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AVAO CITY—The Davao City Investment and Promotion Center (DCIPC) has granted incentive package to three big projects worth P12 billion. The three projects—a feedmill, low-cost housing and a green project—came in during the first quarter of the year. Also under review are four other projects worth P400 million that all sought tax incentive covering a three-year fiscal and incentive on real-property tax for two years. “Hopefully the Board of DCIPC can act on them [four projects] by October,” DCIPC Officer in Charge Lemuel Ortonio said. There are other new businesses, he added, that did not apply for incentives, but the city will extend services in securing permits and refer them to other agencies for the smooth processing of the required permits. Meanwhile, Ortonio said the city’s Business Bureau is in the process of perfecting the system on business permitapplication procedure from three to two days provided that the applicants submit complete and correct corresponding documents. Otherwise, these will be sent back to them, he added. The city government has been riding high on positive business climate.
Ortonio said that, in the first half of the year, the city’s Business Bureau registered a total value of investments a little over P247 billion, which is higher by P17 billion, as compared to 2016 annual data of P230 billion. Also, the city posted a 6-percent increase in the number of businesses, from 32,000 in 2015 to 38,000 in 2016. Ortonio added he will still discuss with the Business Bureau on the total investment targets for the remaining months of 2017. The city is also coming up with industry profile of different investments. The DCIPC started the profiling for the agribusiness, health and wellness and property development. “We saw this as an effective measure, so we would know whether there is a need to invite more on these type of investments,” he said. Ortonio added the DCIPC also received several unsolicited proposals, mostly on solid-waste management and street-lighting projects under the Private-Public Partnership (PPP) program scheme. “What we did was provide the prospective investors the requirements so they could comply, and these will be reviewed by the Davao City PPP secretariat,” he said. PNA
Economy
A4 Friday, September 1, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon
BusinessMirror
news@businessmirror.com.ph
PIDS study uncovers TRAIN’s weak spots
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By Cai U. Ordinario
@cuo_bm
he government’s tax-reform program could fall short of expectations due to the lack of incentives for self-employed and professionals (SEPs) to pay taxes, according to a study released by state-owned Philippine Institute for Development Studies (PIDS).
In a paper titled Assessment of the 2017 Tax Reform for Acceleration and Inclusion (TRAIN), PIDS Senior Research Fellow Rosario G. Manasan estimates that as much as P51.3 billion in 2018, P96.5 billion in 2019, P99.9 billion in 2020 can be generated in additional government revenues from the program. Manasan, however, said these additional funds are only half of government expectations. These funds only account for only 0.4 percent, 0.7 percent and 0.8 percent of GDP in 2018, 2019 and 2020, respectively.
“The high estimates are unlikely to be achieved due to an increased risk of noncompliance among SEPs who are expected to face higher effective tax rates under all three bills in comparison to those under the current system,” Manasan said. These additional revenues could even be lower if tax collection is inefficient. Manasan said a 5-percentage-point reduction in tax-collection efficiency could cut these estimates by more than half. Initially, the personal-income tax (PIT) that can be generated from
SEPs under the TRAIN is estimated at P74,888 annually. But a decline in tax-collection efficiency could cut this to P32,950 a year. This leads to lower estimates in terms of additional funds to be generated from the TRAIN to P18.34 billion, or 0.1 percent of GDP in 2018; P63.5 billion, or 0.5 percent of GDP in 2019; and P66.9 billion, or 0.5 percent of GDP in 2020. “If tax compliance/efficiency in collecting PIT from SEPs deteriorates, the overall revenue take of national government is likely to be considerably lower than these high estimates,” Manasan said. Further, Manasan added, based on her analysis of the TRAIN bill, or House Bill (HB) 5636, filed at the House of Representatives in May 2017, the tax-reform program could be anti-poor. Manasan said, if implemented, HB 5636 will see the tax burden of the poorest decile increase by 4.01 percent, while the richest will see a decline of 2.87 percent by 2020 and onward. In peso terms, this means the poorest Filipinos will be spending an additional P355 a month, or P4,259 a year, for taxes, while the richest Filipinos will see a P2,115
monthly, or P25,386 annual reduction in their taxes. “HB 5636 is estimated to result in a net-income transfer from households in deciles 1 to 8 in favor of deciles 9 to 10. These findings support the need to compensate the poorer deciles, e.g., the poorest two or poorest four deciles, through targeted subsidies for a three to four years,” Manasan said. Improving the tax system in the Philippines is crucial since the country’s PIT, specifically, has not been updated since the 1997. This has resulted in what is called “bracket creep”, where low-income taxpayers “hurt more” than their high-income counterparts. Bracket creep, Manasan earlier explained, has occurred because of the “non-indexation” to inflation of PIT brackets. This means that the coverage of each tax bracket does not take into consideration the current value of the peso. Manasan said this presents a problem because the current value of the Philippine peso, using the 2014 consumer price index (CPI), is already less than half of its value in 1998. This means that an annual income
of P210,000 a year in 2014 is only equivalent to P105,000 in 1998. With this, taxpayers earning P210,000 should only be paying P15,500 worth of tax, or 14.8 percent, instead of P40,000, or 19 percent. Apart from this, new taxes are essential in the government’s vision of ushering in the golden age of infrastructure under the Duterte administration. Of the 75 flagship projects, some 55 projects are still pending at the Investment Coordination Committee (ICC). But only 33 projects have cost estimates, wh ic h a mou nted to P831.4 4 billion while the remaining 22 projects still do not have cost estimates as of press time. The projects pending with the
The high estimates are unlikely to be achieved due to an increased risk of noncompliance among SEPs who are expected to face higher effective tax rates under all three bills in comparison to those under the current system.” —Manasan
Lawmaker backs creation of energy-policy think tank By Lenie Lectura
@llectura
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en. Sherwin T. Gatchalian is supporting the creation of an energy think tank tasked to bridge research and policy gaps in fostering greater energy security, equity and sustainability within the archipelago. The lawmaker on Wednesday sponsored Senate Bill (SB) 1574, creating the Philippine Energy Research and Policy Institute (Perpi), which is envisioned to be an independent institution attached to the University of the Philippines Diliman and composed of scholars and energy sector professionals. Perpi will be tasked to conduct multidisciplinary energy research, incubate and develop cutting-edge technologies, and serve as partner for the government during the energy policy-making process. “As a publicly funded institute, Perpi will be charged with ensuring its research output is used to craft energy-sector reforms for the benefit the national economy and the lives of the Filipino people,” Gatchalian said. Gatchalian, the chairman of the Senate Committee on Energy, said the energy research services being provided by the different existing institutes in the country are not sufficient to meet the country’s development needs. “The energy sector is one of the most research-intensive fields
Women ‘power’ in Asean econ growth cited
₧200M
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The initial budget for the Philippine Energy Research and Policy Institute
within the public policy arena. Characterized by rapidly changing technologies which redefine the parameters of the game at a blistering pace, it is a challenge for even the most well-funded and fully equipped energy- sector players to keep abreast with the latest research,” Gatchalian said. “The country needs a more cohesive all-in-one institution that will focus on technical know-how and will be able to keep up with the fast-paced evolution of technology,” he added. Gatchalian’s legislation proposes P200 million as the initial fund allocation for the think tank. An endowment fund will also be established to further power the institute’s research. “It is my sincere belief that the development of a stable, affordable and sustainable energy supply will be critical to meeting the country’s ambitious long-term socioeconomic goals. The research output of the Perpi, in turn, will be essential to turning this vision into a reality.” Gatchalian said.
ICC that have the highest costs are the P230-billion-worth Manila Metro Line 9 under the Mega Manila Subway Project—Phase 1 followed by the P72.06-billion-worth BoholLeyte Link Bridge, which is included in the Nationwide Island Provinces Link Bridges. Other big-ticket flagship projects with cost estimates are P57.65billion-worth Luzon-Samar Link Bridge under the Nationwide Island Provinces Link Bridges program and the P57.6-billion-worth Clark-Subic Railway project. Among the flagship projects approved by the President, the one with the highest cost is the P211.46billion-worth PNR North 2 or the Malolos-Clark Airport-Clark Green City Railway project.
Central bus terminal
A month before its formal launch, bus companies have started to utilize the Metro Manila Eastern Multi-Modal Transport Terminal in Marikina City, which is envisioned to be the central terminal for provincial buses as part of the government’s thrust to decongest traffic in Metro Manila roads. Nonie Reyes
he economic participation of women should be seen as an “imperative” to regional growth, according to the Asean Women in Business Empowerment Forum. “We want to have a message that women’s economic empowerment has to be seen as a key driver of prosperity and stability for Asean countries and Australia. It’s an economic imperative,” said Dr. Sharman Stone, Australia’s ambassador for Women and Girls ahead of the Asean Women’s Business Conference on Thursday. Quoting a McKinsey report, Stone indicated that long-term economic cost to Asean nations due to the current gap in labor-force participation between genders is 17 percent of the regional GDP. In the long term, there could be an additional 30-percent rate growth in GDP by 2025, if women’s work-force participation is equal that of men. The pay gap, a separate indicator, between women and men in the formal labor sector in the Asean, is estimated at 20 percent. The average economic-participation gap is also at 17 percent across the Asean. Department of Trade and Industry Undersecretary for Regional Operations Zenaida C. Maglaya said there are 63.1 million women entrepreneurs in the Asean, some 9.8 percent of total Asean population. Catherine N. Pillas
PHL to host second Asean congress on sustainable mangrove management By Jonathan L. Mayuga @jonlmayuga
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he Philippines will host for the second time a meeting of Asean nations in a bid to strengthen collaboration toward sustainable mangrove management in Southeast Asia. Organized by the Ecosystems Research and Development Bureau (ERDB) of the Department of Environment and Natural Resources, the Mangrove Congress will gather government officials, scientists and academicians from the 10 membercountries of the Asean. Environment Secretary Roy A. Cimatu is expected to keynote the five-day conference with the theme “Sustainable Management of Mangroves in the Course of Climate Change”. This will be the second time the
Philippines play hosts to such regional meeting. The first Asean Mangrove Congress was also held in the country in December 2012 and was attended by 81 participants from Indonesia, Malaysia, Singapore, Vietnam, the Philippines and Asean development partner, the United States. The meeting aims to update member countries and other participants on the latest research and development on mangrove resource and to enhance public awareness on the current pressing issues, impacts and threats on mangrove habitats, particularly climate change. The conference also seeks to promote the exchange of in-depth learning and good practices among Asean participants and to dialogue with development partners. In a news statement released on Thursday, Cimatu said during con-
ference, ministerial representatives from Philippines, Malaysia, Myanmar, Thailand, Singapore, Vietnam will present the reports on the status of mangrove management in their respective nations. There will also be plenary talks on mangrove ecology, functions and fisheries; mangrove restoration and rehabilitation; climatechange adaptation and mitigation and socioeconomic and valuation studies. A workshop dubbed as “One Asean, One Mangrove” will also be conducted. The delegates will also participate in an ecotour, lecture and mangroveplanting activity in Triboa Mangrove Park in Subic, Zambales. Mangrove habitats represent both a vulnerable resource and a potential deterrent to the effects of climate change. Sea-level rise poses a major threat to mangrove
ecosystems as it induces erosion and weakening of root structures, increased salinity and mangrove inundation, the ERDB said in a separate news statement. Mangroves have been recognized to play an important role in combatting storm surges as what has been observed to be severely destructive at the height Supertyphoon Yolanda in 2013. “Mangroves are also known to attenuate waves by as much as 75 percent through its vast underground root networks and high-vegetation structural complexity,” according to the “Storm Surge Reduction by Mangroves” authored by a team led by Anna L. Mclvor. Dr. Henry A. Adornado, ERDB director, said Congress will serve as an avenue for the sharing of best practices on mangrove conservation and plantation management among
the Asean countries. “We will strengthen collaboration and linkages among environment researchers who are now playing a crucial role in this big task of managing the coastal resources and climate change,” Adornado said. Participants to the meeting will discuss thematic topics related to mangrove ecology, functions and fisheries, mangrove restoration and rehabilitation, climate-change adaptation and mitigation and valuation and socioeconomic studies. Coastal disasters have occurred as a result of tropical cyclones, tsunamis, landslides and storms among which are Yolanda in the Philippines and tropical cyclone Komen that caused deaths in the Bay of Bengal affecting Myanmar, India and Bangladesh in 2015. “Some 563 million people in Southeast Asia are concentrated
along coastlines measuring 173,251 kilometers long, leaving it exposed to increasing risks including coastal erosion due to climate change and sea level rise,” according to ERDB. Mangroves are known to protect communities for as long as these have an extent of 1 km. “General MacArthur, Eastern Samar had only less than 100 people died [from Yolanda] due to the mangroves in the area which served as barrier against storm surge,” according to “Saved by the Mangroves: A Philippine town dodges Haiyan’s storm surge.” Disaster prevention has become a primary program of Asean countries with reports of trends on rising temperature in the region by 1 to 0.3 degrees Celsius per decade from 1951 to 2000 as reported by the Intergovernmental Panel on Climate Change or IPCC.
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Modi cash ban a ‘total failure’ as 99% of banned notes back
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Family members react as a van is pulled out of the Greens Bayou with the bodies of six family members, on August 30, in Houston. The van was carried into the bayou during Tropical Storm Harvey as the water went over the bridge. Elizabeth Conley/Houston Chronicle via AP
more fatalities expected
Harvey death toll surpasses 30
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OUSTON—Now that the sun is finally shining and the murky, brown floodwaters are slowly receding in much of the Houston area, grim reality is setting in. Harvey is about to release its dead. In Texas, the official death toll surpassed 30 on Wednesday and was expected to climb as authorities investigated several other deaths to determine whether they were storm-related. Officials fear that the number of fatalities will climb sharply in coming days as neighbors, emergency workers and family members search for the missing—and discover the bodies of people trapped in waterlogged homes or encased in underwater graves inside cars. A nd t he deat h tol l m ig ht r ise even f ur ther in the recover y phase, from car crashes, carbon-monoxide poisoning or other accidents during cleanup. “Historically, all estimates of deaths are wrong in the beginning,” said Craig Fugate, who was the Federal Emergency Management Agency (Fema) director from 2009 until earlier this year. Already, the nation is shocked by the horrors revealed as the storm moves out of the area and east toward Louisiana and points north. The first confirmed fatality came early: A man in the Gulf coastal city of Rockport was killed in a fire late Friday as the storm raged ashore. On Wednesday officials located a submerged van that seven members of a Houston family had been traveling in when it was swept off a bridge and into a storm-ravaged bayou. Samuel Saldivar told the police he was trying to bring his elderly parents and his brother’s four grandchildren to safety from their flooded home last Sunday, when
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The number of family members—two elderly and four children—who died when they were trapped in a submerged van the van he was driving was tossed by a strong current into the bayou as it crossed the bridge. He escaped t hrough a w indow, but t he si x ot hers were t rapped when t he va n’s pa r t i a l ly submerged sl id ing door wou ld n’t open. Also on Wednesday authorities said 65 -year-old Dona ld Rogers and his 58-year-old wife, Rochelle, drowned when they were swept away by a current after driving their pickup truck into floodwaters in a rural area southwest of Houston. Fort Bend County Sheriff’s Maj. Chad Norvell said the couple was on the phone with 911 asking for help when the line went silent. When officers found the truck, it was completely submerged. O n Tu e s d a y a f t e r n o o n a 3-year-old girl was found alive in a rain-swollen canal, clinging to the body of her drowned mother in Beaumont, Texas. A second woman was confirmed dead in Beaumont on Wednesday. Earlier on Tuesday the body of 61-year-old Houston Police Sgt.
Steve Perez was found in his car. He’d been swept down a flooded road as he drove to his precinct, determined to serve his community. Eleven other confirmed deaths, some of which were listed on a Harris County database, showed people were found f loating in waters—some in homes or businesses, others near cars. Among those victims was Ruben Jordan, a high-school basketball coach, who was last seen late Saturday helping people through floodwaters. His family was informed on Monday that he had died in the floods. “The sad thing is, of the deaths we’ve seen, we’re going to see more, unfortunately,” said Jeff Schlegelmilch, the deputy director of the National Center for Disaster Preparedness at Columbia University. “That number doesn’t stop moving up until we’re well into the recovery phase.” No of f icia l number of the missing has been released, and a spokesm a n for t he Ha r r i s County Sheriff ’s Office, where Houston is at, said there isn’t a specific strategy in place to look for additional bodies. “We are going to go out and tr y to find any potential victims that may be there,” said t he spokesma n, Ja ke Sm it h. “We are also encouraging the public if they come across anything, we strongly urge them to call 911 if they find a body or a potential victim.” Houston Police Chief Art Acevedo said the department had received 47 missing-persons reports since Harvey inundated the city, and 27 of those individuals have been located. Photos with pleas for help have been posted on social media, cutand-pasted and retweeted by thousands of people as desperate family members seek loved ones they fear may be dead—but who may only have a cell phone without power. The uncertainty is terrifying. O ne of t he wor r ies, s a id Schlegelmilch, is that many of
the severely flooded neighborhoods weren’t in evacuation areas. Additionally, the people most likely to be found dead are the elderly, the infirm and the people who were isolated from others— along with folks who didn’t have the means or wherewithal to flee. Sometimes, it’s a matter of having the strength to wade through floodwaters a few blocks to safety or to pull one’s self up onto a roof. “Those who are the most vulnerable when the sky is blue, t he y a re a l so t he most v u lnerable when the sky is gray,” Schleglemilch said. Fu g at e , t he for me r Fe m a head, said it’s also common for people to die during the recovery phase, when stress levels are high and people aren’t making clear-headed decisions. “Stay safe, stay home, stay off the roads if you can. Don’t go sightseeing,” he warned. Still, experts say there is some good news: They don’t expect the death toll from Harvey to come anywhere close to that of Katrina, when 1,800 people died. Many of those flood-related fatalities came when a levee broke and water inundated New Orleans. People were stranded in extreme heat, and the federal response was slow. Emergency managers learned painful lessons during Katrina, and have put those lessons to use in this storm. Residents of New Orleans during Katrina saw top-to-bottom failures at every level, experts said. During Harvey, “state and local officials and Fema were mobilizing and water-rescue teams were prepared, in anticipation of this,” Fugate said, adding that safe shelters were almost immediately in place for Texas residents, unlike New Orleans. “That provided faster rescues.” One other thing seems to have helped Houston in its time of need: the residents themselves. “Neighbors helping neighbors,” Fugate added. “That will keep the death toll down.” AP
As Trump threatens Nafta exit, farm secretary touts its success
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resident Donald J. Trump may be eyeing a North American Free Trade Agreement (Nafta) exit, but his agriculture secretary is trying to get him to see the merits of the trade deal. Secretary Sonny Perdue said on Wednesday that he’s been trying to convince the Trump administration the Nafta is “good for US agriculture.” The trade deal just has some “rough edges” that need to be smoothed for improvement, he said during a presentation at an industry event in Decatur, Illinois.
The United States is one of the world’s biggest agricultural exporters, and Canada and Mexico are major buyers. Tearing up the 23-year-old deal between the neighboring countries could put Trump at odds with his rural base, with farmers and ranchers dependent on trade for their livelihood. Companies, including Cargill Inc. and Tyson Foods Inc., the largest US meat company, have called on the administration to protect agriculture during the negotiations.
“I talked to him this morning, actually,” Perdue said of his conversations with Trump. “He’s concerned about American agriculture,” but he’s also concerned about trade deficits in other parts of the economy, particularly in automobiles and manufacturing, he added. Perdue said he hopes the administration can find a solution that “reconciles” and “resolves those issues.” Since its adoption, Nafta has knit the three agricultural economies more tightly, with effects
ranging from cattle being raised and processed across borders to US dependence on Mexican avocados for guacamole at Super Bowl parties. A second round of negotiations on the accord is scheduled from September 1 to 5 in Mexico City. Perdue said on Wednesday that the primary concerns he’s been hearing from farmers on the Nafta talks are issues regarding labor, regulations and trade. His comments echoed similar remarks from earlier this year. Bloomberg News
ndians have deposited nearly all the currency bills voided by Prime Minister Narendra Modi, denting the central bank’s profit and dealing a blow to his drive to unearth unaccounted wealth. Banks have received 15.28 trillion rupees ($239 billion), or 99 percent of the currency invalidated, the Reserve Bank of India (RBI) said in its annual report on Wednesday. The government had initially estimated about 5 trillion rupees wouldn’t be declared following the sudden move on November 9, indicating that this was cash stashed away illegally to avoid tax. The cash ban prompted the central bank to print new currency, reducing its profit and cutting annual dividend payout to the government by half. “This data proves that demonetization was a total failure,” said Mohan Guruswamy, chairman of New Delhi-based Centre For Policy Alternatives, who’d advised a previous government led by the current ruling party. “The prime minister obviously had overstated his case. You’ve lost so many jobs across sectors. How can people trust Mr. Modi and his numbers?” Supporters of the cash ban saw the action as a battle against the rich who salt away their wealth without paying taxes. Modi’s party had a landslide victory in a key state soon after the move to ban 86 percent of the nation’s cash, though subsequent data show that the economic shock has slowed growth and investment in Asia’s No. 3 economy.
Slowdown
A raft of economic data since the note-ban decision have signaled that the $2-trillion economy was hurt by the cash clampdown, raising fears that the economic growth would stall. Growth in the quarter ended March 2017 slowed to 6.1 percent, from a year earlier. It expanded 7-percent pace in the previous quarter. GDP data for April to June due at 5:30 p.m. in New Delhi on Thursday will help assess the lingering impact of the cash ban or whether it had faded. Electronic payments have risen 21 percent since November to 113.7 trillion rupees in July, though they dipped from its peak of 150 trillion rupees in March, central bank data show. While some economists blame Modi for
the economic slowdown, he politically gained by winning elections in Uttar Pradesh, the country’s most populous state, as rural poor supported the move with a belief that his actions would even out the scale of inequality and reduce corruption. The fact that the bulk of the banned notes have been returned “shows that the banking system and the RBI were able to effectively respond to the challenge of collecting such a large number” of notes in a limited time, the Finance Ministry said in a statement on Wednesday. It touted an increase in tax payers and an “almost entire” stop to terror funding following the cash ban as examples of its success. “Some people had expected a very large shock to economic growth on account of demonetization,” the statement read. “Their expectations have been belied.”
Nobel Prize
Opposition parties were quick to blame the government and the central bank for the demonetization drive. The RBI lost more money on printing notes compared to the bills that were permanently extinguished, former Finance Minister Palaniappan Chidambaram said. “The economists deserve Nobel Prize,” Chidambaram added on a Twitter post. The bank spent 79.65 billion rupees to create new cash in the year through June 30, it said in its annual report published on Wednesday. That was the highest in at least 17 years and compares with 34.21 billion rupees and 37.6 billion rupees for the previous two years. “The upsurge in expenditure during the year was on account of change in the production plan of printing presses due to the introduction of new design notes,” the central bank said in it annual report. “To ensure availability of bank notes across the country at the shortest possible time subsequent to the demonetization, bank notes had to be frequently air-lifted from the presses.” Higher costs ate into profits, compelling the monetary authority to cut its dividend to the government. The smaller payout imperils India’s budget deficit target, because Modi boosted spending to compensate for a drop in private investment and consumption following the cash-ban shock. Bloomberg News
Growing family-owned Indian drug firms erode US generic prices
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he most recent earnings reports across the generic drug industry have read like dispatches from the front lines of a price war. This month the world’s largest copycat drugmaker, Israel’s Teva Pharmaceutical Industries Ltd., slashed its dividend; United States giant Mylan NV lowered its profit target; and India’s Sun Pharmaceutical Industries Ltd. reported its first quarterly loss in at least 12 years. The source of the pain? At least some of it can be traced to the global ambitions of a growing constellation of family-owned drug factories in India. Their expansion is boosting competition in the US, where mergers among pharmacy chains and pricing wars between drugmakers had already been driving down the cost of generics. “The assumption was there would be a step-down, but nobody expected it would be this bad,” said Ronny Gal, an analyst at Sanford C. Bernstein and Co. As the smaller Indian manufacturers are growing stronger, the US Food and Drug Administration (FDA) is working to boost competition by handing out approvals at a record pace. The agency has said it will specifically favor generic drug applications for products that have few competitors as a way to drive down prices further. India was already the world’s largest exporter of generic drugs, with $16.4 billion sold abroad last year. In the first half of 2017, Indian firms got about 40 percent of new US approvals for generics, up from 35 percent just a year earlier, and with a wider base of companies than ever before taking part, according to FDA data analyzed by Bloomberg News. “With more and more companies in the fray, the competition has intensified,” Pankaj Patel, chairman of Ahmedabad-based Cadila Healthcare Ltd., said in an e-mail. The company’s main US subsidiary has received 27 approvals this year through July, compared with eight last year. “The pure generics sphere has seen price erosion.” India is home to about 6,000 drugmakers,
according to its government’s estimates, members of a cutthroat market characterized by price controls, limited insurance levels and low patient incomes. That makes the US look like easy pickings, according to Surajit Pal, an analyst at Prabhudas Lilladher Pvt. Ltd. in Mumbai. Instead of introducing a generic product and then lowering the price when forced to, many of the Indian companies will play a far more brutal game, Pal said. “The US business is basically icing on the cake, so they don’t mind giving you a 90-percent discount on the very first day,” Pal said. “The US will get cheaper products going forward. The US will get more competition from Indian guys.” Thirty-two different Indian firms received US approvals to sell new generics in the first half of this year—almost double the number from two years ago. The approvals came as India’s top 10 drugmakers grew their share of the US generics market from 14 percent in 2010 to about 24 percent today, according to Bernstein’s Gal. Among the leaders in approvals were Hyderabad-based Aurobindo Pharma Ltd. and Cadila, two of India’s biggest drugmakers who have only turned their attention to the US more recently. The companies, controlled by their founding families, are worth $6.8 billion and $8.2 billion, respectively, on the local stock exchange. Smaller Indian firms that previously had little presence in the US are also seeing approvals surge. Mumbai-based Macleods Pharmaceuticals Ltd., a closely held company that came onto the US scene in 2012 with 12 approvals, has been one of India’s most prolific filers every year since. It’s gained approvals for eight new drugs this year to treat conditions including pain, high blood pressure and depression. Ajanta Pharma Ltd., a $1.6-billion public firm that’s been operating in India since 1973, only had two US approvals to its name until 2014. Last year it had nine new approvals. Bloomberg News
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Fed judge blocks Texas’s ban on ‘sanctuary cities’
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OUSTON—A federa l judge in San Antonio on Wednesday blocked Texas from enforcing its ban on sanctuary cities, questioning the constitutionality of a law that has pitted Republican state leaders against several Democratic-leaning cities. The judge’s ruling was only temporary and prevents the law from taking effect on Friday while a suit against it goes forward. But the decision, which Texas said it would appeal, served as a legal blow to one of the toughest state-issued immig ration laws in the country and puts the brakes on a measure backed by the Trump administration that critics had called anti-Latino. The law has become so divisive that it served as the backdrop of a shoving match at the Texas Capitol between Hispanic Democratic lawmakers and their white Republican colleagues. The law, known as Senate Bill (SB) 4 prohibits cities and counties from adopting policies that limit immigration enforcement, allows police officers to question the immigration status of anyone they detain or arrest and threatens officials who violate the law with fines, jail time and removal from office. It also directs local officials to cooperate with so-called immigration detainer requests, which allow foreign-born detainees to be transferred to federal custody after they are released from state or local custody. A number of the state’s biggest cities, including Houston, Austin, San Antonio and Dallas, all of which are run by Democrats, joined a lawsuit against Texas seeking to strike down the law, which was passed by the Republican-controlled Legislature and signed by the Republican governor, Greg Abbott, in May. In his ruling issued on Wednesday evening, the judge, Orlando L. Garcia of US District Court for the Western District of Texas, granted a preliminary injunction preventing the law from taking effect while the suit continues. Garcia appeared to block three provisions of the law, including one that stated that local government entities and officials may not “adopt, enforce or endorse” any policy limiting the enforcement of immigration laws. Lawyers for those suing the state said prohibiting local officials from endorsing a particular viewpoint violates the First Amendment. Garcia wrote that the plaintiffs were likely to succeed with that argument when the case goes to trial. “ The government may disagree with certain viewpoints, but they cannot ban them just because they are inconsistent with the view that the government seeks to promote,” Garcia
wrote. He added, “SB 4 clearly t a rget s a nd see k s to pu n i sh s pea kers ba sed on t he i r v ie w p oi nt on lo c a l i m m i g r at ion en forcement pol ic y.” Some of the law’s most contentious provisions allow police officers to question the immigration status of a person whom they have arrested or detained, including during routine traffic stops, and create a system of harsh penalties for those who try to “materially limit” immigration enforcement, including removal from office for elected or appointed officials and criminal misdemeanor charges for sheriffs and other law enforcement officials. In his ruling, Garcia said the law’s provision banning policies that limit enforcement of immigration laws was unconstitutionally vague and failed to define the specific prohibited conduct. The provision, the judge wrote, “ascribes criminal and quasi-cr imina l pena lties based upon violations of an inscrutable standard, in a manner that invites arbitrary and d i sc r i m i n ator y e n force me nt against disfavored localities.” Texas vowed to appeal Garcia’s decision, setting the stage for the case to be heard by the US Court of Appeals for the 5th Circuit, in New Orleans, one of the country’s most conservative appeals panels. Garcia, who was appointed by President Bill Clinton in 1994, was a Democratic state lawmaker in the 1980s. Cr it ics of SB 4, inc lud ing the police chiefs in Houston, San A ntonio and other large cities, said it would open the door to racial profiling of Hispanics and prevent legal and unauthorized immigrants from reporting crimes to the police. Latino and civil rights groups call it a “show me your papers” law that echoes the one enacted by Arizona in 2010 that led to lawsuits and boycotts. Supporters of SB 4 say that opponents have distorted its intent and potential impact. They said the law has a provision specifically prohibiting racial profiling and argued that a Supreme Court ruling in 2012 that upheld part of the Arizona law put the state on solid legal ground. The Trump administration’s Justice Department has also defended the Texas law, filing statements of interest in the case. “US Supreme Court precedent for laws similar to Texas’s law are firmly on our side,” Abbott said in a statement. “ This decision will be appealed immediately and I am confident Texas’ law will be found constitutional and ultimately be upheld.” Civil rights lawyers and Latino groups praised Garcia’s ruling, calling the law racist and unconstitutional. New York Times News Service
Friday, September 1, 2017
US shows surprising briskness in growth
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he current recovery has entered its ninth year—long by economic standards—but it is showing some unexpected vigor.
The Commerce Department said on Wednesday that the economy had expanded at an annual rate of 3 percent in the second quarter of the year, better than initially estimated, and a substantial acceleration over the first quarter’s lackluster 1.2-percent pace. The revised figure is still well below President Donald Trump’s goal of 4-percent growth, but it is the economy’s best quarterly showing in two years. Trump talked up the latest figures in a speech on Wednesday in Springfield, Missouri, laying out his plans for tax overhaul. Despite nearly uniform skepticism from mainstream economists, he insisted that much fa ster econom ic g row t h wa s within reach. “I happen to be one who thinks we can go much higher than 3 percent,” the president said. “There is no reason why we should not.” There are several reasons that his goal is probably far-fetched, namely the country’s aging workforce a nd slower popu l at ion growth than in the past. Combine that with low productivity growth, and hitting Trump’s target begins to look like a Sisyphean challenge. The president also suggested that other economies overseas were growing at two or three times the US rate. “You look at other countries and what their GDP is, they are unhappy when it is 7, 8 and 9,” he said. No major Western economy is
growing close to that rate—and none has in years. The fastestgrowing large economy, China’s, grew 6.7 percent last year. Still, with personal consumption accounting for nearly 70 percent of economic output, the new willingness of shoppers to open their wallets is a good sign. “The economy is stronger than you think,” said Chris Rupkey, chief financial economist at Mitsubishi UFJ Financial Group in New York. “Bet on it.” The improvement was driven in large part by strong consumer activity, with purchases of durable goods like automobiles and appliances rising strongly. Increased business spending also helped lift the latest estimate above Commerce Department’s initial reading of 2.6 percent for the quarter. The surge in consumer spending stands in stark contrast to the problems plaguing brick-and-mortar stores like Sears and Macy’s, which have been forced to close dozens of locations this year amid fierce competition from online retailers, like Amazon.com. The government’s data reflects all purchases, whatever the retail channel, which explains why malls and street-level stores may be suffering even as consumers become more bullish and the broader economy powers ahead. Most economists are expecting the economy to expand at a rate of roughly 3 percent in the second
half of 2017. That pace should be strong enough to keep job growth and wages on track for further gains, while keeping the threat of inflation modest for now. Besides wild cards, like Hurricane Harvey’s effect on a broad swath of the Gulf Coast, and political uncertainty about issues like tax overhaul and a possible increase in infrastructure spending, traders are also keeping an eye on the Federal Reserve (the Fed). Most experts believe the central bank will raise interest rates just once more this year, but a faster economy or an increase in wages or inflation could prompt policymakers to move more quickly to tighten monetary policy and shrink the Fed’s balance sheet in 2018. Janet L. Yellen, the Fed chairwoman, and other policy-makers will also be closely watching data expected Friday morning from the Labor Department on hiring, wages and unemployment in August. Economists estimate that the economy added 180,000 jobs, but a stronger gain, like July’s 209,000 jump, or an uptick in wages, would focus more investor attention on the Fed’s next meeting on September 19 and 20. At a speech last week in Jackson Hole, Wyoming, Yellen focused mostly on the continuing need for regulation, rather than the outlook for growth, but she did term the current economy “strong.” On Wednesday some economists offered improved expectations for job creation in August after the payroll processor ADP reported that private employers added 237,000 jobs, well above the 185,000 increase that had been expected. The acceleration in spending sug gests that a so-called Trump bump—improved sentiment among consumers and more optimism among business leaders — m ay be t ra nsl at i ng into concrete actions, like homeowners buying new appliances and companies investing in new software or equipment. “The consumer is in the driver’s seat in terms of economic growth,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “It puts us on a stronger path going into the third quarter, although Hurricane Harvey introduces some uncertainty.” Anderson expects growth in the range of 3 percent to 3.5 percent in the current quarter, but he said the hurricane could shave as much as 0.3 percentage points off that figure. A hit like that would mostly be reversed in the year’s final quarter as rebuilding efforts kicked in, he added. New York Times News Service
Princes William, Harry honor Diana’s charity work L ONDON—Princes William and Harry on Wednesday visited a memorial garden dedicated to Princess Diana to pay tribute to their mother’s charity work on the eve of the 20 anniversary of her death. T h e ro y a l s, a c c o m p a n i e d b y William’s wife, Kate, the Duchess of Cambridge, huddled under umbrellas in the pouring rain as they strolled through the Sunken Garden, which is planted with white flowers and dedicated to the princess at her former home, where she once would stroll by and ask the gardeners about their ever-changing displays. William and Harry, who have both promised to carry on their mother’s charity work, chatted animatedly with representatives from groups that Diana supported. The princes then left the palace grounds to meet with members of the
public, who braved the rain for hours for a chance to share memories of Diana with her sons. The weeks before the anniversary of Diana’s death have been met with reflection in Britain as the public remembers “the people’s princess” and considers her contributions to the country and the monarchy. Many brought flowers, which the princes gathered and laid in front of the black and gold gates of Kensington Palace. The flowers added to a fast-growing collection of items, including flags, burning candles and photographs, hanging on the gates to remember Diana. “I still get upset, I can’t even watch the funeral, it just brings it all back. It really upsets us and no, the feelings haven’t diminished and she’s too much of an important person to forget about,” said
Maria Scott, 46, who was among those waiting for the princes at the palace gates. Fans from as far as Australia have posted homemade signs with messages—one read “Her work carries on through her loving sons,” while another said “20 years on and we still miss you.” William and Harry stopped to admire the public’s makeshift memorial, smiling while pointing at photos of their mother and reading fans’ messages from around the world. The 36-year-old princess died in the early hours of August 31, 1997. Her Mercedes, pursued by paparazzi, crashed into a concrete pillar in the Alma Tunnel in Paris while traveling at more than 100 kilometers per hour. Diana, her boyfriend Dodi Fayed and their driver Henri Paul were all killed. Her bodyguard, Trevor Rees-Jones, was injured but lived. AP
Britain’s Prince William (center), his wife Kate (left), Duchess of Cambridge, and Prince Harry arrive for an event at the memorial garden in Kensington Palace, London, on August 30. Princes William and Harry are paying tribute to their mother, Princess Diana, on the eve of the 20th anniversary of her death by visiting the Sunken Garden to honor Diana’s work with charities. John Stillwell/PA via AP
A9
Trump plan to lift workers’ pay: Slash the tax rate for businesses
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PRINGFIELD, Missouri—President Donald J. Trump on Wednesday pitched a sweeping tax overhaul that he said would unleash the US economy and help ordinary people, promising that a large corporate tax cut and trims to individual income-tax rates would boost the middle class. The president wrapped his message in the populist rhetoric that powered his presidential campaign. But he described a plan that on its surface appears to offer relatively little to ordinary Americans, granting instead huge tax cuts—“the biggest ever,” he said—to corporations and their shareholders. Trump gave few specifics beyond a goal of slashing the corporate tax rate to 15 percent, from 35 percent, and eliminating “loopholes and complexity that primarily benefit the wealthiest Americans and special interests,” a reference to his call to scrap some itemized deductions. The politically difficult legislation has yet to be drafted despite months of private negotiations among members of the Trump administration and Republicans on Capitol Hill. Time is running out for enactment of the bill before year’s end, and the White House is keenly aware that if Trump fails to deliver his promised tax cuts, he will emerge from his first year in office devoid of any major legislative accomplishments. “This is our once-in-a-generation opportunity to deliver real tax reform for everyday hard-working Americans,” the president said, as he stood in front of a giant American flag at the Loren Cook Co., a fan manufacturer. “And I don’t want to be disappointed by Congress.” “Lower taxes on American business means higher wages for American workers,” he added. Many economists say it is not that simple. They argue that large corporate tax cuts would do relatively little— particularly in the near term—to boost wages or create jobs. Instead, they would boost corporate profits and benefit the wealthiest Americans who own the most corporate stock. There is little evidence that large tax cuts will prompt US corporations to invest more; they are already sitting on nearly $2 trillion in cash. And with the economy growing at 3 percent— Trump exulted over the figure during his speech, saying, “I happen to be one who thinks it can go much higher”—the Federal Reserve has warned that it would move to curb faster growth for fear of inflation. “Corporate profits are at record highs,” said Michael Linden, a fellow at the Roosevelt Institute. “Corporations are sitting on a vast amount of capital. Reducing their tax burden would have absolutely no effect on workers.” Business groups eager to see big tax cuts argued the opposite. “A reform package that lowers tax rates and encourages investment will enable and encourage more people to start businesses,” Karen Kerrigan, president of the Small Business and Entrepreneurship Council, said in a statement. “Of course, if smallbusiness owners can keep more of their hard-earned capital, they will reinvest those resources back into their employees and enterprises.” That is a minority view among economists but has gained ground. For many years, experts agreed that corporate taxes did not affect wages. US companies were stuck in the US, so they had no leverage to lower workers’ wages. Instead, taxes reduced profits. The rise of globalization changed that calculus—particularly in industries like manufacturing, where it is relatively easy to move jobs overseas. The conventional estimate now is that workers bear about a quarter of the burden of taxation, but some estimates are much higher. “If a firm faces a higher tax rate, you’re not going to pass that off to shareholders or consumers because you’re competing in a global marketplace,” said Aparna Mathur, a resident scholar at the American Enterprise Institute, a conservative research organization. “So it’s labor that bears the brunt.” It follows that when taxes are reduced, labor gets some of the benefit.
New York Times News Service
A10 Friday, September 1, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
While we are fighting over ‘rocks’…
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he territorial dispute with China over Philippine areas of the West Philippine Sea that should be completely under our nation’s control is valid and important. There is absolutely no argument against the fact that the Chinese have invaded what belongs to us. The government must continue to use whatever diplomatic and legal means available to right this terrible wrong.
However—as usually happens—there is a bigger picture to consider. As often happens with other situations in our lives, there is a wide divide between the principles involved and the pragmatic reality. The reality is that if the Chinese government excluded all Filipino fishing activities from the region they claim as their own, it would have a serious economic and humanitarian impact on the fishermen who were excluded. Nonetheless, the nation would not starve. That may be a harsh statement but it is also a fact. In a bizarre case scenario that the Chinese government decided to invade the Philippines, it would take them about 15 minutes figuratively speaking. By the time the rest of the world—and particularly Uncle Sam—responded, the Rizal Monument in Manila would have probably been replaced by one of Mao Zedong. Since the arbitration ruling in favor of the Philippines last year, the reality is that the response from other nations, especially in Southeast Asia, has been muted at best. Let’s be honest about it. With the exception of some strong statements from Vietnam, Asean has not exactly been full of “sound and fury” in supporting the Philippines. You would think that this is a case of “we hang together or we hang separately”, but that has not happened. The economic ties between China and our regional neighbors have been continuously increasing and are important. China and Asean have led a double-digit growth rate in exports and imports over a long period. While China has invested about 10 percent more, bilateral investment from Asean members to China is over $6 billion annually. Most governments and companies would do business with the devil if there were profits to be made. But if Satan owns your soul, the game changes. China’s first “territorial dispute” happened in 1950 when China took over Tibet and more critically, completed control of the Tibetan Plateau called the “Water Tower” of Asia. The Ganges, Indus, Brahmaputra, Irrawady, Salween and Mekong rivers ranging from Pakistan through India and Myanmar to Vietnam all start on the Tibetan Plateau. With more than 87,000 dams and control of the Tibetan plateau, the source of 10 major rivers, which 2 billion people depend on, China possesses a weapon of mass destruction. From the international affairs magazine The National Interest: “With the flip of a switch, the Middle Kingdom can release hundreds of millions of gallons of water from its mega dams, causing catastrophic floods that would reshape entire ecosystems in countries downstream. In the past, India has blamed sudden discharges from Chinese dams for several flashfloods, including one that caused an estimated $30 million in damage and left 50,000 homeless in northeast India. Last year Vietnam pleaded with China to release water from the Yunnan Dam on the Mekong River to ease severe water shortages downstream. China agreed and waters flowed into Cambodia, Lao PDR, Myanmar, Thailand and Vietnam.” “When it comes to diplomacy, China uses rivers as bargaining chips,” said Tanasak Phosrikun, a Mekong river activist from Thailand. While the Philippines is correctly battling China for its territory and rights in the South China Sea, our regional neighbors may be fighting for their lives.
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Comelec in a federal Philippines James Jimenez
spox
T
he Republic of the Philippines has always been unitary. Recent developments now make it abundantly clear that the years of public debate on the wisdom of remaining within this unitary mold are on the verge of coming to a head. While the Commission on Elections (Comelec) has properly remained officially neutral in this matter, the apparent imminence of a possible shift to a federal form of government has been the subject of much discussion and speculation, particularly as to the fate of the institution should such a change come to pass. In this context, it is important now to ask: Is a centralized election management body (EMB) ideal for a federal Philippines? A centralized EMB has a lot going for it. Because elections are complex events involving numerous moving parts that all have to be coordinated and managed at the same level of professionalism, centralized decisionmaking and management reduces the possibility of gaps and breakdowns in planning and conducting elections. This results in both greater efficiency and professionalism in election management, as well as clearer lines of accountability. In a federal system of government, however, it is not unlikely that
centrally managed elections might be viewed with distrust by the states who may well deem federal involvement as an encroachment on states’ rights. In the United States this concern is so acutely felt that the Federal Election Commission (FEC) and the Election Assistance Commission (EAC), while commonly referred to as EMBs, in reality have little to do with actually running elections. The FEC concerns itself only with campaign finance, while the EAC deals primarily with helping States certify voting equipment.
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EAGLE WATCH
T
he latest GDP growth of 6.5 percent in the second quarter has met the lower end of government target. This data records 26 quarters of growth performance. Furthermore, this rate is still the best among the larger Asean economies besting Vietnam’s 6.2-percent growth in the same period. We know that successive growth is not enough, it has to be successively high in order for it to impact significantly in every aspect of the economy. Nonetheless, the average growth in the last six years have now topped 6 percent better than our generational average of just about 4 percent. So the next question is how will this growth be sustained at its current levels? This is an important question because some critical balances have tilted significantly over the side that could signal slowing growth. These are the current account and the fiscal balances. Let us consider the fiscal balance first. While the Philippines has been regularly posting fiscal deficits, the previous administration has been able to maintain it at an average of -1.7 percent of GDP. This shows good fiscal discipline that allowed the country to finally attain an investment grade-credit rating. It is also notable that this fiscal discipline was achieved without tax reform (except the “sin” taxes). The rule of thumb in fiscal deficits is that it is alright to have them as long as they do not go
beyond 3 percent of successive GDPs. However, this low deficit to GDP ratio was also achieved with government revenues relatively staying around 14 percent of GDP. In effect, government expenditures were maintained at certain levels and were not able to complete significant infrastructure projects on time. To address this, the current administration has embarked on the “Build, Build, Build” strategy of infrastructure spending. Considering the window available for deficit spending, the government has targeted to push it to the limit of 3 percent up to 2022. This is not necessarily bad as the economy will be using the deficit for investments, which eventually will be returned in the
Most countries with a federal form of government have EMBs at the national and the state level. However, none even approach the level of fragmentation existing in the US. Despite having state-level EMBs, the nationallevel EMBs of these countries exercise a significant amount of policy supervision over the states. Having multiple state-level EMBs, on the other hand, isn’t without its own challenges. These are most readily apparent in countries, like the Philippines, where a formerly unitary government is broken up into various states (as opposed to countries composed of formerly independent polities choosing to federate). Foremost of these concerns is the lack of local experience. In the Philippines the Comelec’s field offices exercise only a very limited range of devolved powers, with field officials tasked with merely implementing the policies, rules, regulations, decisions, guidelines and orders of the Commission en banc, within their respective areas of responsibility; even within these parameters, all major decisions are referred back to the Commission en banc, to ensure system-wide uniformity. Thus field offices and their officials, while tremendously experienced in conducting elections, only act as extensions and representatives of the centralized Comelec,
rather than as EMBs in their own right. Should these field offices be transformed into actual state-EMBs, it might take a long while to develop local capabilities in voter registration and maintaining the roll of voters; registering political parties; identifying and managing the location of polling stations; enforcing electoral laws and regulations; educating voters; and monitoring and reporting on all aspects of campaign finance and election spending—tasks currently undertaken by the central Comelec under the Commission en banc. And, of course, considering the existence of what we euphemistically refer to as “politically controlled areas”, there exists the very real likelihood of local power structures hijacking the process, resulting in elections that adhere to democratic principles and norms only in form and not in substance. Taking all of these into consideration, my sense is that the ideal form for the Comelec to take in a federal Philippines falls somewhere in the middle of the range of possibilities defined by the massively centralized setup of the present Comelec on one end, and the extreme decentralization seen in the US. And with plans for federalism seemingly proceeding rather briskly, the time to start finding that sweet spot has to be right now.
form of higher sustained growth. This is also the reason the government recognized that for it to keep deficit at 3 percent of an expanding GDP, it has to pass the tax-reform proposal. The other deficit that is more of a concern lately is the current account. The current account records the international transactions of the economy, such as the exports and imports of goods and services (including business process outsourcing [BPOs] income and tourism receipts) and personal income including overseas Filipino workers (OFWs) remittances. For the past 12 years, the current account has produced significant surpluses coming from the strong contribution of the BPOs and the OFW remittances. In the last three years tourism has already started to contribute on a larger scale. This was possible because our trade deficit in goods (we import more goods than we export) has been relatively maintained at about $2 billion monthly. In the last two years, however, a notable jump in import of goods have been observed pushing the monthly trade in goods deficits to unprecedented highs. Comparing first half of 2015, 2016 and 2017, the deficit has increased more than four times from about $4 billion (January to June 2015) to over $13 billion in January to June 2017. This undoubtedly is putting a lot of pressure on the peso to weaken significantly. Furthermore, this is happening at a time that OFW remittance growth has stabilized to about 5 percent annually and BPO contributions have also reached their peaks. The expected revenues from tourism, likewise, have already reached their maximum as the
infrastructure deficit limits further growth. It is also observable that the travel advisories against the country, particularly in Mindanao, have limited tourist inflows overall, which we estimate to be about 6.6 million this year. This means the maximum revenues from tourism will have difficulty breaching $7 billion. The current-account deficit should be able to correct itself since a weak peso would signal that Philippine exports of goods and services will relatively be cheaper compared to our neighbors and competitors in Asean, thereby attracting more buyers of our products and services. Looking forward, these deficits should not alarm us if markets are working efficiently and are following signals of incentives correctly. The real challenge is not these two deficits—the real challenge is the deficit that governs the environment for these to become advantages to our country. This is the governance deficit. This is when governments are not able to provide the right environment for market incentives to work well. This comes out in different forms and are basically the issues where people are left to fend for themselves and government is simply missing. The weak government institutions are not able to respond to the rapidly changing environment and is not doing anything about it. This is what you see as traffic in major urban centers. This is also what you observed in the recent Uber debacle. This is why even if you change the heads of perceived corrupt agencies, they will remain corrupt. This is the more worrisome deficit and most of government are not aware of its existence.
Opinion BusinessMirror
opinion@businessmirror.com.ph
Tax on sugar-sweetened beverages hits the poor
Dreaming of Nabunturan Tito Genova Valiente
annotations Dr. Jesus Lim Arranza Continued from A1
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he hearing, after all, was about the proposed excise tax on SSBs. Although, I was surprised why Cabral was given all the time to read and discuss their position on the excise tax on cigarettes, while I was stopped from clarifying some issues pointed out by Cabral on the cigarette tax even only for a few minutes of the committee time. According to Angara, he gave Cabral the chance, as that was her first time to attend a Senate Ways and Means Committee hearing. But like Cabral, it was also my first time to attend a Senate Ways and Means Committee hearing. Being an advocate for the unitary tax on cigarettes, I was disturbed by Cabral’s lengthy discussion on the cigarette excise tax and thought it would be a mortal sin on my part if I would not be able to clarify some issues pointed out by Cabral on the health impact of the excise tax on cigarettes, among others. Had I been given even only a few minutes by the committee chairman to speak, I could have enlightened those present in the hearing on some of the counterproductive effects of the two-tier tax on cigarettes, like the proliferation of fake tax stamps, market segmentation and the creation of a virtual cartel. But nevertheless, while I felt that I was deprived of my right to be heard, I humbly submitted to the decision of the honorable senator and apologized for my brief deviation from the issue and proceeded to discuss our position on the excise tax on SSBs.
The poor will take the brunt of the excise tax on sugarsweetened beverages
Since under the proposed excise tax on SSBs, it’s only the 3-in-1 coffee, other sweetened drinks in sachets and soft drinks, among other similar sweetened drinks, that would be taxed, it is practically taxing only the poor. The impact of the excise tax on sweetened beverages would be most felt by the poor, as the 3-in-1 coffee and other similar drinks in sachets are among the cheapest and most convenient forms of food/drinks by poor Filipinos. And yet, the coffee and other sweetened drinks sold at worldfamous coffee shops like Starbucks, Seattle’s Best, UCC and Figaro, among others, are not taxed. These shops are where the rich and moneyed people go for their coffee or tea. Like the coffee enjoyed from a 3-in-1 sachet and the coffee served at world-famous coffee shops, they’re both food and/or beverage. Why then should a 3-in-1 coffee be taxed and the coffee served at swanky and world-famous coffee shops be tax-free? How did the experts from the Department of Health (DOH) rationalize that the 3-in-1 coffee and soft drinks will keep the Filipinos, especially the poor, unhealthy, and, thus, deprive them of their cheap and affordable beverage/food by taxing them, while the rich who frequent swanky coffee shops can drink their brewed coffee mixed with sugar to their hearts delight tax-free, presumably without any health risk. I still believe that anything taken in excess of moderation can be a health risk.
Excise tax on sweetened beverages will create market segmentation
Like what happened to the two-tier tax on cigarettes, taxing sweetened beverages, like the 3-in-1 coffee and soft drinks, among others, while other coffee products, cakes and pastries are not, will create market segmentation. Remember that market segmentation is a derivative of free competition, and imposing a tax
Since under the proposed excise tax on SSBs, it’s only the 3-in-1 coffee, other sweetened drinks in sachets and soft drinks, among other similar sweetened drinks, that would be taxed, it is practically taxing only the poor. The impact of the excise tax on sweetened beverages would be most felt by the poor, as the 3-in1 coffee and other similar drinks in sachets are among the cheapest and most convenient forms of food/ drinks by poor Filipinos. law that will create market segmentation through preferential taxation will be a violation of the Philippine Competition Law. Remember also that on a household level, many poor Filipino families lace their cooked rice with sugar for their viand or just to add flavor to the cooked rice. Let me ask the experts at the DOH then: Will taxing SSBs solve the country’s problem on diabetes and obesity? Obesity and diabetes, after all, are lifestyle generated and/or genetically acquired health issues. Perhaps, the DOH should consider an even more rational program to address the country’s obesity and sugar-related health problems like diabetes through a more intensified consumer-education campaign, without necessarily putting more burden on the lives of the poor by taxing the food and beverages they find most affordable. But if the excise tax on SSBs is a tax measure to generate more revenues for the government, why then are the rich and moneyed who take their coffee at swanky and worldfamous cafes not taxed for their coffee, cakes and pastries, while the poor who satisfy their hunger with the cheaper sweetened coffee in sachets and soft drinks are being taxed? The P10-per-liter excise tax that would be imposed on SSB would raise the price of 3-in-1 coffee and soft drinks by more than 50 percent. And if the purpose of the excise tax on SSBs is to create a healthy citizenry, our legislators and DOH experts must take into account that, to have a healthy Filipino citizenry, we must first have a healthy industry and economy, an economy that would provide enough jobs for its people and more healthy foods on the table. While I left the Senate with a heavy heart after the Angara interruption, I had a sense of fulfillment, though, knowing that I may have enlightened the committee members and those present during the hearing, the fears that the excise tax will erode the competitiveness of the local beverage industry, even as it will also affect the lives of poor Filipino consumers. And by the way, if the excise tax on SSBs is based on volume and not on the sugar content, would it not be taxing water?
N
abunturan is a town deep in Compostela Valley. Its name comes from buntod, which means mountain. We were in Nabunturan from August 22 to 27, although some came in earlier. Mostly young filmmakers of full-length feature films and those who make short films. To the uninitiated, the event is called “Cinema Rehiyon”, which brings as well institutions like the National Commission of Culture and the Arts and the Film Development Council of the Philippines, the latter under Liza Dino. Karen Santiago Malaki, a lawyer, was at the helm of the festival. She was very visible each day, and her husband, Rocky, would be in and out. He would tell me in a teasing manner how he had to work so that Karen can manage the festival. There was another highly visible person during our stay in Nabunturan, Mayor Chelita Amatong. She gave short and sweet speeches, a model for all politicians to think about. On the first day we learned a new name: ComVal, an abbreviation of the name for the region. A hotel is named ComVal, behind which Villa Amor sits. Most of the delegates were booked there. The other filmmakers and some guests, including this critic, were all billeted in Cozy Quartelle. Names of places usually ran as counterpoint to what they are. The place where we stayed lived up to its name. At night, when forums and screenings were over, many delegates discovered they could repair to where we were. The drinks were plentiful, the conversations honest and full of candor. Each night was enough
to thaw and melt the timidity and aloofness common among film artists. The nights there enabled many to bloom like the wild orchids of the region with newfound wit and wisdom about life and cinema. On the second day, we noticed the uniforms of very young men and women waiting on us during lunch and dinner. They came from the National High School in the area. They were volunteers. In the early afternoons, the
Friday, September 1, 2017 A11
drizzle came. The air became cooler, and I discovered the power of a nap. When the rains became strong, we looked for any sign of the silver lining that would allow the open-air screening of films. When the rains persisted, we knew the gods had different plans. We shifted the screening to the alternative covered venues where people could sit and enjoy the films. One night, the gods were kinder. Bagane Fiola’s “Baboy Halas” was screened outdoors in the town park. With the aid of the inflatable screen made possible by Blaine Johnson, we journeyed deep into the wilderness of the lumad called the “Matigsalog”, or “of the river”. Each morning, a thick fog settled in the town. We took our breakfast in the small quadrangle of our hotel. The cups of coffee were cinema paradiso as the fog lifted and sunlight eased in. At night, there was nip in the air. The travel guide was correct: Bring pullover and jacket, as the late afternoon could be chilly. In the plaza, with our cap to warm our head, we learned about life in the valley. On the last day we travelled an hour to a farm. There were food stations scattered around the
assembly point. One table was groaning with the fruits of the land—santol, dragon fruit and all types of durian. I settled for the more common langka. The air was heady with the scent of the fruits, but the hospitality was headier. There was a night market, but the rice cakes and other delicacies there always would run out by the time we were there. Some of us traveled to the barangay where we saw all kinds of rice cake and suman of varying sizes, sweetness and persuasion. Inside the heart of some of us, we were worried the festival will fail. Nabunturan Cinema Rehiyon 9 exceeded all our expectations. There are reasons. The festival management was impeccable; the volunteers were efficient. But, I think it was really the town that went all out to support the gathering. On the morning of our departure, the fog was back again. Nabunturan, this small and simple town, was bidding us goodbye in the mist. This essay, if you have not noticed yet, is a product of separation anxiety, of missing the town and its gracious people.
E-mail: titovaliente@yahoo.com.
Australian Embassy turns over ₧1 million worth of equipment, fixtures to Caritas Manila Rev. Fr. Antonio Cecilio T. Pascual
SERVANT LEADER
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he Embassy of Australia, through its Direct Aid Program (DAP), formally turned over P1 million worth of fixtures and equipment to Caritas Margins for its Caritas Margins Store and Café. Her Excellency Ambassador Amanda Gorely, with Australian Embassy DAP Resource Officer Doris Avila, led the ceremonial turnover to the officials of Caritas Margins. This is the third time that the Australian Embassy has given its support to Caritas Margins, and we are grateful for it. We can use this
grant to achieve product development, packaging and marketing for the products of our poor micro entrepreneurs. In the past, the Australian Embassy, through DAP, had also helped Caritas Margins put up a center for food production and a sewing-production center. These
projects continue helping more than 50 urban poor partners from Tondo, Manila, and East Rembo, Makati City. Gorely also expressed her gratitude to Caritas Manila for its continuous effort in empowering women. “Caritas Margins has shown how it is a sustainable business, which, very important, is largely run and driven by women, which is also a very important thing, as well as empowering women and providing livelihood to them, has a flow-on effect to the rest of the community and to their families,” Gorely said. Caritas Margins is a church social enterprise that markets quality products of poor microentrepreneurs all over the Philippines. It works hand-in-hand with the Caritas Manila’s livelihood program, providing skills training, like tailoring, food processing and
The rise of the Asian tourist Edgardo J. Angara
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ccording to a recent Foreign Policy article, the former picture of the global tourism industry being dominated by Western tourists visiting so-called “exotic locales” glosses over a bigger story—the rise of the Asian tourist. As the middle class is growing fast across the developing world, particularly in Asia, many of them are beginning to spend more of their money on vacations and holidays. Based on the latest United Nation World Tourism Organization (UNWTO) data, China already overtook the US, the former global leader, in terms of outbound travelers. In
2016 some 135 million Chinese tourists went around the world and spent up to $261 billion—an amount larger than the GDPs of many nations, like Greece or Portugal. India is also fast-becoming a force in global tourism. According to the UNWTO, 20 million Indian tourists travelled the world last year, and that number could balloon to
50 million in three years. Such growing number of tourists from Asia is already reshaping the travel industry in significant ways, as many established names in the hospitality industry have begun to actively court more Chinese, Indian, and other Asian tourists. If Philippine tourism will continue to grow and become a driver of economic growth, government and the tourism industry must work to attract more Asian tourists. A good first step was made when the Department of Tourism (DOT) announced that Chinese nationals can now avail themselves of entry visas upon their arrival in a Philippine airport. The Chinese nationals covered include members of DOT-accredited tour groups, businessmen endorsed by government agencies and local and foreign chambers of commerce, athletes and delegates to conventions and exhibitions. Such
production of herbal soaps, perfumes and home-care products. It helps the livelihood of poor communities by encouraging their entrepreneurial spirit. To date, Caritas Margins supports over 900 microentrepreneurs in Metro Manila and the provinces by providing them livelihood opportunities and in marketing their products. Caritas Margins revenues also benefit the flagship program of Caritas Manila, the Youth Servant Leadership and Education Program, which supports more than 5,000 youth scholars nationwide. To learn more about Caritas Margins, visit www. margins.org.ph. To donate and support Caritas Manila’s programs for the poor, visit www.caritasmanila.org.ph or call DonorCare lines (+632) 563-9311, 564-0205, (+63) 999-7943455, (+63) 905-4285001, and (+63)929-8343857.
privileges are similarly being considered for Indian nationals. And right in our own backyard, we must do more to attract the travelsavvy tourists from the nine other Asean countries. Much work still needs to be done to fully tap the tourism markets of countries with emerging middle-classes. There exist significant gaps in airports, roads, mass transportation and other tourism-related infrastructure. Many still doubt the safety and security conditions in the Philippines. Allaying their fears would require a radical change in the mindset of our law-enforcement agencies. In other words, while the marketing efforts should aggressively target the growing Asian middle-class, government can and should endeavor to do major infrastructure and mount an even more fundamental shift in the drug war in helping our tourism industry develop.
2nd Front Page BusinessMirror
A12 Friday, September 1, 2017
www.businessmirror.com.ph
Manufacturers oppose plan to merely subject imported cement to preshipment inspection
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op executives of major cement manufacturers in the country have opposed the proposed minimum requirement of preshipment inspection for cement imports, as they highlighted the importance of subjecting imported cement to rigorous testing upon arrival in the Philippines to ensure consumer safety.
In a letter to the Department of Trade and Industry (DTI), Eagle Cement COO Manny Teng said that, if the government would come out
with revised rules and guidelines for the cement industry, such rules must foster a level playing field and ensure high regard for quality and
ANG: “We believe that any diminution of the minimum quality standards of cement products, as imposed, would pose a great risk to the entire industry and to the clients it serves— the Filipino people.”
environmental protection. “Eagle Cement Corp. stands against the possible minimum requirement of a preshipment inspection as the substitute for testing cement imports upon arrival in the Philippines,” said the letter, which was also signed by Eagle Cement President and CEO Paul Ang, on behalf of the company’s chairman. “We believe that any diminution of the minimum quality standards
of cement products, as imposed, would pose a great risk to the entire industry and to the clients it serves—the Filipino people,” Ang stressed. Taiheiyo Cement Philipines President and CEO Satoshi Asami, Mabuhay Filcement Inc. CEO Enrison Benedicto, Northern Cement General Manager Oliver Gorrospe, incoming Republic Cement President Nabil Francis and Cemex Philippines President Ignacio Mijares all said in their letters that a “preshipment inspection only” rule cannot substitute for testing imports to ensure quality and safety. “In this regard, we respectfully propose that all cement players, whether a manufacturer or a mere trader, should be required to have their imported cement duly tested at the port. We can-
not underscore the importance of doing a local test as a crucial safeguard for consumers’ safety and lives,” the executives said. The officials, likewise, raised the issue of technical smuggling of cement, which, they said, must be addressed by the DTI, along with other concerned government agencies. “We sincerely hope that the DTI can effectively move to stop such practices of undervaluation or tax evasion of importers by updating standard rates. The setting of specific benchmarks for cement and freight costs for each country of origin may be another option to consider,” they said. The officials are apparently referring to the recent disclosure by resigned Customs Commissioner Nicanor E. Faeldon
Stakeholders given until Sept. 4 to air side on GEOP
METRO PACIFIC HOPES TO INTEGRATE MRT 3 WITH LRT 1 BY H1 2018 By Lorenz S. Marasigan @lorenzmarasigan
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NFRASTRUCTURE conglomerate Metro Pacific Investments Corp. (MPIC) is hoping to formally take over the operations of the Metro Rail Transit (MRT) Line 3 by the first half of 2018, should the government decide to proceed with its multibillionpeso proposal to rehabilitate and expand the most congested train line in the Philippines. Rogelio L. Singson, the president of Light Rail Manila Corp., said buying out the corporate owners of the train system will prove to be a good proposition for Metro Pacific, given that it—together with Ayala Corp.—operates the Light Rail Transit (LRT) Line 1. He explained that taking over the line will pave the way for better passenger experience, as there will be a seamless transfer of riders from both lines, as the two systems are effectively connected on Edsa. “Our proposal is all-encompassing. It is basically lock, stock and barrel. Our offer aims to address all the issues connected to the MRT 3: the equity value buyout of the government, the bonds issued to government financial institutions, existing service contracts, the existing concession agreement and issues with other investors. We will take over all those obligations,” he said. The proposal, which involves an initial P12.5-billion tag price, was submitted to the transportation department on July 14. The proposal involves the expansion of the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimillion-dollar expansion plan also aims to double the capacity of the line to 700,000 passengers a day from the current 350,000 passengers daily.
Same provisions as LRT 1 deal
Singson said the proposal submitted to the government somehow mirrors the current concession agreement for the LRT 1 Cavite Extension deal, which the company bagged in 2014 through the PublicPrivate Partnership (PPP) Program. “We have lifted the same provisions under the concession agreement under LRT 1. It means that instead of having a different operator and maintenance provider, our
SINGSON: “We can have synergies between Line 1 and [MRT] 3 in terms of suppliers, depot management, logistics management—like one machine does not have to be bought by two entities. There will be a lot of synergies that can reduce the cost and improve efficiency.”
group will be the one to do both,” he added. “It is the only way that will make sense.” The build-lease-transfer agreement between MRT Corp. and the Philippine government, signed almost two decades ago, requires the government—as the operator of the train line—to pay equity rental payments to the owner of the facility. The railway system is owned by the group of Robert John L. Sobrepeña and a few minority shareholders. The proposal of MPIC also involves the replacement of the rails of the MRT 3. This, Singson said, will allow the company to operate the new trains purchased by the government from Chinese train manufacturer Dalian. “Other components include the improvement of the reliability of rolling stock, he upgrading of power supply and the upgrading of stations,” he said. “We are hoping that the government will give the proposal serious evaluation and give the proponent the original proponent status.” Should the government grant MPIC such a status, it can proceed with the Swiss Challenge for the deal. Unsolicited proposals are required, under the law, to go under a competitive challenge, wherein other groups can offer a similar proposal, and the original proponent can present a counter offer. “It could be as soon as four to six months that the operator of the MRT 3 will be different. Hopefully, the best proposal comes out by the first quarter of 2018,” Singson said. He noted that Metro Pacific has been in discussion with Sobrepeña for the acquisition of the facility. Sobrepeña, in a text message to the BusinessMirror, contested, however, that his group has yet to touch base again with Metro Pacific. Metro Pacific had an agreement with Sobrepeña’s group back in 2011, when it first submitted a proposal to See “Metro Pacific,” A2
that rampant technical smuggling of cement is happening in the country’s port of entries and even linked a son of Sen. Panfilo M. Lacson Sr. to the anomaly. Top executives of other major cement manufacturers in the country have also written separate letters to Trade Secretary Ramon M. Lopez, urging the department to include in the new industry rules the requirement that all cement imports must undergo quality testing upon arrival in the Philippines to protect consumers. They likewise reiterated their call to the DTI and the Bureau of Customs to jointly address technical smuggling, which, experts say, are costing the government billions in foregone revenues, while helping the entry of substandard and dangerous cement in the local market.
By Lenie Lectura
T CCAP PRESENTS ‘CONTACT ISLANDS’ Contact Center Association of the Philippines (CCAP) Chairman Benedict C. Hernandez (left) and CCAP President Jojo J. Uligan lead the pre-event news conference of the upcoming “Contact Islands: The Future of Customer Experience”, the annual conference that will feature an exciting combination of local and global operators and powerful speakers, plus presentation of studies to help attendees understand trends better and the role that the industry will play in shaping the customer experience. ALYSA SALEN
House panel eyes CMTA review, BOC reinvention Continued from A1
one-time payment of import/export fees that would include duties/taxes, storage, warehousing and all expenses relative to importation/exportation; strengthen border-control function while providing for utmost convenience privatization of nonsovereign functions, which will be part of an extensive study to be conducted by the Department of Finance [DOF],” the report said. It also recommended that all officers of the bureau, including deputy commissioners, heads of office and all port collectors, shall take a leave of absence or be replaced immediately, in accordance with law, to give way to proper reform and/or investigation on the corruption issue. The committee also recommended the revocation of a Customs special order creating the command center for being contrary to the spirit and intent of CMTA, and for being organized without the imprimatur of the DOF secretary. The report said amendments to the Republic Act (RA) 10863 shall be introduced, including proper qualification for the head and the deputies of the new agency/instrumentality; requiring that all cargo manifests, packing lists and other supporting documents of all ship-
ments shall identify the name and address of owner, shipper and/or end user for every cargo/package included in a shipment; and requiring registration of cargo consolidators, indenters, forwarders and similar business enterprise regularly engaged in importation of goods. The House panel also pushed for the review of the electronic-to-mobile (E2M) computerization project and introduce necessary changes to improve its effectiveness and electronic linkage of database between the Bureau of Internal Revenue (BIR) and the BOC and hasten the National Single Window System. The committee also wants to review the BOC importer/consignee accreditation system for the purpose of eliminating it or reducing human intervention, layering; and exercise the use of discretion and eliminate the mandatory BOC accreditation of Customs broker so the existing Customs broker, accreditation policy shall be replaced with a simple process of registration. It also wants an effective monitoring of performance of the BOC personnel, particularly in the physical inspection or examination of cargo shipment, law-enforcement operations and all other functions requiring the use of discretion.
Criminal charges
Barbers’S panel has also recommended the investigation and filing of criminal charges by the Office of the Ombudsman against resigned Customs Commissioner Nicanor E. Faeldon for allegedly coddling or protecting a suspected drug lord during an antidrug operation in Valenzuela City last May that resulted in the seizure of 604 kilos of shabu worth P6.4 billion. He said Faeldon could have violated Section 4, last paragraph of RA 9165 (Coddling/Protecting), for knowingly, willfully and deliberately shielding, harboring and screening alleged drug lord Chen Ju Long, general manager of Hong Fei Logistics, located at No. 5510 Aster Street, De Casto Subdivision, Paso de Blas, Valenzuela City. Chen Ju Long, a.k.a Richard Tan and Richard Chen, is a Chinese businessman who reportedly tipped off the BOC officials led by Customs Intelligence Officer Niel Estrella about the huge shabu shipment, led authorities to his warehouse, and allowed the opening and cutting using a grinder of five cylindrical metal containers where 604 kilos of shabu were found. The shipment came from China.
@llectura
HE Department of Energy (DOE) is now soliciting comments from industry stakeholders to the final draft of a proposed policy that seeks to provide end-users the option to choose renewable-energy (RE) resources as their sources of energy. “The DOE is hereby requesting all interested parties to submit their comments on the Department Circular, ‘Prescribing the Guidelines Governing the Establishment of Green Energy Option Program [GEOP]’,” a notice posted on the agency’s web site stated. Comments would be accepted until September 4. Should the DOE receive no comments, “it shall assume your concurrence with the draft circular.” Under the proposed rules, allend-users may register with their distribution utilities (DUs) and electric cooperatives (ECs) their option to source RE power. “The purpose of the GEOP is to empower end-users to choose RE in meeting their energy requirements,” the DOE said. The scope of the GEOP includes the rules and regulations for the type of RE resources and identification of generating facilities using said resources that end-users, DUs and ECs can source RE to meet their energy requirements under GEOP; the registration by DU or EC customers of their option to source power from RE sources; technical feasibility and stability of the transmission and distribution grid systems; and other rules necessary to achieve the objective of the GEOP. The DU and ECs shall aggregate the demand for each RE, and contract directly with the RE developers for corresponding requirements net of the customers who have opted to contract directly with an RE developer. A DU or EC shall not be required to supply an end-user that has exercised the option, where such supply will result in an increase in the blended generation, which shall be passed through to other end-users of the DU. The DUs and ECs shall reflect in the monthly electric bill how much energy consumption and See “Stakeholders,” A2