BMReports
Marawi City in conflict: ARMM seeks investments in other areas By Manuel T. Cayon |
@awimailbox Mindanao Bureau Chief
Part One
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AVAO CITY—The Autonomous Region in Muslim Mindanao (Armm) announced it has readied its environment department to survey the lands in embattled Marawi City after the government military has secured the place. The move is its contribution to the Malacañang-formed Task Force Bangon Marawi tasked to ensure the recovery, reconstruction and rehabilitation program for this central Mindanao city. The survey is intended primarily, yet, for the establishment of additional temporary and
Indigenous people march in Manila to protest the continued siege of the town of Marawi and the martial law declared by President Duterte in the whole southern Mindanao region, which has surpassed 100 days on August 31. Officials of the Autonomous Region in Muslim Mindanao believe the crisis in Marawi City doesn’t affect—yet—investment in the region. AP
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permanent shelters, and to determine subsequently the political boundaries of the adjacent towns, the city’s barangays and the properties of private owners. “We assure help in the land surveys in Marawi for the fast setup of the shelters,” ARMM Gov. Mujiv Hataman said during the recent meeting with member-agencies of the task force. He added it would be the Armm’s Department of Environment and Natural Resources (DENR) that would conduct the survey. Hataman said the office of the ARMM governor was informed the DENR would conduct a comprehensive land survey. Initial ARMM and DENR data indicates that Marawi City has a land area of 8,407 hectares. Continued on A2
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Monday, September 4, 2017 Vol. 12 No. 326
Asean told to address challenges in labor deal
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By Cai U. Ordinario
@cuo_bm
he Asean can take the lead in fast-tracking the implementation of agreements that seek to remove barriers to labor mobility in Southeast Asia, according to experts.
As the region’s economic ministers meet in Manila this week, experts reminded Asean economic leaders to also focus on the Mutual Recognition Agreements (MR As),
which pertain to the movement of skilled persons. These agreements have not been fully implemented. E x per ts a lso sa id A sea n ca n a lso push for t he
Very little had been done on liberalizing services.”—Manzano
remova l of ba r r iers to implement Mode 4 of t he Genera l A g reement on Trade in Ser v ices (GATS) on t he movement of nat ura l persons. “Maybe they [Asean ministers] can work more on services. Very little had been done on liberalizing services since it is more protected by countries at this Continued on A16
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Dissecting PPP contracts #6: Amendments PPP Lead Alberto C. Agra
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he “amendments” provision is one of the shortest, yet important and desirable, boilerplate provisions of public-private partnership (PPP) contracts. The inclusion of this provision could address matters not contemplated or could not be contemplated as of the date of execution. Sample texts. Some PPP contracts word this provision this way: “This agreement may be amended, modified, or altered only by mutual agreement and a duly executed written instrument signed by the parties’ authorized representatives.” Others, like this, “No amendments or modifications of this agreement shall be valid except by written agreement signed by the duly authorized representatives of the parties.” Continued on A15
‘DOF must keep hands off Peza perks’ 15 percent By Catherine N. Pillas
A
Angel highway The Skyway, at one point, providentially called the celestial freeway because it offers motorists a welcome respite from Metro Manila’s hellish traffic. NONIE REYES
PESO exchange rates n US 51.1660
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merican businesses in the Philippines again appealed to the Department of Finance (DOF) to retain the tax incentives granted by the Philippine Economic Zone Authority (Peza) to employees of regional operating headquarters (ROHQ). Changing the incentive administration of the Peza will spook Philippine-based American firms, enough to send them packing, according to the American Chamber of Commerce in the Philippines (AmCham). “The absolute best thing that could happen is for the DOF to leave the Peza alone. Tinkering with it will create jitters in the industry and the last thing we need is jitters,” AmCham Executive Director David Hinchliffe
The income-tax rate for expats and Filipino nationals in managerial and technical positions in multinational firms
told the BusinessMirror. The DOF earlier aimed to remove the zero-rate value-added tax (VAT) exemption on local goods purchases made by export-oriented firms, as part of its comprehensive taxreform program. The Peza, which registers and attracts exporting firms, appealed to the DOF to maintain this incentive, saying taxing local purchases will erode the competitiveness of locators. The DOF maintained the VAT exemption. But the removal of
preferential income-tax rate given to employees in ROHQs may push through. The removal of the preferential income-tax rate is seen to offset revenues foregone due to the DOF’s parallel bid to lower personal-income taxes. Republic Act 8756, amending the Omnibus Investments Act, offers a 15-percent preferential income-tax rate for expatriates, and Filipinos in managerial and technical positions in ROHQs of multinational firms. This is considered a key incentive to maintain Filipino talent in toptier positions in multinational companies, as well as to attract foreign executives. “The same thing could be said of ROHQs. This is a key issue among companies belonging to AmCham; their sentiment is, we’re here because of that, and if you break,
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
See “DOF,” A2
Source: BSP (31 August 2017 )
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A2 Monday, September 4, 2017
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Marawi City in conflict: ARMM seeks investments in other areas Continued from A1
Township building
THE task force’s executive director and concurrent National Defense Undersecretary, Cesar B. Yano, told the meeting that the local government of Marawi City “must submit immediately the list of families who want to stay in permanent homes and those who prefer to stay in temporary shelters while the recovery and rehabilitation of the city are ongoing”. “As soon as possible, we need to have a location for temporary and permanent shelters for displaced residents in Marawi City,” Yano was quoted by the ARMM Bureau of Public Information as saying. Retired Brig. Gen. Eduardo del Rosario, the chief of the Housing and Urban Development Coordinating Council, said the government is giving its assurance the housing units that would be built
“would be culturally and socially acceptable”. “We would ensure to prioritize in the temporary and permanent shelters those who do not have houses and lands; those who really don’t have anywhere else to go,” he added. “We will develop a township with social services, schools, health centers and mosques.” The task force said the planned township would have a madrasah, kitchen area and wash room in houses, market, mosque, water supply and a multipurpose hall. The task force has initially identified 11 hectares in Barangay Sagonsongan in Marawi City for the construction of “temporary transitional shelters” for displaced residents of Marawi City. The units would be completed within a month to accommodate 1,200 families. Hataman said “the main purpose of building transition shelters
is to decongest evacuation centers and to provide them with more conducive areas”.
Developing ideas
THE political and military conflagration in the central Mindanao city of Marawi, ironically named as the Philippines’s sole Islamic City, throws another challenge to the progressive creativity of the current administration of the Armm. The city sprawls on the northern edge of scenic Lake Lanao, the country’s second-largest inland body of water. The waters of Lake Lanao cascading along the Agus River has been tapped by six hydroelectric plants to supply the main energy requirement of Mindanao for half a century since they were established in the 1960’s. While it should be assured of steady electricity, many of its villages are not energized yet, a picture of imbalance and slanted
priority common in many areas of the country. When the biggest telecommunication project in the island has yet to be done, economic officials in the Armm knew that the conflict in Marawi City has splattered another black ink blot on the snowballing multibillion-investment interest in the southern portion of Mindanao, the island-group considered as the food basket of the Philippines.
Relief
IT was a relief though for Armm officials when the Australian-Filipino telecommunications company announced it was pursuing its P3-billion telecommunications carrier project in the ARMM. Apparently, the investment potential remained fiercely attractive that the investors also assured investment officials that the company would also continue to do
the opening rollout of the project in Marawi City. The ARMM’s Regional Board of Investments (RBOI) said the TierOne Communications International Inc. (TierOne) told the agency it was starting the project “still with the rollout activity in Marawi City but to be done alongside the government’s multibillionpeso rehabilitation of the city”. The RBOI said the TierOne “had to reevaluate its business plan” following the Marawi City crisis, which was triggered by the armed assault of the Maute Group on the city on May 23. “Company officials said the rollout program in Marawi City would still be implemented, but in coordination with the rehabilitation and reconstruction program of the government,” the RBOI said. The announcement bolsters the view of lawyer Ishak Mastura, who said the crisis in Marawi won’t stop
investments in the ARMM. Mastura, who is also chairman and managing head of the RBOI, expressed this, especially after approving the registration of a P129-million port-related services project. With the addition of such a project, the worth of investments registered with RBOI this year is now totaled to P3.2 billion, Mastura was quoted in a statement as saying. “This signifies an uninterrupted growth of investments in the region despite the Marawi crisis. The company’s reliable services of delivering the goods to customers on time and in right condition have strengthen local businesses,” Mastura said. “Cargo handling is very critical in the logistics and supply chain, problems in the cargo movement will cause delays and will cost a lot of money to enterprises.” To be continued
North Korea tested hydrogen bomb meant for ICBMs Continued from A16
a series of nuclear- and ballistic-missile tests since 2006. Its previous nuclear-tests have produced increasingly larger blasts. The last test, in September 2016, yielded one about as powerful as the bomb the US dropped on Hiroshima in 1945. In its fourth nuclear test, in January 2016, North Korea claimed to have used a hydrogen bomb. Other countries dismissed the claim for lack of evidence, but experts have said that the North
Asean. . .
may have tested a “ boosted ” atomic bomb, in which a small amount of thermonuclear fuel produced a slightly higher explosive yield but fell well short of a true hydrogen bomb. Hours before the tremor was detected last Sunday, North Korea’s state news agency said the country had developed a hydrogen bomb that could be mounted on an ICBM. The report offered no evidence for the claim, other than photos of Kim inspecting what it said was the weapon. Trump’s aides have concluded
Continued from A16
proposals for Mode 4 of the GATS, such as proposals per occupation, negotiation guidelines and assessment of trade in services, among others, have been “unsatisfactory”, preventing members from reaching a consensus on the matter. “Under the original version of the GATS, the discussion there is who are these natural persons? The understanding is these include
that his options in responding to a North Korean nuclear blast are limited. A strike on the North’s main nuclear and missile sites faces the same challenge it always has: the North’s ability to retaliate against Seoul, the South’s capital, which is within range of its artillery. So, for now, Trump has turned to the same strategy his predecessors have tried: increasing economic pressure and threatening force, although Trump has used more provocative rhetoric about a potential military response than his predecessors did.
only the professionals, such as managers and skilled workers of service-providing companies that have work across borders. In the Asean, the definition is more encompassing, since it pertains to the movement of skilled labor in reference to various professions,” Ofreneo said.
Specialization
National Economic and Development Authority (Neda) Undersecretary for Planning and Policy Rosemarie G. Edillon said the
Another strategic consideration in responding to a nuclear blast is China, which, for decades, has been the North’s closest ally and its big gest trading partner. While China’s president, Xi Jinping, fears that a collapse in North Korea could lead to a wave of hungry refugees and a scramble for North Korea’s territory and nuclear weapons, he appears to have lost patience with Kim, recently agreeing to stronger UN sanctions against Pyongyang. The test’s timing was a major embarrassment for Xi, who last
priority for the Asean moving forward is to make the region part of the global value chains. She added this means encouraging Asean countries to specialize in the production of certain items that they can produce with economies of scale. However, this means greater trading of intermediate inputs. Edillon said this entails improving intraregional trade by harmonizing rules and regulations and creating uniform requirements for the trade of various goods. The Neda official added that Asean
Sunday was hosting a summit meeting of the so-called Brics countries—China, Russia, India, Brazil and South Africa. Cheng Xiaohe, a North Korea expert at Renmin University in Beijing, said the timing of the test—on the day of the meeting’s opening ceremony, in the Chinese city of Xiamen—appeared to be deliberate. “This will test whether China is prepared to go ahead with more radical actions, like cutting off oil supplies to North Korea,” Cheng added. Peter Hayes,
countries must also improve the turnaround time in the clearance process. This will ensure that the succeeding processes in production will be on time. “There are many ways to make trading more efficient, like having one trading nomenclature, that is, the same code is used. It’s better to use the same form. It’s best if all countries have online systems,” Edillon added. In the first six months of 2017, total trade of the Philippines with the Asean reached P4.7 billion, 12.4 percent higher than the P4.18 billion posted in the same period of 2016. Total trade with the Asean accounted for 15.1 percent of the country’s overall trade, valued at P31.04 billion in January to June. In terms of workers deployed abroad, the Philippine Statistics Authority said one in every four, or 23.8 percent, of OFWs went to Saudi Arabia in April to September 2016. The other preferred destinations were the United Arab Emirates, where 15.9 percent of OFWs were deployed, followed by Kuwait, with 6.4 percent and Qatar, with 6.2 percent.
DOF. . .
Continued from A1
it, we have no reason to stay,” the AmCham executive said. Senior Adviser to AmCham John D. Forbes, however, made the distinction between the perks being given by the Peza, and those vested by numerous laws (numbering to around 200) catering to different industries. “The incentives, as provided by numerous incentive laws passed decades ago, were given to infant industries in the 1950s and 1960s. They don’t need those anymore. But exportoriented ones do because other competing countries are giving more,” Forbes said, adding that rationalization of some select perks are “long overdue”. Hinchliffe noted AmCham has already lost some members due to the unease created by the tax-reform effort of the government. “AmCham in Mindanao just doubled membership and we’re reaching out in more areas in [the] Visayas. The growth in membership may not exactly be a barometer in investor sentiment, but it’s still encouraging,” he said.
director of Nautilus, a US-based research institute specializing in North Korea, said the test seemed i nt e n d e d t o j o l t X i a n d t o convince him that he needed to persuade the US to talk to North Korea. “It’s aimed more at Xi than Trump,” Hayes added. “Kim Jong Un doesn’t have the leverage to get Washington to talk. Xi has real power to affect the calculations in Washington. He’s putting pressure on China to say to Trump, you have to sit down with Kim Jong Un.” New York Times News Service
DOT. . .
Continued from A16
“Canada is a country of immigrants, and it recognizes the Filipinos’s role in the community,” she said. “There is a growing curiosity where the Filipinos came from. Also noting that the Philippines as the fastest-growing economy in Southeast Asia, more Canadian businessmen are also interested the Philippines,” Garcia added. During her visit to Toronto, Teo met with representatives of the Canadian Snowbird Association, a lobby group dedicated to protecting the healthcare and rights of traveling Canadians. It currently has 100,000 members who frequently travel, especially during Canada’s winter season. Teo said Snowbird members who will stay in the Philippines for up to six months can generate higher tourism revenues for the country’s tourism stakeholders. The DOT secretary, along with Philippines Embassy officials, as well as Susan del Mundo, head of the Tourism Promotions Board’s domestic tourism promotions, likewise met with the Flight Centre Canada (FCC) and the Canadian Executive Service Organization (Ceso) to explore possible partnerships in tourism-development programs. The FCC is the largest travel agency in Canada with 150 brick-and-mortar retail outlets in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia and Newfoundland. The Ceso is an international economic-development organization now celebrating its 50th year. It has volunteer advisors who are senior-level professionals and work in some 123 countries, transferring their expertise and knowledge to project beneficiaries. According to the Philippine Embassy in Ottawa, “[the] Ceso spearheaded the conceptualization and implementation of the famous Loboc River Tour in the province of Bohol to stimulate greater tourist arrivals.”
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House seen approving ₧3.7-T budget on Friday By Jovee Marie N. dela Cruz @joveemarie
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he House of Representatives is seen approving this week the Duterte administration’s proposed P3.7-trillion budget for 2018. House Committee on Appropriations Chairman Rep. Karlo Alexei B. Nograles of Davao City said the lower chamber will try to finish the plenary debates on Friday, September 8, and have House Bill 6215, or the proposed General Appropriations Act (GAA), approved on third and final reading. Speaker Pantaleon D. Alvarez said there is no reason to prolong the approval of the 2018 budget, as it will affect the passage of other important measures pending in the lower chamber, which include the proposed Charter change. Moreover, Nograles said the GAA is expected to be signed into law by President Duterte on or before November 15. “Passing the national budget before the end of the year is a tradition that Congress intends to keep under the Duterte administration,” he added. “Although there is much exigency in passing the [2018 budget] this year because of the impending switch to federalism and other matters, we assure the public that we, legislators, will exercise the power of the purse to its fullest, as this is our mandate,” Nograles said. Under the proposed GAA, the education sector will get the biggest chunk of the 2018 budget with P691.1 billion.
The economic-services sector comes second with P1.15 trillion, 30.6 percent of the proposed budget. The budget for economic services in 2018 gets a generous increase of 25 percent, from 2017’s P922 billion. The proposed P3.767trillion national budget for 2018 represents a 12.4-percent increase on 2017’s general appropriations of P3.35 trillion. The projected fiscal program is expected to result in a fiscal deficit amounting to P524 billion, or 3 percent of the GDP. Among those lined up for plenary defense on Monday are the proposed budgets of the Department of Budget and Management, which will be defended by Nograles; the Department of Finance, by Rep. Luis Raymund F. Villafuerte of the Second District of Camarines Sur; National Economic and Development Authority, by Rep. Joey S. Salceda of the Second District of Albay; Department of Tourism, by Rep. Michael John Duavit of the Second District of Rizal; and Department of Labor and Employment, by Rep. Ana Cristina S. Go of the Second District of Albay. Villafuerte, Salceda, Duavit and Go are all vice chairmen of the Appropriations Committee. Earlier, Party-list Rep. Edcel C. Lagman of Albay said the lower chamber is sacrificing its power of the purse with the rush approval of the budget bill. Also, Party-list Rep. Tom Villarin of Akbayan said the swift approval of the budget should not be allowed pending inquiries on lumpsum funds and major budget realignments in the national budget next year.
Trillanes shrugs off Gordon’s threats to file ethics complaint By Butch Fernandez @butchfBM
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en. Antonio Trillanes IV last Sunday shrugged off threats by Sen. Richard J. Gordon to file ethics complaints against him for maligning the Senate with his comments mocking the Gordon-chaired Blue Ribbon panel inquiry into the smuggled P6-billion shabu shipment as a “committee de abswelto” or committee to acquit. “The bottomline is, did I do anything unethical,?” Trillanes said in a radio interview, adding he was leaving his fate up to his fellow senators. He, however, predicted Gordon would be “lucky if he gets three votes” to convict him. Speaking partly in Filipino, Trillanes noted that President Duterte had been spewing out foul language in speeches and even in his State of the Nation Address and maligning both local and international figures and yet was applauded by his allies in Congress. “It is an irony, if they will remove me for alleged unethical behavior when Duterte himself acts unpresidential,” Trillanes complained, adding: “Now they will side with Gordon to remove me.” In the same interview, Trillanes affirmed his readiness to produce evidence when the President’s son, Davao City Vice Mayor Paolo Duterte, shows up at the resumption of the Senate inquiry into the shabu smuggling case, also allegedly involving presidential son-in-
law Manasas Carpio, husband of Davao City Mayor Sarah Duterte-Carpio. In a separate interview over the weekend, Duterte confirmed he was not stopping his son (Paolo) from appearing before Gordon’s Blue Ribbon inquiry but advised him to invoke his “right to remain silent because Senator Trillanes had been attacking us way back since the presidential campaign”. Addressing Trillanes, the President said: “Do not use us as your evidence [because] you have prejudged us.” He added that witnesses summoned to testify in inquiries may invoke their Constitutional right to remain silent. Duterte voiced concern the senator, a known critic of his administration, was on a fishing expedition to pin down alleged members of the socalled Davao Group, composed of key figures in Duterte’s camp said to be calling the shots at the Bureau of Customs. Responding to President Duterte’s latest tirade against him, Trillanes said he “will not stoop down to his level of name-calling”. “ The bottomline is this: his son and son-in-law were named masterminds behind the Davao Group and are being suspected of being involved in smuggling that led to the entry of the P6.4-billion shabu shipment into the country. Those are not my allegations but information extracted from Senator Richard Gordon’s witnesses during the Senate hearings,” Trillanes said in a text message to reporters.
Editor: Vittorio V. Vitug • Monday, September 4, 2017 A3
NPA local unit in Ilocos Sur using child warriors–Army
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By Rene Acosta
@reneacostaBM
oldiers deployed in the province of Ilocos Sur have accused the New People’s Army (NPA), particularly its local unit, of employing child warriors as corroborated by former rebels who have surrendered to the government.
Members of the Army’s 81st Infantry Battalion (IB) based in Ilocos Sur made the claims against the NPA’s Platun South Ilocos Sur (SIS), which operates in the Ilocos provinces and in Abra and nearby provinces. On July 22 members of the 81st IB encountered at least 12 rebels from the SIS at Barangay Sorioan, Salcedo, Ilocos Sur, triggering 30 minutes of firefight.
During the clash, the soldiers recovered 20 rounds of M-14 ammunition, homemade bombs, cleaning gears, rebel documents and other personal belongings. The encounter was followed by another firefight on August 5 at Sitio Mabileg, Barangay San Elias, Sigay, Ilocos Sur, as the troops continuously pursued the rebels. Lt. Col. Eugenio Julio Osias IV,
commander of the 81st IB, said the successive operations have prompted some members of the local guerilla unit to surrender to the government. “Through the continuous interviews and having established a good rapport with these surrenderees, they revealed that many members of their group [Platun SIS] include fighters 21 years old and below,” Osias said. “ These child warriors were newly recruited through ideological political organizational works, and they were used as members of the armed group that operates in the Triple S Complex of South Ilocos Sur [Santa Cruz, Santa Lucia and Salcedo],” Osias added. Osias said they were withholding the names of the surrenderees for security reasons “pending the processing of their status”. The use of child warriors by the SIS has reached Major Gen. Angelito de Leon, commander of the 7th Infantry Division, who called on the
rebels to stop this practice. “It is a violation to the law, RA [Republic Act] 7610, and the signed agreement, Comprehensive Agreement on Respect for Human Rights and International Humanitarian Law, that these rebels are recruiting child warriors/minors to join them in their armed struggle and allowing them to take part in gun battles,” he said. “We will further strengthen our intelligence and civil military operations so that these activities will stop,” he added. On the other hand, Osias said they were already identifying the families of the reported child warriors to inform them about the status of their relatives. “We are tracking the relatives of these minors so that their respective families will be made aware of their situation, and for these families to help the government in persuading their children to leave the armed struggle,” Osias said.
CA affirms ruling releasing Ampatuan patriarch from jail By Joel R. San Juan @jrsanjuan1573
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HE Court of Appeals (CA) has denied the plea of government prosecutors to reverse its ruling that allowed the son of former Maguindanao governor and clan patriarch Andal Ampatuan Sr. to be released from jail. In a four-page resolution penned by Associate Justice Marie Christine Azcarrage-Jacob, the CA’s Former Sixteenth Division affirmed its January 30 decision that upheld the order of Regional Trial Court in Quezon City Branch 221 Presiding Judge Jocelyn Solis-Reyes granting Datu Sajid Islam Ampatuan, one of the principal suspects in the 2009 Maguindanao massacre, where individuals, including 32 journalists were killed in November 2009. Ampatuan was granted bail on January 9, 2015. The appellate court did not give credence to the claim of the petitioners that its January 30 decision should be reversed, following the decision of the trial court to discharge Police Insp. Rex Ariel Diongon as state witness and to admit his testimony. Government prosecutors asked the CA to give weight to the testimony of Diongon, which was previously disregarded by the trial court, to prove that the evidence against Amapatuan’s guilt is strong enough to deny his application for bail. The petitioners argued that this “supervening event” should warrant the reversal of the CA’s decisions favoring Ampatuan. In denying the government prosecutors’ plea, the CA noted that the petitioners failed to submit proof that such order was issued by the Court. Even assuming that such order was issued by the trial court, the CA said it would have no relevance to this present case considering that its power of review is limited only to a determination whether the trial court issued the said order in grave abuse of its discretion amounting to lack or in excess of jurisdiction. “Indeed, our power of review does not include encroaching upon the lower court’s prerogative of determining the witnesses whose testimonies are relevant to the application of bail, as well as the power of according probative weight to said witnesses’ testimonies in the absence of any showing that the exercise of such discretion, was gravely abused by the trial court— an imputation we find wanting in the instant case,” the CA ruled. Aside from the said supervening
event, the CA described the other arguments of the petitioners as mere rehash of the arguments raised in the main petition, which it already
considered in coming up with its earlier decision. “In other words, these arguments are not issues which are
novel or which the Court overlooked to pass upon. Hence, the same do not need further judicial determination,” it added.
Economy
A4 Monday, September 4, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon
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‘Efficiency to minimize impact of excise tax’ By Lenie Lectura
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@llectura
“[The excise tax] is going to be a pass on to consumers. We can’t do anything about that. But it has been proven that what can best bring down prices is competition and efficiency. Those two will drive prices down,” Energy Secretary Alfonso G. Cusi said. Cusi urged oil firms “to be efficient in its operation so that consumers will support their products”. Based on the proposal, the excise tax on diesel will initially be P3 per liter, and will increase to P5 on January 1, 2019, and to P6 on January 1, 2020. The same will apply to kerosene, liquefied petroleum gas and bunker oil, which is used for producing electricity. The pending tax proposal also seeks an increase in the existing taxes on other petroleum products, like gasoline, lubricating oils and greases to P8 per liter or kilogram in 2018,
P9 in 2019 and P10 in 2020. “For SPUG [Small Power Utilities Group] areas, it will increase by P1.60. This is the effective increase in electricity rates for diesel-consuming plants. For oil prices, the estimate is between P7 to P9,” Cusi said. The Independent Philippine Petroleum Cos. Association (Ippca) is expecting gasoline prices to surge by P7.65 as a result of an impending increase in excise tax on all petroleum products and increase in locally produced ethanol. “With the increase in excise taxes compounded by the increase in prices brought about by the requirement of exhausting locally produced bioethanol, the general public bears the burden of the astronomical rise in gasoline price amounting to [P7.65] by the year 2019 for gasoline,” Ippca said in a draft letter to Congress.
BM FILE PHOTO
he Department of Energy (DOE) said efficient business operations and competition would best address an expected hike in the prices of petroleum products due to the upward adjustment in excise tax.
Seaoil Philippines said it would abide by what the law states. “It’s a pass-on cost for us. We will just implement what the law says,” Seoil CEO Glenn Yu said.
Sustainable energy
The Philippine government conveyed to the European Union (EU) and World Bank that it is pursuing its thrust to promote energy efficiency, sustainability and total electrification.
PHL leads Asia in financial inclusion, report says By Cai U. Ordinario @cuo_bm
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he Philippines led Asian countries in terms of financial inclusion, according to the latest report from think tank Brookings based in the United States. Based on the 2017 Brookings Financial and Digital Inclusion Project, Report, the Philippines ranked 7th out of the 26 Financial and Digital Inclusion Project (FDIP) countries. While the country’s overall score remained unchanged at 76 percent, Brookings said the Philippines dropped one spot in the rankings from sixth overall. “Countries have increasingly recognized that advancing access to and usage of affordable, secure formal financial services can contribute to their development objectives,” report authors Robin Lewis, John Villasenor and Darrell West said. “However, further opportunities for progress remain.” The Brooking’s FDIP team produced an annual report and scorecard that measure countries on four “dimensions” of financial inclusion: country commitment, mobile capacity, regulatory environment and the adoption of traditional and digital financial services.
The report stated the Philippines received its highest scores of 100 percent in the country commitment and regulatory environment categories. The country scored 94 percent in terms of mobile capacity but got only 42 percent in the category on adoption. “The top-scoring countries on the mobile capacity dimension of the FDIP scorecard are quite economically and regionally diverse, representing Latin America and the Caribbean, Africa and Asia. The five top-scoring countries for 2017 are El Salvador, Indonesia, Mexico, the Philippines and South Africa,” the report stated. Brookings said this performance may have been due to the signing of Executive Order 208 facilitating the Establishment of the Financial Inclusion Steering Committee by former President Aquino in June 2016. The authors also recognized the efforts of the Bangko Sentral ng Pilipinas (BSP), which is working with the national government in putting in place a biometric-based identity system to provide more efficient and equitable government services, including financial services. The authors said that, in order to improve the country’s performance, the government need to operation-
alize the recommendations of the steering committee based on the 2014 consumer finance survey. “Leverage the findings of the BSP’s Financial Inclusion Initiatives 2015 report, as well as the National Baseline Survey on Financial Inclusion and other studies, to identify underserved customers and target financial inclusion initiatives toward those customer segments,” the report stated. For the third year in a row, the top performer among all FDIP countries was Kenya. The other countries that made up the top 5 in the rankings were Brazil, Mexico, Colombia and South Africa. Other Asian FDIP countries included India, which ranked 12th overall; Indonesia, 14th; Pakistan, 16th; Bangladesh, 19th; and Vietnam, 21st, among others. The report was released by the Center for Technology Innovation at the Brookings Institution. The 2017 report was titled “Building a Secure and Inclusive Global Financial Ecosystem”. FDIP evaluates commitment to and progress toward financial inclusion across a set of 26 geographically, politically and economically diverse countries, including the Philippines.
This was the message conveyed by Cusi during the joint planning workshop for the Supported Access to Sustainable Energy Programme (Asep) held from August 30 to September 1 at Camp Punta Fuego in Nasugbu, Batangas. “The DOE is prioritizing the delivery of quality energy service to our people, not only in the business districts but also in the rural areas,” Cusi said. The EU earlier allocated €60 mil-
lion, or P3.3 billion, in support of the Philippine government’s 100-percent electrification target by 2022. The objective of the Asep is to assist the Philippines in expanding sustainable energy generation to meet growing economic needs and provide energy access to the poor and marginalized sector in accordance with the Philippine Development Plan. The objective was also emphasized during the Philippine-EU
Asep conference held on March 9, signaling the start of the joint undertaking between the DOE, EU and World Bank. The workshop aims to reacquaint the participants with the organizational structure and implementation mechanism of Asep and its components to improve interagency coordination and streamlining of the overall implementation process. A sep w i l l be implemented through three components: Component 1, the “Technical Assistance and Capacity Building Pillar”, Component 2, the “Investment Support” managed by the World Bank; and Component 3, the “Call for Proposals for Pro-Poor and Climate Resilient Innovative Energy Solutions” directly managed by the EU delegation. “With all the program’s key players gathered in one venue, we aim to seek each other’s concerns, insights and suggestions to be more synergized in our approach toward carrying out the Asep,” Cusi said. The DOE expects the participants to be more updated on the different implementation mechanisms and roles of Asep players after the joint planning workshop with hopes that this will further strengthen the agency’s E-Power Mo Campaign, designed to empower consumers by providing them information and options on the intelligent utilization of energy resources.
Free college education could cost P178 billion–group By Rosabell C. Toledo Correspondent
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hile the Commission on Higher Education (Ched) estimates the cost of implementing Republic Act (RA) 10931 next year at P34.1 billion, private sector-led advocacy group Philippine Business for Education (PBEd) said giving free higher education for public-university students could actually cost the government as much as P178 billion. The group said they are expecting the road toward the successful implementation of the Universal Access to Quality Tertiary Education Bill to be riddled with huge challenges, especially on the aspect of coming up with the necessary budget. “While PBEd welcomes the signing of RA 10931, it anticipates a tough challenge ahead, particularly on the financing side, as quality higher education comes at a hefty price tag,” PBEd said in a statement. Congress has earlier proposed the rechanelling of unused funds from government agencies that have low absorptive capacities, such as the departments of Information and Communications Technology, Agrar-
ian Reform, and Transportation as one of the ways to come up with the necessary funds for free tertiary education in the country. Be it P34 billion or P178 billion, however, PBEd says coming up with the budget is only a fraction of the challenge of making public universities free and accessible. “Adequate funding, earmarked to ensure that the education the law affords for all Filipinos is of high quality and sustainable is what PBEd is pushing for,” the group said. For PBEd, this means that the implementing rules and regulations (IRR) for the law must “clearly reflect mechanisms to engage the private sector, both from industry and academe, in standard setting and service delivery.” Moreover, PBEd thinks that the tertiary-education subsidy fund intended to cover indirect costs, such as matriculation and living arrangement costs, must be implemented with integrity and transparency, that the assistance actually reaches those who need it the most. “Securing the funds is just half the battle. We must also make sure that it’s spent on the right things and on those who deserve it. This is where the IRR comes in. It needs
to articulate in no uncertain terms how quality will be pursued—even elevated—while taking more people in. Free education must never mean substandard education,” the group explained. PBEd is composed of the country’s top business leaders committed to furthering the role of education in national competitiveness and development. Its advocacies include basic education reform, teacher quality improvement and work-force development. Aside from remaining on the lookout for strategies on how to best implement laws concerning education in the country, PBEd has also previously urged the Philippine government to decentralize its education system and to overhaul teacher development in order to address what it perceives as inefficiencies in the nation’s current education system. “Our basic-education system of 28 million learners, 800,000 teachers and 75,000 schools is too big for one agency to manage centrally. It’s no surprise then that inefficiencies and waste continue to plague the system,” PBEd Chairman Ramon del Rosario Jr. said in a news conference in July.
Think tank urges govt to increase LGU share on mining
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speci a l mining study urged government to increase the share of local governments and allow mining companies to pay local government units (LGUs) directly. This was among the key recommendations presented in a round table discussion on special study, titled “Mining in the Philippines: Problems and Suggested Solutions”. The study was commissioned by the Stratbase ADR Institute (ADRi) and authored by Dr. Carlo Arcilla, a professor of the National Institute of Geological Sciences of the University of the Philippines. The study points out that, “Revenues from excise taxes should be shifted substantially toward the LGUs [more than 30 percent] and away from national government. The LGUs bear the brunt of the impacts of mining and they should
proportionately share more in the sharing of tax revenues. This is an application of subsidiarity in the distribution of needs. The sharing itself, even more important than the actual must be done immediately, so as to have temporal cadence in the disturbance of mining and its benefits to the people most affected.” Arcilla cited the ongoing problem in delayed remittance to LGUs, which has been documented to be as long as 10 years, which gives the wrong impression to local residents and political leaders who have to answer to their electorate. The paper recommends further, “An exemption should be studied and granted to companies similar to that granted to firms in special economic zones that are allowed to pay taxes directly to the local government units. A solution, hopefully done by executive order, is to permit
mining companies to directly pay LGUs their share of the excise tax and also to increase the LGUs share of the excise tax.” Dr. CP David, trustee of Stratbase ADRi supported Arcilla’s forwardlooking position, adding that there are already world-class mining operations that are going beyond what is required by laws and can serve as success models in responsible mining operations with sustainability projects integrated with needs of their communities. The forum was attended by representatives from the government, academe, environmental groups and the mining industry. Stratbase ADRi will share the study to key policy leaders in both Houses of Congress, the executive, the Department of Environment and Natural Resources, civil-society organizations and industry stakeholders.
WALLS OF ART
A man walks past a wall featuring beautiful artwork at The Fort in Taguig City. The painted walls attract the attention of visitors and even workers in the area. NONIE REYES
Agriculture/Commodities BusinessMirror
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SRA hikes sugar allocation for US market in CY 2017-2018 By Jasper Emmanuel Y. Arcalas
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@jearcalas
he Sugar Regulatory Administration (SRA) increased the allocation for sugar to be exported to the United States in crop year (CY) 2017-2018 under a preferential trade scheme to stabilize domestic sugar supply.
In Sugar Order (SO) 1, the SRA classified 10 percent of the projected sugar output of 2.38 million metric tons (MMT) in CY 20172018 as “A” sugar, or those bound for the US. The allocation, which is about 238,000 metric tons (MT), is bigger than the 150,000 MT classified as “A” sugar by the SRA in the previous crop year. In CY 2016-2017, only 6 percent of the country’s output was set aside for the US market. “The US market continues to be a reliable market and remains
an instrument to stabilize domestic sugar supply that its allocation is imperative regardless of volume,” SR A Administrator Anna Rosario V. Paner said in SO 1, which she issued on August 31. The volume allocated by the SRA for “A” sugar is also bigger than the 142,160 MT raw value (MTRV) sugar quota granted by Washington to the Philippines for fiscal year (FY) 2018. For FY 2018 the Philippines was given the third-largest allocation of the 1.117 million MTRV
in-quota quantity of the tariffrate quota (TRQ) system of the US, next to the Dominican Republic and Brazil, which received 185,335 MTRV and 152,691 MTRV, respectively. Countries authorized by the US to export sugar under the TRQ scheme may do so at lower duties. A US fiscal year runs from October 1 and ends on September 30 of the succeeding year. Of the projected sugar output for CY 2017-2018, 80 percent will go to the domestic market, higher than the 74 percent classified by the SRA as “B” sugar in the previous CY. The remaining 10 percent of sugar output was classified as “D”, or those that will be exported to “other World markets”. “In order to promote the effective merchandising of sugar
and its products in the domestic, US and World markets, it will be necessary to allocate the CY 2017-2018 sugar production to such quantities as to place those engaged in the sugar industry on a basis of economic viability,” Paner said. The projected output of 2.38 MMT in the cur rent crop year is 4.8 percent lower than the 2.5 MMT produced in CY 2016-2017. The SRA, a government-owned and -controlled corporation attached to the Department of Agriculture, pegged the domestic demand for sugar in the current CY at 2.17 MMT. In the previous CY, the SRA reduced the allocation for “B” sugar to 74 percent, from 94 percent, and allocated 20 percent, for “D” sugar. The SRA maintained its allocation for “A” sugar at 6 percent. Data from the SR A showed that the Philippines has filled its regular sugar quota from the US in FY 2017. Local producers are currently in the process of supplying the additional volume of 63,830 MT granted by Washington, which should enter the US territory on or before October 31.
Editor: Jennifer A. Ng • Monday, September 4, 2017
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Future at risk?
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outh unemployment remains a key challenge. The persons concerned lack the kind of education, training and effective vocational guidance that would match industry needs. Unless things improve, the future looks bleak. Frustrated youth are actually more of a risk than a chance. If they cannot build a life, start a family and fulfill at least some of their own and others’ expectations, they become destructive, prone to extremist movements—or leave. Millions of young people seek their fortunes abroad and are missed at home. Education is the key to everything. Regarding job opportunities and labormarket demand, high-quality vocational training is at least as important as university education. Fast population growth today means more problems tomorrow. Moreover, it is necessary to set in motion economic development. This involves many industries, but let’s focus on agriculture. No country that has escaped poverty has done so without substantially raising farm productivity. Food production is essential for a people to be healthy and productive. In terms of jobs and livelihoods, agriculture is more important than any other sector. Irrigation and mechanization would boost agricultural outputs. Better access to financial services and markets would be useful. Moreover, it would make sense to process food near the villages. Tax exemptions should support this kind of rural development. Moreover, young people should get access to land. Employment opportunities would arise. Additional, rural jobs could result from processing harvests in the region and providing supportive services, including credit, for instance, to farms. The future is in food security, in agri-food supply and value chains, in agri-entrepreneurship and in the young
Henry J. Schumacher
europe Beat staying on the farms. Jointly with the youth, agriculture must be modernized in order to synergize linkages in the value chain from preproduction, through production, to processing (with special focus on reducing the excessive postharvest losses), to creating linkages to markets or food-manufacturing plants. The main drivers of these changes in agriculture have to be the youth, a new breed of entrepreneurs. Let’s bear in mind that the most powerful and sustainable approach to spur job creation is education geared to empower entrepreneurship. Entrepreneurs take advantage of problems and make profits by offering solutions. The youth must be involved in creating empowered farming communities; they may find new ways to accept cooperatives as the key for agricultural development. All summed up, youth empowerment must focus on changing the young generation’s mindset and culture. Education and motivation matter— and when they result in a sufficient number of people becoming successful entrepreneurs, those people can dramatically improve the employment situation for everyone. Imagination, inspiration, creativity, passion and the pursuit of happiness matter. The government must certainly do its part, but it is wrong to only wait for the government to act. People must be agents for their own well-being—and the young generation must be taught accordingly. Comments are welcome; contact me at hjschumacher59@gmail.com
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Banking&Finance
Monday, September 4, 2017 • Editor: Jun B. Vallecera
BusinessMirror
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Headline inflation seen higher in August
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he Department of Finance (DOF) anticipates a slight uptick in the country’s inflation in August reaching 3.1 percent, due to the combined impact of food- and petroleum-price adjustments. According to DOF Undersecretary Gil S. Beltran, the market already feels the impact of the rainy season and food-supply restraint, pushing prices slightly higher, resulting in inflation. “The inflation forecast for August is 3.1 percent. The main reason is food and oil from petroleum products. On food, we are reaching the point where the supply in the market is low because it’s the rainy season. But, once harvest time comes, the prices will be back,” said Beltran, also chief economist at the DOF. He added that, once the rainy season subsidies around October, inflation levels should start to decline again as the supply of food in the market stabilizes. The main drivers for the uptick in inflation in August are rice and gasoline. “[The supply of rice is] okay, but seasonally the supply is lowest at the point where the rainy season is at its peak. When the rainy season ends in October,
for instance, prices drop. It’s only seasonal,” he said. Based on an earlier DOF economic bulletin, inflation in July was reported at 2.8 percent owing to stable food prices and lower electricity rates.
Case clippings
By Justice S J Ranada Jr.
LAWYERS–return of fees to client In the course of disciplinary proceedings against a lawyer, it is proper that said lawyer be required to return to the complainant-client the amount delivered to him during said complainant’s engagement of his professional services, or in the context of an attorney-client relationship. Said client-victim should not be required to litigate in another proceeding what has already been established as the lawyer’s liability. Murray v. Cervantes 07 Feb 2017
AC 5408 Leonen, J
W hen asked if the recent bird-f lu outbreak in some of the provinces contributed to the inflation uptick, Beltran said the price of poultry or chicken in the market actually dipped. “None, because of the bird flu, the prices of chicken dropped. That has a different impact. It was mainly rice and gasoline,” he said. Rea Cu
The main reason is food and oil from petroleum products. On food, we are reaching the point where the supply in the market is low because it’s the rainy season. But, once harvest time comes, the prices will be back.”—Beltran
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he Department of Finance (DOF) is studying a special legislation that will generate revenues needed to rehabilitate war-torn Marawi City. According to Finance Secretary Carlos G. Dominguez III, the cost of supplying the necessities of Marawi City may need supplemental funding, which will be done through a special bill submitted to Congress. “The big thing is what we are spending there [in Marawi City]. Actually at the Ledac [Legislative-Executive Development Advisory Council] meeting last Tuesday, we discussed the possibility of bringing to Congress a special bill for additional money,” Dominguez
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familiarize themselves with the system. By 2021, the DOF expects the system to be fully in place and operational. The department will also work closely with the Department of Communications and Technology (DICT) to ensure the sustainability of the system. The DOF Technology Modernization team led, by Dr. Vladimir Dennis Reyes, has already identified the compromised machines, software and communication lines within the department. Among the intervention and mitigation strategies that the team has proposed to put in place as shield include: performing a comprehensive cleanup of all end-point devices connected to the DOF network; establishing communications and threat analytics sharing protocols with the DICT; and limiting the number of potential channels that hackers usually exploit to gain access to online networks.
told financial reporters. The finance chief said Congressional leaders expressed willingness to study the proposal even though cost estimates from the Department of National Defense (DND) have yet to be determined. “Congress said they will look at it, but we did not have the exact figures, I and Secretary [Benjamin E.] Diokno spoke to Secretary [Delfin N.] Lorenzana to make sure he comes up with estimates as soon as possible,” Dominguez added. He said the Armed Forces of the Philippines (AFP) has enough funds to replenish supplies, but the dwindling number of soldiers it has will have to be addressed.
“The big problem is rebuilding the number of soldiers that we need to expand the military. We heard it’s something like 20,000 new soldiers,” he said. On the rehabilitation of Marawi City, the Philippines will receive aid from China machinery and equipment valued at some $3 million by October this year. “We want to say we are receiving by middle of October around $3 million worth of equipment for construction— bulldozers and ditch diggers and the like. It should arrive from China mid-October and will be landing in Iligan City. That will be the first batch coming in,” Dominguez said.
Citystate Savings Bank relocates two branches for better servicing
Preparing to disrupt and grow nsurance CEOs may be confident in their current market position, but they also recognize that they face an uncertain future where new innovations, technologies and operational risks will upset the status quo and catalyze further disruption. As insurers start to transform their organizations and embrace new models and technologies, the risk landscape is changing. In fact, according to insurance CEOs, the most concerning risks today are those related to people, processes and emerging technology. Thirty-six percent of CEOs participating in this year’s survey admitted they are concerned about emerging technology risks (up from 29 percent in 2016), ranking this as the top risk for CEOs this year. And 45 percent of respondents said they expect technological innovation to create significant disruption in the sector over the next three years. At the same time, a third of the insurance CEOs we surveyed also noted significant concerns about rising operational risks (up from 19 percent in 2016), suggesting that CEOs are worried that their transformation initiatives may be straining their risk appetites. “Most insurers are now undertaking multiple change programs across the business and that’s putting a lot of pressure on business and operating models,” Gary Reader noted. “In this environment, CEOs need to be increasing their focus on governance and controls while boards and executive committees must allocate enough time to reviewing progress, risks and issues.” Interestingly, many of the traditional insurance risks seemingly have fallen down the CEO agenda. Cyber risk, ranked the top risk by insurance CEOs in 2016, tumbled to seventh place this year (even as European-based firms prepare for the European Union’s General Data Protection Regulation). Yet, in discussion with our clients around the world, we see strong signals that many are mov-
he Department of Finance (DOF) said it is putting in place a comprehensive cybersecurity defense structure that will span all department units and attached agencies and shield its online portals and communications systems against sophisticated cyber attacks. Such a system was seen operational by 2021. In a report to Finance Secretary Carlos G. Dominguez III, the system was seen set up within the month and completed next year. Communication brokers will connect all inline security appliances of each attached agency to an Advanced Security Operations Center (Asoc). The system will perform a comprehensive digital infrastructure upgrade of each attached agency, including the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). There will be a corresponding training for employees to
Supplemental budget eyed for Marawi rehab
Perspectives New concerns emerge
DOF pursues 4-year cyber-shield program T
ing beyond a generic view of cyber risk to develop risk, resilience and mitigation plans in the context of the parts of their business that could be most seriously affected. We believe the risk remains very much top of mind. Another interesting change is that just one in five CEOs said they are concerned that regulation will inhibit their growth over the medium term. In response, insurance CEOs seem to be shifting their strategic priorities to focus on innovation, emerging technologies and data. The top 2 priorities—cited by 25 percent of CEOs—were to foster greater innovation and become more data-driven. Twenty-four percent said their top priorities include implementing disruptive technologies. “Many CEOs recognize that—over the long term—their traditional evolutionary approaches of achieving select and systematic improvements will no longer work,” said Laura Hay, national insurance leader, KPMG in the US. “They understand that they will need to take an approach that revolutionizes their relationship with customers, their use of technology and their business models.” “The problem is that the vast majority of these efforts are happening at the functional or project level rather than the enterprise level,” Reader noted. “If insurers truly want to reinvent their customer proposition, they need to take a much more fundamental approach to their transformation and innovation initiatives.” The article, “Preparing to disrupt and grow” by Gary Reader, KPMG in the UK, was taken from KPMG International’s annual CEO Outlook survey. © 2017 R.G. Manabat & Co., a Philippine partnership and a member-firm of the KPMG network of independent member-firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.
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itystate Savings Bank Inc., a publicly listed bank, transferred two of its branches recently to new locations to better serve its clients. The transfer happens as Citystate Savings celebrates its 20th anniversary this year, keeping true to its commitment to help more and more Filipinos attain financial growth. Citystate Savings Bank Pasay Branch has been relocated to the ground floor of the Vista Cinema Pasay Building at 2350 Taft Avenue. Citystate Savings Bank Las Piñas Branch has been transferred
SWEET EXTRACTION
to the city’s business hub along Zapote Road, where it can be more accessible to its clientele and prospective customers. Both Inna Bianca Reynaldo, Pasay City Branch business manager, and Zeny Abello, business manager of Las Piñas Branch, anticipate increased banking activity in their respective branches. Abello said the new location at the Zapote Road business center “offers easier accessibility, higher visibility and stress-free transactions. It also has more parking spaces for prospective clients.”
Citystate Savings Bank is the banking arm of the ALC Group of Companies headed by the late Ambassador Antonio L. Cabangon Chua, founder and chairman emeritus. The group also includes the Fortune Insurance Group and the Eternal Group of Cos., among other firms. Citystate Savings Bank is regulated by the Bangko Sentral ng Pilipinas. It is a proud member of BancNet Deposit Insurance Corporation with maximum deposit insurance for every depositor of P500,000.
The Philippine Association of Stores and Carinderia Owners (Pasco) is leading a signature drive against the proposed sugar-sweetened beverage tax, which will increase the price of instant coffee, powdered juices, energy drinks, soft drinks and other beverage products sold in sari-sari stores. At Barangay 176 in Caloocan City, sari-sari storeowner and Pasco member Mary Joy Bueno assists fellow members in signing the petition. The Pasco encourages the public to sign the online petition at www.pambansangpalista.org.
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The World BusinessMirror
Editor: Lyn Resurreccion • Monday, September 4, 2017 A7
US seizes control of Russian posts in San Fran, D.C., NY
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ASHINGTON—The United States seized control last Saturday of three Russian diplomatic posts in the US after confirming the Russians had complied with the Trump administration’s order to get out within two days, officials said. These inspections were carried out to secure and protect the facilities and to confirm the Russian government had vacated the premises.” —State Department official
As the Kremlin cried foul, accusing Washington of bullying tactics, the US disputed Moscow’s claims that American officials had threatened to “break down the entrance door” to one of the facilities, and that the Federal Bureau of Investigation (FBI) was “clearing the premises.” Not true, said a senior State Department official, adding that US officials had joined Russian Embassy personnel for walkthroughs of the three buildings. “These inspections were carried out to secure and protect the facilities and to confirm the Russian government had vacated the premises,” the official said in a statement e-mailed last Saturday to reporters by the State Department on condition the official not be named. Russia has been incensed by the move to shutter Russia’s consulate in San Francisco and trade offices in Washington and New York, actions the US took in retaliation for Moscow’s decision last month to force the US to cut its diplomatic personnel in Russia to 455. Moscow has accused the US of violating international law by shuttering the facilities, a charge the US disputes. Last Saturday Russia’s Foreign Ministry said it had summoned the US deputy chief of mission in Moscow, Anthony Godfrey, to deliver a formal protest note calling the purported trade office search an “unprecedented aggressive action.” The Foreign Ministry also posted a video on Facebook that it said showed FBI agents inspecting the consulate general building in San Francisco. In the video, a man in a tie knocks on several numbered doors and enters what appears to be apartment units, taking a quick glance inside before declaring everything in order. There was no additional comment from the US about whether the FBI was involved in the inspections. The State Department declined to answer additional questions about whether the premises might be searched for intelligencegathering purposes now that the Russians have left. Last Saturday night lights shined brightly on several floors of the consulate in San Francisco and some windows were wide open. A day earlier, black smoke was seen billowing from the chimney at the consulate as the Russians rushed to meet the Saturday deadline, and workers could be seen hauling boxes out of the stately building. The US did appear to bow to one Russian complaint—that they were given a mere 48 hours to vacate homes used by diplomats and their families. Softening the original order, the US said it had made “separate arrangements” to give families “sufficient time” to pack their belongings and vacate apartments on the consulate grounds. The US wouldn’t disclose how long the Russians would have
Rajan warned Modi vs demonetization
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he man who predicted the 2008 global financial crisis also presaged the damage Prime Minister Narendra Modi’s unprecedented cash ban would cause to India’s economy. Raghuram Rajan was governor of the Reserve Bank of India (RBI) in February 2016, when he was asked by the government for his views on demonetization, according to Rajan’s book I do what I do, the first time he’s spoken about his experience in the country. “Although there may be long-term benefits, I felt the likely short-term economic costs would outweigh them, and felt there were potentially better alternatives to achieve the main goals,” he wrote in the book. “I made these views known in no uncertain terms.” The central bank then prepared a note outlining costs, benefits and other options available, as well as detailing the preparation that would be needed and the time it would require. “The RBI flagged what would happen if preparation was inadequate,” Rajan said. “At no point during my term was the RBI asked to make a decision on demonetization.” Rajan left the central bank last September after unnerving political leaders with his outspoken nature. Several months later, Modi blindsided the nation by scrapping 86 percent of currency in circulation, saying the move was essential to unearth unaccounted wealth and fight graft. Bloomberg News
to move out of the residential part of the consulate, other than to say that Moscow had been informed of the new deadline. In the meantime, the State Department will control all access to the properties, along with the responsibility for securing and maintaining them, the official said. The closures on both US coasts mark perhaps the most drastic diplomatic measure by the US against Russia since 1986, near the end of the Cold War, when the
nuclear-armed powers expelled dozens of each other’s diplomats. And it comes amid some of the broadest strains in their relationship ever since. The two countries have clashed over the wars in Ukraine and Syria, but most significantly over American allegations that Russia meddled in the 2016 US election to boost President Donald J. Trump’s chances of victory. Investigations continue into whether Trump’s campaign colluded with Moscow. AP
Workers carry boxes out of the Russian consulate in San Francisco as acrid, black smoke was seen pouring from a chimney at the stately building in a historic area of the city on September 1, a day after the Trump administration ordered its closure amid escalating tensions between the United States and Russia. The workers were hurrying to shut Russia’s oldest consulate in the US ahead of a Saturday deadline. AP/Garance Burke
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Monday, September 4, 2017
One week after Harvey
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Texas residents exhausted, still stranded
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OUSTON—A week after Texas was slammed by Hurricane Harvey, this region was still engulfed in crisis last Saturday, with weary residents of Houston searching for ways to repair swamped homes and salvage possessions even as others faced new orders to evacuate. In cities and small towns to the east, thousands of others remained stranded by rising waters and were still without dry shelter. After seven days, frustration and exhaustion had set in for many. Parts of Beaumont, a city of nearly 120,000, and a vast array of towns east of Houston were cut off from one another and coping with flooded roads, submerged homes and limited power, with no relief in sight. For a third day, residents of Beaumont were going without drinking water, after flooding knocked out pumps for the city’s water system. “This has been a trying week,” Amelia Nickerson said, as she and her husband hauled yet another bag of trash out of their Houston home, where the waters had risen after the storm made landfall late on August 25. Remains of their bedroom walls were being carried out, one soggy wheelbarrow load at a time. “This was so much worse than what we expected,” she said. President Donald J. Trump visited Texas and Louisiana last Saturday, his second trip to the affected
$7.8B
The amount President Donald J. Trump was expected to ask Congress to approve for disaster relief in the coming days, and $6.7 billion more by the end of the month region last week. In Houston he toured a temporary shelter, helped volunteers load boxes of supplies and said he was “very happy” with a recovery that, in many places, had barely begun. As officials were only beginning to assess the widespread damage across the region and as rescue flights and boat missions continued through parts of the state, Trump was expected to ask Congress to approve $7.8 billion for disaster relief in the coming days, and $6.7 billion more by the end of the month, White House officials said.
Photo albums dry out on a driveway at a home in Bellaire, Texas, on September 1. A week after Harvey began battering southeast Texas, residents in some places returned home and began the long, hard slog toward recovery, while other areas remained very much in the midst of a crisis last Friday. Jim Wilson/The New York Times
Texas officials said 440,000 residents had applied for aid from the Federal Emergency Management Agency (Fema), and tens of thousands of people remained in shelters. Local authorities said at least 50 deaths in Texas were related or suspected to be related to the storm. Residents of the region said the days since the storm’s first landfall had been a long, dreadful blur. Some described spending hours moving their families to safe places, only to be moved along to another town a few days later when the waters rose again where they were. Others said they had gone a week without clean clothes, showers or cooked meals.
Houston was sputtering back to life—some restaurants were open and buses were running—and school officials were assessing the damage before a delayed first day of school on September 11. A spokesman for the Houston Independent School District said that water had gotten into at least 202 of the district’s 284 schools and that officials were deep-cleaning 115 schools. Officials have not yet checked on 39 schools. And even as some residents were returning to their homes, Mayor Sylvester Turner ordered a mandatory evacuation for a west Houston neighborhood that officials said was
likely to remain inundated because of releases of water from two nearby reservoirs. Turner added the evacuation would affect about 300 people who had stayed in their homes and would not apply to dry homes. In a news conference last Saturday evening, he said that power to affected homes would be turned off last Sunday morning. Beaumont, about 80 miles east of Houston, was still in crisis mode. After the city’s water service shut down early last Thursday, some homes have had sporadic trickles of water coming out of their faucets. Officials warned residents to boil water and were distributing bottled
water, and last Saturday evening, the city said it believed that it had found a way to bring back partial service. Rescuers, volunteers and others bringing help to the area were weary by Saturday, as well. Unlike in some storms where waters recede quickly, this one seemed to move in slow motion, spreading around the area and continuing to affect new communities. “I don’t even know what day it is right now,” said Tony Gonzales, a worker who had come from Laredo to assist efforts to raise dozens of utility poles toppled around Port Aransas. “It’s been a 100-hour week,” said Gonzales, who looked bleary from the heat and was battling a cold. Chief warrant officer Pedro Vargas-Lebron, who pilots Black Hawk helicopters for the Texas Army National Guard and spent much of the week on search-andrescue missions, said he could recall only a vague outline of recent days: the missions, the rescues, the weather. Each mission, he said, proved startling. “Every time we went out, it was the same thing,” he said. “Every time we flew over a flooded area, I’d say the same exact thing to my crew: ‘Oh my God, this is crazy.’” He added, “Every step is just, ‘Oh my God, I can’t believe these many people are out here.’” The signs of exhaustion were seen all around. Colleen Grice and her husband plunked down in the lobby of an Extended Stay America hotel in Corpus Christi last Friday night. Her family, from a town near Beaumont, had fled to a hotel in Beaumont to avoid the storm’s high waters. New York Times News Service
How to deal with flooded Covering water damage: Flood insurance around the world cars in Harvey’s wake T
In this August 29 photo, flooded cars were brought by water current near the Addicks Reservoir as floodwaters from Harvey rise in Houston. Auto-industry experts estimate that 500,000 to 1 million cars, trucks and sport utility vehicles were damaged by floodwaters from Hurricane Harvey. Most will have so much water damage that they can’t be fixed, and insurance companies will declare them total losses. AP/David J. Phillip
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ETROIT—As Harvey grudgingly moved away from Southeast Texas, aerial photos revealed thousands of cars covered by floodwaters on streets, parking lots and in driveways. By the time the water recedes, auto industry experts estimate that 500,000 to 1 million vehicles will have been damaged by water, with most being total losses. State Farm, one of the largest United States auto insurers, says it has already received almost 20,000 claims from the Houston area. Cars sat in water for days, in many cases up to the windows or roof lines. It’s likely they’ll never be driven again. Here are answers to questions about what will happen to those vehicles and how to handle cars in the aftermath of the epic storm. Should I start my car if it’s been flooded? No, in almost all cases. If the car was only in a few inches of water that didn’t rise past the bottom of the body, maybe. Water higher than that can get into wires, transmission parts, the exhaust or other places. Deeper water could enter the cylinders that surround the pistons. Trying to start the car could bend parts that connect the pistons to the rest of the drive train, said John Nielsen, managing director of automotive engineering for AAA. Oil, gasoline, antifreeze, brake fluid and other liquids could have
water in them that could cause damage if not replaced. Nielsen recommends having the car towed to a mechanic for inspection. Depending on the severity of flood damage, he says the cost of refurbishing a car likely will be more than replacing it. If it’s repaired, will my car be safe? Probably not. Water could have damaged sensors, electrical connectors, computer chips and wiring that are under the carpet, behind the dashboard or in the engine compartment. That could disable lights, air bags, ignition, gas and brake-pedal sensors or other essential systems. Corrosion can form beneath wiring insulation. Salty water from the Gulf of Mexico would make that worse. Damage may not surface for years. “Maybe it’s OK. Maybe it’s not. I would be really worried about it,” Nielsen says. Will insurance cover a flooded car? Depends on your coverage. If you’re financing or leasing, your lender likely requires comprehensive insurance, which typically covers flood damage along with fire, vandalism or falling objects. But if you own a car outright, or it’s old and would be more expensive to repair than it’s worth, you may choose not to get comprehensive coverage. As of 2013, 78 percent of US insured drivers had comprehensive coverage, according to the Insurance Information Institute. AP
HE HAGUE, Netherlands— The catastrophic flooding unleashed on Texas by Harvey was unprecedented. Elsewhere in the world, flooding, associated with wild weather, is a challenge confronting all types of communities from coastal cities in Asia to mountain villages in Europe. In the last two months alone, floods have killed more than 1,000 people across India, southern Nepal and northern Bangladesh. Some 40 million more have seen their homes, businesses or crops destroyed. Compounding the misery is the fact that many don’t have access to insurance and even if they do, it can be prohibitively expensive. At least in the United States, there is a government-backed program that provides flood insurance to residents. But in the Houston area, which bore the brunt of Harvey, many residents didn’t have the flood coverage and could have to dip into savings to pay for repairs. Maryam Golnaraghi, director of the extreme events and climate-risk program at global-insurance think tank, The Geneva Association, said governments and the insurance industry have to work together to make insurance affordable and give people incentives to buy it. “In the past, that marriage did not work,” she said. “Now they’ve realized that neither the industry nor the government can do it alone. They have to work together on provision of insurance.” Here is a glance at how other f lood-prone regions deal with insurance.
Asia
OF all natural calamities, floods are the most frequent and costly in Asia, due to the combination of monsoonal weather and burgeoning populations in coastal cities and river flood plains. Rising sea levels linked to global warming are also expected to increase the
Schoolchildren wade through a waterlogged street following heavy rains in Mumbai, India, on August 29. Heavy rains last Tuesday brought Mumbai to a halt, flooding vast areas of the city. AP/Rajanish Kakade
frequency of so-called once in a century floods, such as those that swept through Thailand in 2011, costing tens of billions of dollars. In Asia’s developing countries, which make up the bulk of the region’s population, private insurance against flooding and other natural calamities is beyond the reach of most. From Bangladesh to Indonesia and India, the burden of losses, as well as the costs of relief and reconstruction falls on individuals, businesses and the already overstretched budgets of governments and charities. The Geneva Association estimates that in 2014 only 10 percent of losses from all types of natural disasters in Asia were insured, compared with 60 percent in North America. In China a government-subsidized insurance against natural calamities has been available for farmers since 2007—but crucially only covers crops and livestock. Private insurance is negligible with only 1 percent to 2 percent of flood losses insured and flood insurance for property not available at all in rural areas, according to the Geneva Association. Thailand’s government set up
a National Catastrophe Insurance Fund after the 2011 floods with the intention of backing up hardpressed domestic insurance companies so they would continue to offer natural-disaster insurance. However, participation is not compulsory, and according to media reports, local premiums have still soared, counter to the government’s intention, while insurers have reduced the amounts they’d pay out.
Europe
The 28-country European Union has a fund to help member-states tackle natural disasters, like floods and earthquakes. However, the so-called EU Solidarity Fund is intended to help governments meet the cleaningup costs and rebuilding. It is not meant to cover private insurable losses—that is down to homeowners in member-states. There’s, perhaps, no country in Europe more alert to the threat of flooding than the Netherlands. The low-lying nation of 17 million has a well-developed network of dikes, dunes and water barriers that have largely succeeded in containing the water.
For a country constantly battling the elements, it may come as a surprise that flood insurance is not so well-advanced. Only one Dutch insurer offers it. The national association of insurers wants to change that and has long called for a mandatory scheme that would involve adding a small amount—50 cents to a euro—to existing homeowner-insurance premiums. “England, France, Belgium have flood insurance. It is crazy that a delta country like the Netherlands doesn’t,” the association’s spokesman Rudi Buis said. “Maybe people think we are so good with our dikes and everything else we can fix it, it won’t happen. But we think that’s an illusion, particularly in light of climate change.” The country’s Consumer and Markets Authority rejected the proposal back in 2013, however, arguing that consumers must have a choice of whether they insure against flooding. Now, if there is a flood, Dutch homeowners who suffer damage have to hope that the government activates a national program that pays out for damages suffered in major natural disasters or serious accidents. In France all insurance contracts covering houses, businesses, public entities or vehicles must by law include protection against natural disasters, including floods, Stephane Penet of the French Insurance Federation said. Insurers must cover flood losses up to a certain amount, above which a state fund kicks in, he added. “If there is a huge catastrophe in France from a certain amount of losses, it’s no longer the insurers that pay, it’s the state,” he said. In Romania fewer and fewer people are insuring their homes against flooding. The National Pool against Natural Disasters reported that, at the end of July, about 1.7 million homes were insured, down 4 percent on the previous year. AP
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Trump ponders withdrawing from trade pact with S. Korea
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ASHINGTON—President Donald J. Trump is considering pulling out of a major trade agreement with South Korea as he tries to fulfill get-tough campaign pledges on international trade, but he has not yet made a decision, two senior administration officials said last Saturday. The president’s top economic advisers remain deeply divided over a possible withdrawal from the United States-Korea Free Trade Agreement, as negotiators from both countries struggle to rewrite the 5-year-old deal. The debate comes as the US and South Korea are working together to try to combat a growing nuclear threat from North Korea. In recent days, a frustrated Trump has pushed his staff to take bold action against a host of governments, including the one in Seoul, that he has accused of unfair trade practices. But many of his more moderate advisers, including the chairman of the National Economic Council, Gary D. Cohn, believe such a move could prompt a trade war that could hurt the US economy. An industry publication, Inside US Trade, first reported late last Friday that the administration was considering withdrawing from the treaty as early as next week. “Discussions are ongoing, but we have no announcements at this time,” a White House spokesman said in an e-mail. But Trump, asked last Saturday during a trip to the Gulf Coast whether he was talking with his advisers about the trade deal, said: “I am. It’s very much on my mind.” The idea of potentially withdrawing seems to have been prompted by the breakdown in negotiations between South Korean officials and the US trade representative, Robert Lighthizer, a US official with knowledge of the situation said. An initial meeting generated little consensus, with South Korean officials offering to consider minor adjustments to the agreement but rejecting a wholesale renegotiation— angering hard-liners in the White House who have targeted countries like China, Japan, Mexico and South
Korea that have large trade surpluses with the US. But it remains unclear whether the administration would actually withdraw from the deal, and industry representatives who have lobbied the White House say the president’s team has done little of the work—like a wide consultation with affected industries—needed before taking such a step. The possibility of abandoning the agreement has alarmed economists and some members of the president’s party who fear that such a move would force South Korea to block US manufacturers and farmers from a lucrative market. “The president and Nebraska have a basic disagreement about trade,” said Sen. Ben Sasse, RepublicanNebraska, who has frequently criticized Trump. “His administration holds 18th-century views of trade as a zero-sum game. I side with our farmers and ranchers who are feeding the world now.” Lighthizer and other administration officials, including Peter Navarro, an economic adviser to the president, have long complained that many South Korean industries, especially the automotive sector, enjoy government protections that make it harder for American companies to compete. Scrapping the deal would also have profound geopolitical implications in the region, said Michael Green, an Asia expert at the Center for Strategic and International Studies who oversaw issues on the Korean Peninsula during the administration of President George W. Bush. “One of the big reasons we decided to go forward with the agreement was to demonstrate to the South Koreans, North Koreans and Chinese that the US was committed to this relationship for the long haul,” Green added. That the administration would even consider canceling the agreement in the midst of the North Korean missile and nuclear crisis is astonishing, Green said. “It’s probably all theater, but it has negative strategic consequences as we try to manage the North Korean threat,” he said. New York Times News Service
May set to agree on $65-B Brexit bill
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rime Minister Theresa May is set to approve paying as much as €50 billion ($64.8 billion) for leaving the European Union (EU) in a bid to kick-start trade talks, but won’t disclose details until after the Conservative Party conference in October, The Sunday Times reported, citing a source. Britain would pay up to €17 billion a year to Brussels for three years after Brexit before ending payments ahead of the 2022 general election, the Times added. The newspaper also said that May’s office “did not recognize” the plan on the payment. How much the UK owes the EU in leaving the bloc is among the most difficult issues concerning Brexit, with analysts estimating that the EU will put forward a gross bill of as much as €100 billion. Britain’s government acknowledged in July that it will have a bill to pay, saying it wants to “determine a fair settlement of the UK’s rights and obligations.” In a separate report, The Mail last Sunday reported that May has been advised that Britain may have to pay up to 46 billion pounds to break the deadlock of the Brexit talks. Last week the EU’s negotiator, Michel Barnier, said the talks still had done nowhere near enough for there to be a prospect of moving on to trade discussions after October. The big sticking point is money: how much the UK is prepared to pay toward commitments the EU has made on the assumption of continued UK membership.
Labor to challenge Tories on repeal bill
Meanwhile, the UK opposition Labor Party will seek major chang-
es in legislation repealing laws that took Britain into the European Union four decades ago as a way to stay in the bloc’s customs union and single market, the Times said, citing a letter from the party’s Brexit spokesman. Keir Starmer wrote to his Conservative Party counterpart, Brexit Secretary David Davis, to warn that unless changes are made to safeguard “crucial rights and protections,” the party will oppose the so-called Great Repeal bill when it is considered in Parliament on Thursday, the newspaper said last Saturday. The opposition is backing a softer line on Brexit, with the party announcing last month that it wants Britain to remain in the single market and customs union for up to four years after exiting the EU. Labour lawmaker Chuka Umunna told Bloomberg TV last Friday that the UK should look to maintain customs and single-market trade links indefinitely to avoid “immensely damaging” economic consequences of Brexit. The vision of Brexit put to the electorate by Vote Leave campaigners in last year’s referendum looks “impossible to deliver,” Umunna said, as he called for a further softening of Labour’s stance on leaving the EU ahead of the party’s annual conference in Brighton later this month. Labour will seek support from pro-EU Tory backbenchers to force changes to the bill that will be published in the autumn, the Times said. The government is yet to signal whether it will concede the changes or attempt to pass them with its slim parliamentary majority, the paper reported. Bloomberg News
Monday, September 4, 2017 A9
US stocks rise as investors cheer August jobs report
The American flag flies above the Wall Street entrance to the New York Stock Exchange. Stocks are rising on September 1 despite an August jobs report that was a bit weaker than Wall Street anticipated. Automakers Ford and General Motors are rising as the companies report their monthly sales. The S&P 500 is on pace for its sixth gain in a row. AP/Richard Drew
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EW YORK—Not great, but good enough: US stocks rose last Friday as investors viewed a relatively weak jobs report for August as likely to help keep interest rates low. Banks, energy companies and automakers led the way.
The Labor Department said US employers added 156,000 jobs in August. That was a bit less than analysts expected, but investors were pleased that the economy kept growing at a steady pace while inflation remains weak. They bet that would keep the Federal Reserve (the Fed) from raising interest rates too quickly. Car companies rose as they reported their August sales. Wall Street expects them to get a boost as Gulf Coast residents replace the hundreds of thousands of cars that have been damaged by rains and flooding this week. Banks rose as bond prices dropped, which sent yields and interest rates higher. The pattern of slow but steady job gains and weak inflation has helped push stocks higher for years. Investors have worried at times
that the Federal Reserve would raise rates too fast and that the economy would stumble. “The market is looking at economic news that is below expectations as a sign that the Federal Reserve is not going to do much in terms of interestrate hikes,” said Scott Wren, senior global equity strategist for Wells Fargo Investment Institute. He said Friday’s report was “like almost every other jobs report we’ve seen over the last four years.” The Standard & Poor’s (S&P) 500 index rose 4.90 points, or 0.2 percent, to 2,476.55. The Dow Jones industrial average gained 39.46 points, or 0.2 percent, to 21,987.56. The blue-chip index had its first change in more than two years last Friday, as longtime Dow component DuPont combined with former rival Dow Chemical to form DowDuPont.
156,000 The number of jobs that the Labor Department said US employers added in August
The Nasdaq composite added 6.67 points, or 0.1 percent, to 6,435.33. It was the best week this year for the Nasdaq as technology and healthcare companies surged. The index is at record highs. The Russell 2000 index of smaller-company stocks advanced 8.29 points, or 0.6 percent, to 1,413.57. Six months ago, stocks made their biggest gain of the year: the S&P 500 jumped 1.4 percent on March 1. The index has gained just 3.3 percent since then. While businesses continue to hire workers at a steady pace, inflation is well still below the Federal Reserve’s target of 2 percent. The Fed has raised interest rates three times in the last year and says it plans to raise rates once more this year, and three times in 2018. But based on reports like Friday’s, investors don’t think that will happen. Long-term government-bond prices moved lower. The yield on the 10-year Treasury note rose to 2.16
percent, from 2.12 percent, but the yield on the two-year note remained at 1.33 percent. Still, the increase in bond yields and interest rates gave banks a boost. JPMorgan Chase rose 81 cents, or 0.9 percent, to $91.70. General Motors said its sales improved in August, and it gained 82 cents, or 2.2 percent, to $37.36. Car sales declined overall, partly because Hurricane Harvey slowed car buying in Houston, one of the largest US markets. But investors expect that will help sales in the months to come. Ford picked up 32 cents, or 2.9 percent, to $11.35. Fiat Chrysler gained 73 cents, or 7.2 percent, to $61.68. Benchmark US crude added 6 cents to $47.29 a barrel in New York. Brent crude, which is used to price international oils, fell 11 cents to $52.75 a barrel in London. Wholesale gasoline prices, which have surged this week, declined 3 cents to $1.75 a gallon. Wholesale gasoline prices have climbed because of rains and flooding in the Gulf Coast. At least two major pipelines have been slowed or stopped, and oil drilling and refining have also been curtailed. It’s not clear how much damage Hurricane Harvey, which is now a tropical depression, will cause to the region or to the US economy. But investors expect at least some companies will benefit: those that will be involved in the cleanup after the flood waters recede. Consulting and engineering-services company Tetra Tech climbed 75 cents, or 1.8 percent, to $43.35, for a 7-percent gain this week. Environmental-services company Clean Harbors and radioactive and hazardous waste-services company US Ecology took small losses last Friday, but for the week, Clean Harbors rose almost 5 percent and US Ecology jumped 8.5 percent. Gold rose $8.20 to $1,330.40 an ounce. Silver jumped 24 cents, or 1.4 percent, to $17.82 an ounce. Copper gained 2 cents to $3.12 a pound. In other energy trading, heating oil was little changed at $1.75 a gallon. Natural gas rose 3 cents to $3.07 per 1,000 cubic feet. The dollar rose to ¥110.24, from ¥109.98. The euro slipped $1.1869 to from $1.1903. The French CAC 40 gained 0.7 percent, and so did the DAX in Germany. In Britain, the FTSE 100 rose 0.1 percent. Japan’s benchmark Nikkei 225 edged up 0.2 percent and the Kospi in South Korea lost 0.2 percent. Hong Kong’s Hang Seng was little changed. AP
Trump’s Nafta threats bringing Mexico and China together
Mexico President Enrique Peña Nieto (left) and US President Donald Trump Bloomberg
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onald J. Trump’s repeated threat to terminate the North American Free Trade Agreement (Nafta) could bring a little bit closer together the two US partners who he’s complained about most: Mexico and China. At first glance, the two are more natural competitors than allies. Both
thrive on cheap labor and assembling products to sell to consumers in wealthier nations. When China comes looking to buy goods from Latin America, it’s usually commodities to fuel its own boom—iron ore from Brazil or copper from Chile—rather than finished products from Mexico.
Yet, they find themselves on the same side of the globalization argument—opposite the US—advocating more trade as the pathway to growth. That helps explain why President Enrique Peña Nieto will be in China next week, meeting with President Xi Jinping, just as US negotiators are in Mexico wrapping up the second round of talks on the Nafta. Peña Nieto has been invited to a business forum at a summit of the Brazil, Russia, India, China and South Africa. “This is an intentional effort of the president to show that Mexico has alternatives to the United States,” said Eric Farnsworth, vice president of the business group Council of the Americas. “They’re in the midst of Nafta negotiations, and the US president is saying very publicly that Nafta may have to be abrogated. If you’re the leader of either Mexico or Canada, that’s a pretty strong signal that you need a Plan B.” Policy-makers have realized that they took Nafta for granted for much
of the past two decades and didn’t advance enough in trade with other nations. Despite having trade accords with more than 40 countries, Mexico still sends 73 percent of its exports to the US, according to International Monetary Fund Data.
No easy task
IN addition to its overtures with China, Mexico is also working to update its trade accord with the European Union, while deepening ties with Brazil and Argentina, as well as nations like Japan, Australia and New Zealand, who were part of the Trans-Pacific Partnership that Trump abandoned in January. But to get an idea of the size of the challenge, those countries bought just 11 percent of Mexican goods in 2016. While Mexico has managed to increase exports to China by 12 percent since 2012, they still only account for $10 billion a year. China and Mexico have traditionally been rivals rather than partners. A sign of that competition is their share of US imports. Bloomberg News
A10 Monday, September 4, 2017
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Top China, India officials meet as border standoff drags on
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op Chinese and Indian officials met in Beijing amid a tense border stand-off in the Himalayas and an increasingly protracted diplomatic impasse.
T he T hursday meeting between Chinese State Councilor Yang Jiechi and India’s National Security Adviser Ajit Doval was the first high-level meeting since the weeks-long dispute began in a contested mountainous border area near Bhutan. It was part of a meeting of top national security advisers (NSAs) for the Brazil, Russia, India, China and South Africa (BRICS) nations. “At present, there are deep and complex changes in the international situation,” Yang said at a separate group meeting last Friday. “There is an increase in uncertainty and instability.” Yang held separate meetings with BRICS NSAs, including Doval, in which they exchanged views on “bilateral ties, international and regional hot-spot issues.” Yang also expounded China’s “principled stance” on “important matters,” according to the statement posted on China’s foreign ministry’s web site. The meeting comes as the two Asian powers jostle for broader geopolitical influence in South Asia. New Delhi is wary of Chinese investments in neighboring countries such as Pakistan and Sri Lanka, while Beijing is irked by India’s lack of support for its global Belt and Road infrastructure and trade initiative. “Doval’s official purpose is attending the BRICS meetings, but the border dispute will be high up on the agenda because that’s the biggest elephant in the room,”
said Du Youkang, a former Chinese diplomat based in India and Pakistan, who is now director of the Center for South Asian Studies at Shanghai’s Fudan University. “The visit will present the first good and genuine opportunity for both sides to sit down and discuss where we go from here.” The dispute is at a three-way junction between Bhutan, China’s Tibet and India’s Sikkim. Bhutan accused a Chinese road-building party of crossing into its territory on June 16. India said its troops approached the Chinese party and urged them to “desist from changing the status quo.” Most obser vers expect the standoff to be resolved diplomatically, but a sense of rising nationalism in both countries makes it difficult for either side to stand down. That risks prolonging the face-off as troops continue to stare at each other of a September BRICS summit in China’s Xiamen. Chinese state-owned media have issued editorials reminding India of China’s victory in a 1962 border war. The Communist Partyaffiliated Global Times said India would suffer “worse losses” than in 1962 if it doesn’t stand down and warned New Delhi to “get prepared for all possibilities from a potentially grave escalation of tension in the future.” On July 24 defense ministry spokesman Wu Qian warned India not to underestimate the country’s armed forces. China’s determination to defend its territory was
The China-India border Bloomberg
“unshakable,” he said, adding that it’s “easier to shake a mountain than to shake the People’s Liberation Army.”
‘Harsh’ rhetoric
“Chinese rhetoric has remained harsh, rather than softening, and Beijing will want to see how India responds to sustained pressure,” said Shashank Joshi, a senior research fellow at London’s Royal United Services Institute. The Doval visit could lay the groundwork for formal talks but it is unlikely to produce a “quick breakthrough,” he said. India and China have several contested borders and minor incursions happen from time to time.
But this stand-off is the most serious in decades. The dispute is near a sensitive narrow corridor that connects India to its northeast and involves a third country. “This is different from previous times, both in terms of the rhetoric and in terms of what they’ve chosen to do,” said Shivshankar Menon, a former Indian national security adviser who was involved in previous border negotiations with China. “The Chinese signaling has also changed. They obviously see a function for the Global Times that makes sure that China’s views get into the headlines abroad.”
China’s confidence
China has accused Indian troops
Japan princess engaged; wedding set next year
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OKYO—Japanese Emperor Akihito’s oldest grandchild, Princess Mako, said last Sunday she is getting married to a university classmate who won her heart with bright smiles and sincerity. Mako and fiancé Kei Komuro, both 25, said at a news conference that their relationship started when the princess sat behind him at a campus meeting five years ago at Tokyo’s International Christian University, where they graduated. “First I was attracted by his br ight sm i les l i ke t he su n,” Mako said, smiling shyly. They talked for the first time at the event for students ahead of a study-abroad program, and then started dating. Over time, she said she learned he is “a sincere, strong-minded, hard worker, and he has a big heart,” Mako said. The couple had a long-distance relationship while studying overseas—Mako in Britain a nd K omu ro i n t he US — for
Japan’s Princess Mako (right), the elder daughter of Prince Akishino and Princess Kiko, and her fiancé Kei Komuro, look at each other during a news conference at Akasaka East Residence in Tokyo on September 3. AP/Shizuo Kambayashi
one year. T hen Komuro proposed to her after dinner in December 2013. Mako has since introduced him
to her parents, Prince Akishino, second in line to the Chrysanthemum throne, and Princess K iko, as someone she wished
to “share her future with.” Komuro, who works as a legal assistant, said he was so thankful and happy to have been accepted by her parents, and her grandparents, Emperor Akihito and Empress Michiko. He and Mako pledged to have “a relaxed and peaceful” home together. “Having a family still goes beyond my imagination, but I hope to make one that is warm, comfortable and filled with smiles,” Mako said. Details of their wedding have not been decided, and palace officials say the ceremony is expected sometime around autumn next year. Mako’s 83-year-old grandfather, Emperor Akihito, is expected to abdicate in late-2018. He’ll be succeeded by his eldest son, Crown Prince Naruhito. Women aren’t allowed to succeed Japan’s throne. Mako will lose her royal status after marrying Komuro, who is a commoner. AP
Happy birthday! Atlanta zoo’s giant panda twins turn 1
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TLANTA—Atlanta’s zoo is celebrating the first birthday of the only giant panda twins in the United States. Zoo Atlanta has a holiday weekend full of surprises planned to celebrate the first birthday of Ya Lun and Xi Lun, last Sunday. The twins enjoyed ice cake creations made especially for them, and visitors crafted birthday greetings for them from
10 a.m. to 3 p.m. last Sunday. The zoo also offered some admission and concession specials in honor of the panda twins’ birthday. Ya Lun and Xi Lun were born 47 minutes apart on September 3, 2016. They were the sixth and seventh cubs born to 20-year-old mother Lun Lun and 19-year-old father Yang Yang. The twins’ names together mean “Lun Lun’s elegant and happy daughters.” AP
of illegally trespassing into Chinese territory and said India must withdraw troops before any formal negotiations. Indian officials have said they want a peaceful resolution. Indian Foreign Secretary S. Jaishankar told a group of diplomats in New Delhi on July 21 that the two countries were still talking, according to one western diplomat. China’s statements on the dispute reflect its confidence, according to Michael Kugelman, a senior associate for South Asia at the Washington, D.C.-based Woodrow Wilson Center. “China on a very fundamental level has the upper hand because of the strength of its armed forc-
Mexico’s president: Restoring peace is country’s top priority
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resident Enrique Peña Nieto last Saturday called for Mexico to redouble efforts against violence, saying that restoring peace to the nation is the biggest demand of society and top priority of his government. After falling in the first years of his administration, the rate of killings is on the rise again. That requires improvement in security forces at the local level across the country, Peña Nieto said. He urged Congress to pass an overhaul to turn 1,800 local police forces into 32 state units, an initiative that has been stalled for years, saying that the nation can’t depend on federal forces to permanently provide security in towns and municipalities. “We still have much to do,” Peña Nieto said in a nationally televised speech to his cabinet and hundreds of guests at the National Palace in Mexico City. “Today a great part of homicides aren’t related to organized crime but with common crimes, for which states and municipalities are responsible. It’s imperative that we address this weakness and the historical lags that exist in our local security forces.” Homicides have soared this year, reaching the highest rate this century, as drug cartels spar over trafficking routes. The drug war has also spread to top beach resorts like Cancun and Los Cabos, triggering a US State Department travel advisory for both resorts and endangering a tourism industry that generates $20 billion annually.
Election issue This photo provided by the Atlanta Zoo shows giant panda twins at the Atlanta Zoo in Atlanta. Atlanta Zoo via AP
es, which are superior to those of India on many levels,” Kugelman said. “India, which is intent on avoiding a conflict, is using great caution in its public messaging to avoid further antagonizing its Chinese rival. I imagine New Delhi has been particularly struck by the unusually sharp rhetoric emanating from the Chinese media.” China will not be the first to budge in this standoff because China believes its military is stronger and its position on the border is indisputable, said professor Zhang Li of Sichuan University’s Institute of South Asian Studies. “The risk will only increase if the stand-off lingers on,” Zhang said. Bloomberg News
The president’s reference to the spiraling violence signals the severity of the problem, and its likely importance in the upcoming presi-
dential election to choose his successor next July. While the Peña Nieto administration is credited with passing key economic reforms that have ended the state’s oil monopoly and triggered a plunge in prices for mobilephone service, its record on security has been widely criticized. Successes at taking down drug kingpins, like Joaquin “El Chapo” Guzman, may have only backfired by triggering bloody battles among traffickers fighting to replace them. One of the biggest blots on the administration’s security record is its inability to resolve the case of 43 students almost three years after they disappeared at the hands of the police—who handed them over to heroin traffickers in the state of Guerrero. In the speech, which lasted just more than an hour, Peña Nieto touted the administration’s economic achievements and advances in education and development. He also focused part of his speech on the US, drawing his biggest applause by saying that Mexico “won’t accept anything that goes against our dignity as a nation.”
Trump’s wall
U.S. President Donald J. Trump has repeatedly demanded that Mexico pay billions of dollars for a border wall to keep out undocumented immigrants, some of whom he has called criminals and rapists. Mexico’s government has consistently said that paying for the wall is out of the question. Peña Nieto expressed Mexico’s desire to strengthen the North American Free Trade Agreement, with the second round of negotiations to update the accord taking place in Mexico City through September 5. Bloomberg News
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Editor: Max V. de Leon • Monday, September 4, 2017 A11
Rohingya fleeing Myanmar: It’s all gone
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EZU AMTALI, Bangladesh— They stumble down muddy ravines and flooded creeks through miles of hills and jungle in Bangladesh, and thousands more come each day, in a line stretching to the monsoon-darkened horizon. Some are gaunt and spent, starving and carrying listless and dehydrated babies, with many miles to go before they reach any refugee camp. They are tens of thousands of Rohingya, who arrive bearing accounts of massacre at the hands of the Myanmar security forces and allied mobs that started on August 25, after Rohingya militants staged attacks against government forces. The retaliation that followed was carried out in methodical assaults on villages, with helicopters raining down fire on civilians and front-line troops cutting off families’ escape. The villagers’ accounts all portray indiscriminate attacks against fleeing noncombatants, adding to a death toll that even in early estimates is high into the hundreds, and is probably vastly worse. “There are no more villages left, none at all,” said Rashed Ahmed, a 46-year-old farmer from a hamlet in Maungdaw Township in Myanmar. He had been walking for four days. “There are no more people left, either,” he said. “It is all gone.” The Rohingya are a Muslim ethnic minority who live in Myanmar’s far western Rakhine state. Most were stripped of their citizenship by the military junta that used to rule Myanmar, and they have suffered decades of repression under the country’s Buddhist majority, including killings and mass rape, according to the United Nations. A new armed resistance is giving the military more reasons to oppress them. But the past week’s exodus of civilians caught in the middle, which the UN said had reached nearly 76,000 last Saturday, dwarfs previous outflows of refugees to Bangladesh in such a short time period. Last Friday’s influx alone was the single largest movement of Rohingya here in more than a generation, according to the UN office in Dhaka. The dying is not yet done. Some of the Rohingya militants have persuaded or coerced men and boys to stay behind and keep up the fight. And civilians who have stayed on
400
The number of people who had been killed in the violence that has swept across northern Rakhine since August 25 the trail are running toward conditions so grim that they constitute a second humanitarian catastrophe. They face another round of gunfire from Myanmar’s border guards, and miles of treacherous hill trails and flood-swollen streams and mud fields ahead before they reach crowded camps without enough food or medical help. Dozens were killed when their boats overturned, leaving the bodies of women and children washed up on river banks. Tens of thousands more Rohingya are waiting for the Bangladeshi border force to allow them to enter. Still more are moving north from the Rohingya-dominated districts of Rakhine state. And the violence there continues. “It breaks all records of inhumanity,” said a member of the Border Guard Bangladesh named Anamul, stationed at the Kutupalong Rohingya refugee camp. “I have never seen anything like this.” Here, in the forests of Rezu Amtali near the border with Myanmar, dozens of Rohingya told stories that were horrifying in their content and consistency. After militants from the Arakan Rohingya Salvation Army attacked police posts and an army base on August 25, killing more than a dozen, the Myanmar military began torching entire villages with helicopters and petrol bombs, aided by Buddhist vigilantes from the ethnic Rakhine group, those fleeing the violence said. Person after person along the trail into Bangladesh told of how the security forces cordoned off Rohingya villages as the fire rained down, and
Rohingya refugees from Myanmar rest near a refugee camp after crossing the border illegally near Amtoli, Bangladesh, on August 31. Tens of thousands of Rohingya have escaped into Bangladesh, bearing accounts of massacre at the hands of the Myanmar security forces and allied mobs. Hunger and hardship await them across the border. Adam Dean/The New York Times
then shot and stabbed civilians. Children were not exempt. Mizanur Rahman recalled how on August 25 he had been working in a rice paddy in his village, known in Rohingya as Ton Bazar, in Buthidaung Township in Myanmar, when helicopters roared into the sky above him. “Immediately, I had fear in my heart,” he said. His wife came running out of their house with their son, less than a month old. They escaped to a nearby forest and watched as the choppers’ weapons engulfed the village in flames. Myanmar security forces descended, and the sound of gunfire reached the forest. Rahman’s extended family fled the next day, but not before seeing his brother’s body lying on the ground, along with seven others. Three days later, as they climbed a hill near the border with Bangladesh, Rahman’s mother was shot dead by a Myanmar border guard. “Now we are supposed to be safe in Bangladesh, but I do not feel safe,” Rahman said as he wandered
through a market in the Kutupalong refugee camp, with no money in his pocket. His wife’s postpartum bleeding has increased so much that she can no longer walk or produce milk for their infant son. The baby, cradled in Rahman’s arms, looked skeletal, parched skin pinched at his joints. Other refugees took turns gently touching the baby’s feet to check if he was still alive. The Myanmar military said last Friday that nearly 400 people had been killed in the violence that has swept across northern Rakhine since August 25. Of that death toll, 370 people were identified as Rohingya fighters. Fourteen civilians, including four ethnic Rakhine and seven Hindus, were also reported killed. Myanmar officials, however, have given no specific accounting of civilian Rohingya deaths. Dozens of people I spoke to on the refugee trail said they had seen multiple people shot dead in at least 15 villages. Others spoke of families burned alive in their homes. Humanrights groups, while sifting through
Vietnam wants to make own cars; Vingroup to invest $3.5B
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ietnam wants to design and make cars for its 90 million motorbike and scooter riders. The country’s largest real-estate company Vingroup JSC said it plans to invest up to $3.5 billion to set up a manufacturing and research and development complex, aiming to roll out the first car in 24 months. The Hanoi-based developer break ground on the $1 billion to $1.5 billion first phase of the plant last Saturday, with a plan to make sedans, sport-utility vehicles (SUV) and electric cars in the future, Vingroup Vice Chairwoman Le Thi Thu Thuy said. “We want to create an affordable and high-quality car for Vietnamese,” Thuy said during an interview at the company’s Hanoi headquarters. Vingroup has signed a memorandum of understanding with a major investment bank regarding a potential loan for as much as $800 million, though it plans to fund most of the project itself, she added. Vietnam’s ambitions are similar to efforts by companies in China and Malaysia, which have also tried to create cheaper, local brands to woo consumers in a region where foreign brands, including Toyota Motor Corp. and Volkswagen AG, have had
Motorbikes and scooters crisscross Vietnam’s streets. Bloomberg
years of dominance. Vingroup will face the same challenges as Chinese automakers, which have struggled to win over buyers in the world’s biggest vehicle market, said Steve Man, a Hong Kong-based automobile-industry analyst for Bloomberg Intelligence.
Italian design
Vingroup plans to fund most of the new company, called Vinfast, by itself, Thuy said. The company will appoint an executive from a global automaker to be the car company’s CEO. It wants to use Italian design houses and will rely on US
and European companies to help produce main components such as engines, she added. Vingroup, which began as a realestate company, is now a conglomerate with seven core units, including the new automobile business. Vincom Retail, a Vingroup subsidiary backed by Warburg Pincus, is planning a domestic initial public offering that could become the country’s biggest-ever share sale from the private sector. The mall operator is preparing to raise funds as economic growth in Vietnam raises living standards and increases shoppers’ disposable incomes.
The car project is going to be a “very difficult” challenge, said Michel Tosto, head of institutional sales and brokerage at Viet Capital Securities JSC. The company should rather seek a venture with a foreign automaker, he added. “It doesn’t have the expertise nor the capital for that,” Tosto said. “It’s a highly competitive space dominated by foreign brands.” Chinese companies, such as Geely, BYD, Beijing Auto and Chery, have been trying for years to create a domestic car brand. Sales of cars bearing Chinese nameplates accounted for 43.5 percent of the total sales during January to July, according to the China Association of Automobile Manufacturers. Toyota is Vietnam’s biggest car seller with a 23-percent market share in July, according to the Vietnam Automobile Manufacturers’ Association. Ford Motor Co. had 12 percent. Vinfast’s automobile complex, to be located in the northern port city of Haiphong, will initially produce sedans and SUVs. Vingroup plans to eventually expand to mini and electric cars and targets production of up to 500,000 vehicles per year by 2025, Thuy said. Bloomberg News
survivors’ testimonies, have begun to make estimates that could add up to hundreds of Rohingya killed over the past week. Human Rights Watch, the New York-based watchdog, documented 17 sites where satellite imagery showed extensive fire damage, including one village where 700 buildings had burned. The Myanmar government claims Rohingya militants have torched their own homes in a bid for international sympathy. And the military maintains its current operations in Rakhine are designed at rooting out “extremist terrorists”. There are, clearly, combatants on the Rohingya side. State media have reported that more than 50 clashes have broken out between the Arakan Rohingya Salvation Army (Arsa) and Myanmar security forces over the past week. That has further complicated life for civilians trying to flee. Fortify Rights, a human-rights group based in Bangkok, interviewed villagers remaining in Maungdaw township who said Arsa was forcing
men and boys to stay and fight. The refugees flowing into Bangladesh have been predominantly women and children, leading to speculation as to where the men are. Ahmed, the farmer, said he was too old to fight, but 20 others from his village, Renuaz, had remained. “They have nothing to lose,” he said. “The Myanmar government wants to eradicate an entire ethnic group.” What the survivors are fleeing into is no haven. Bangladesh is itself poor, overcrowded and waterlogged, and has been reluctant to take on more displaced Rohingya. Around 400,000 already lived here before the exodus, according to government figures. An urgent humanitarian disaster is brewing here in a country hardpressed to feed itself, much less a new influx of refugees that one Bangladeshi official estimated could soon surpass 100,000 people. For now, the Border Guard Bangladesh is mostly turning a blind eye and allowing the Rohingya to stream across the border. New York Times News Service
Cambodia arrests opposition leader for alleged treason
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HNOM PENH, Cambodia—Cambodian authorities arrested the leader of the main opposition party last Sunday, accusing him of treason in a move that sharply escalated political tensions in the Southeast Asian nation ahead of national elections next year. His party denied the allegations and said the charges were politically motivated. The arrest of Kem Sokha during a midnight raid on his Phnom Penh home appeared to be part of a broader push by the government of Prime Minister Hun Sen, one of the world’s longest-serving rulers, to crush opponents and silence critics ahead of the vote. The government in recent weeks has closed down radio stations that gave airtime to the opposition party and threatened to shut down other independent media outlets on charges of violating tax laws that analysts say are politically motivated. Kem Sokha was taken away in handcuffs after a force of between 100 to 200 officers swept his home, according his daughter, Monovithya Kem, who is also a member of his embattled Cambodia National Rescue Party. Monovithya Kem said on Twitter that police showed no warrant for her father’s arrest. She added later that his whereabouts were unknown. But Interior Ministry Spokesman Gen. Khieu
Sopheak said Kem Sokha was being held at the Tropeang Phlong prison facility in Tbuong Khmum province, some 130 kilometers east of Phnom Penh. He said the next step will be his court appearance to officially face the charges, which carry a prison sentence of 15 to 30 years. The government said it had obtained a video clip and other evidence indicating “secret plans of a conspiracy between Kem Sokha...and foreigners to harm the Kingdom of Cambodia”. The statement gave no details but called the actions “treason”. Khieu Sopheak said that Kem Sokha had admitted in the video that “he was trained and received funding from a powerful foreign country to topple the government”. “This is a clear crime, and there’s no need to make further investigation because he has confessed already,” he added. Mu Sochua, a vice president of the opposition party, insisted the charges were fabricated. She also said that police could not legally arrest Kem Sokha who, as a lawmaker, is entitled to parliamentary immunity. The arrest violated the constitution, she told The Associated Press, but “this government has not cared about the law in quite some time”. AP
A14 Monday, September 4, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
The price of excellence
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inning only 24 gold medals in the 29th Southeast Asian (SEA) Games in Kuala Lumpur, the Philippines finished sixth place in the 11-nation biennial competition. Its medal haul, though, was the worst since the 20-gold production in Brunei Darussalam in 1999. While we congratulate our athletes who gave their best, one cannot be faulted for being disappointed with the performance of the Philippine delegation. Chief of Mission to the Games Cynthia Carreon had predicted 50 gold medals, almost double that of the 29 won in Singapore in 2015, great expectations that fell terribly short. “The 50-gold-medal prediction was to motivate the athletes,” she offered by way of explanation. “Let’s move on and look forward to 2019 [when the Games come to Manila for the fourth time],” Philippine Olympic Committee President Jose Cojuangco said, perhaps anticipating the brickbats to come. We can’t say we are surprised, both with the statements from our sports officials and our paltry production. With a P300-million budget allotted for the stint of the Philippine delegation of 497 athletes, their coaches and support staff (which include plane fare, uniforms, equipment, board and lodging and allowances), we certainly harbored realistic hopes. The Philippines used to be a powerhouse country in the SEA Games, often ranking either second or third (1991, 1993 and 1995) and even topping the event in 2005, when, as host, we got an unprecedented haul of 113 gold medals. Our performances, however, have been on a general decline the past SEA Games. We were sixth in 2007 in Thailand, fifth in Lao PDR in 2009, sixth in Indonesia in 2011, seventh in 2013 in Myanmar and sixth in Singapore in 2015. The fact that we could only come up with 29 gold medals in the past two SEA Games, then go below that output with 24 golds this time around, already speaks volumes about our sports programs. One can say the lean delegations and the introduction of sporting events that are not popular in the Philippines have something to do with our poor showings, but it is really the lack of funding that dooms Philippine sports. We cannot hope to win more medals if we do not sufficiently fund our athletes and sports programs. Money doesn’t necessarily win medals, but it does play a big part in helping athletes become the best they can be. Our Southeast Asian neighbors Malaysia, Singapore, Indonesia and Thailand have not just won golds in the SEA Games, they have also won Olympic golds already. We have to realize that medals—yes, even SEA Games medals —don’t come cheap anymore. And we have to succeed at the SEA Games first before we can even think about getting that elusive first Olympic gold. Why can’t the government give various sports, especially the ones where we can hope to be successful, more funding? Why can’t it invest a more substantial amount from the national budget for grassroots development, for hiring the best coaches, increasing athletes’ allowances, improving sporting facilities? Our public officials are always eager to acknowledge sports’ role in nationbuilding and share credit for medals won in international sporting events, but they are also notorious for peso-pinching athletes, coaches and their sports programs. This does not have to be so. There are things that can be done. Congress could, for instance, finally create through legislation a Department of Sports. Most countries that have successful sports programs have their own autonomously funded government department or ministry dedicated to sports. The President could start by ensuring that the Philippine Amusement and Gaming Corp. duly remits 5 percent of its gross income to the Philippine Sports Commission (PSC) as mandated in the PSC Act of 1990. Next time we participate in an international competition (The Asian Games is next year in Indonesia), the government should make sure the athletes and their coaches and sports associations would not be begging for funds for their training and preparations. Coming in sixth in the SEA Games and winning only 24 gold medals is not a crime, but give our athletes the money they need and maybe next time around we could expect a much better showing.
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RISING SUN
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F we are to go by the report of the Banko Sentral ng Pilipinas (BSP), businessmen in the country are less optimistic about growth this year, at least in the months of July to September. Some of the reasons are: business slowdown during the rainy season, continuing war in Marawi, martial law in Mindanao, increasing consumer prices, damages from the July 6 earthquake in the Visayas, stiff competition among businesses, continuing depreciation of the peso against the US dollar and less demand for produce because of closed fishing season in Davao Gulf. This, despite the reported 6.5-percent growth in GDP in the second quarter.
The BSP report showed that business confidence in the country is down to a three-year dip. It is at 37.9 percent this year, while it was 43 percent last quarter. This information is from a quarterly survey done by BSP among 1,480 major manufacturers operating in the Philippines. The last three months of October to December look more promising, however, it being the Christmas sea-
son when consumer spending picks up. Businesses are also looking forward to the continued rollout of the government’s infrastructure and development projects in the final quarter of the year. President Duterte’s proposed tax-reform program is also contributing to the positive atmosphere among the entrepreneurs. A lot of money is going into infrastructure as the President’s economic
A lot of money is going into infrastructure as the President’s economic managers have pledged around P8.4 trillion on these projects until the year 2022. They expect these developments to further boost the country’s GDP. But the comprehensive tax-reform package is key to funding this, so everyone is just waiting for the Senate to pass this very soon.
managers have pledged around P8.4 trillion on these projects until the year 2022. They expect these developments to further boost the country’s GDP. But the comprehensive tax-reform package is key to funding this, so everyone is just waiting for the Senate to pass this very soon. Some analysts say Aquino’s administration turned over to Duterte a healthy economy, which included “a vibrant services sector, strong consumer spending and stable inflation”. But they are worried about the way the current government is handling things, with respect to the ambitious infra goals and the peace and secu-
rity situation in the south. Proof of this growing concern is the result of BSP’s recent survey. We continue to hope that the good will outshine the not so good in the coming days, and that optimism will soon dominate the business atmosphere. nnn
AS September arrives, we herald the beginning of the Christmas season in the Philippines—we have the longest holiday celebration in the whole world, actually. There will be people who will start decorating their spaces around this time, and even more people who will start shopping for gifts to avoid the Christmas rush. In preparation for all the holiday parties and bingeing, let us look after our health. It’s not enough to make all the external preparations; it’s also a good time to start an exercise program and a healthy eating diet so that our bodies can adjust better to the upcoming hectic season. There is always virtue in taking the age-old advice of getting adequate rest and sleep, and drinking plenty of water. Plan early for the holidays, and good planning includes looking after your health and your loved ones’, too.
LTFRB servants required to use public transportation
T is the declared policy of the State, as enshrined in the Constitution, that public officers and employees must, at all times, be accountable to the people; serve them with utmost responsibility, integrity, loyalty and efficiency; act with patriotism and justice; and lead modest lives.
The proposed measure makes it the duty of every LTFRB public servant to ride public transportation during rush hours once a week on weekdays. As earlier specified, first offense for noncompliance shall be punishable administratively by suspension for one month without pay. Second offense shall have the penalty of six months without pay. Third offense shall be punishable by dismissal from the service.
In line with this declared policy, a neophyte representative, Hon. Henry C. Ong of the Second District of Leyte, filed House Bill (HB) 6229, “an Act requiring all employees and officials of the Land Transportation Franchising and Regulatory Board [ltfrb] to commute via public transport at least once a week during weekday rush hours”. This proposed bill shall be known as the “LTFRB Servants Commuting via Public Transport Act”. HB 6229 proposes that all employees and officials, regardless of employment status, whether job order, contractual, permanent, appointed or career, working for the LTFRB and its satellite offices in the regions, shall ride public land
by a licensed practicing medical specialist; and b) Employees who are senior citizens. HB 6229 further provides that the Civil Service Commission, the Office of the Ombudsman and the Department of Transportation shall jointly develop and promulgate the implementing rules and regulations of this Act. Inasmuch as this proposed bill makes it the duty of every LTFRB public servant to ride public transport during rush hours once a week during weekdays as earlier specified, first offense for noncompliance shall be punishable administratively by suspension for one month without pay. Second
T. Anthony C. Cabangon
Editor in Chief
Senior Editors
Business in the 3rd quarter
Atty. Lorna Patajo-Kapunan
legally speaking
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transport to and from work and/ or for official businesses, at least once every week during weekday rush hours, defined in this Act as the time range from 6 a.m. to 9 a.m. and 5 p.m. to 8 p.m. and using any of the various modes that are operating in the geographical area they reside and work in: passenger busses, commuter trains, light rail, taxis and transport network-vehicle service, public-utility jeepneys and passenger tricycles. The only exceptions to the limitations on land travel provided in this proposed bill are: a) Actual existing physical handicap or serious medical condition that significantly limits physical movement and mobility as certified
offense shall have the penalty of six months without pay. Third offense shall be punishable by dismissal from the service. Commission of dishonesty as regards compliance with this Act shall come with the penalty of six months without pay for the first offense. Second offense shall be punishable by dismissal from the service. Ong, in the Explanatory Notes to his HB 6229, declares that “the personal, firsthand experience of riding public transportation will enable LTFRB officials and employees to gain better perspectives and in aid of rendering judgments and crafting policies.” The proposal of Ong is so novel and idealistic, not surprising coming from a fresh neophyte congressman. It assumes, however, that public employees, or those who work in government offices, have a sense of public service and empathy for the public they are mandated to serve. We hope Ong is right—and that his proposed bill will indeed enable LTFRB officials and employees to empathize with the daily suffering of our people who have to cope with traffic, government inefficiency and corruption in traffic enforcement. I doubt it—but hope springs eternal!
opinion@businessmirror.com.ph
Opinion
Hidden wealth
Dissecting PPP contracts #6: Amendments
BusinessMirror
By Alberto Agra
Siegfred Bueno Mison, Esq.
PPP Lead
THE PATRIOT
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uch has been said about some people in the government who have amassed hidden wealth, but few focus on the accumulation of a deeper kind of wealth—the wealth of a good name. My father, who once served as the vice chief of staff of the Armed Forces of the Philippines (AFP) and the commissioner of the Bureau of Customs, has been one of the people to have acquired the wealth of a good name. I have encountered a few families with a long line of professionals. When I was in the Bureau of Immigration (BI), I noticed that there were quite a number of employees whose parents or siblings were also in the government. The Mison family is a family of both professionals and pubic servants. One of my father’s older brothers, Rafael, served as a Quezon City prosecutor, councilor and vice mayor. Another older brother, Mariano, served as a policeman and an NBI agent who rose from the ranks to become the National Bureau of Investigation (NBI) director. One sister, Yolanda, was a doctor; another sister, Annie, was a Certified Public Accountant (CPA); and the youngest, Alcie, served in the dental industry. My father, Salvador Massey Mison, told his six children that no matter what you do now, what you have done in the past will affect how your colleagues and peers will see you. When I entered the BI, I can only imagine how people researched my family background. I hope they found that my father and his brothers who all served in the government have built a reputation of integrity. Perhaps, they encountered the stories of my father’s “hidden wealth” in the form of the achievements of his family—his siblings and his children. His eldest child, Irene, is a practicing rehab doctor at the University of Florida; Salvador Jr. is a three-star general in the AFP and the vice chief of staff as of this writing; Melinda is an investment banker with work experiences in Swiss Bank and Merrill Lynch; Siegfred is a lawyer and a former public servant in the BI; Ione Marie is a CPA and a tax consultant based in Texas; and the youngest, Michael, is a well-known veterinarian in the US and currently the Ryan Hospital Director and chief medical officer at the University of Pennsylvania. As my father turns 85 today (Monday), he will always brag about his hidden wealth, amassed through the years of consistent team effort with my mother, Ione Bueno. With decent salaries coming from the military and from the teaching profession, my parents still managed to accumulate a different kind of wealth, hidden in their children, as they became productive members of society. My father’s good name has helped me in many ways. In the Army, in the legal profession, in the government, and even in the corporate world, most people will fortunately see me as a person of integrity and discipline, among others, principally because of my father’s reputation. And that kind
of built-in advantage is something money can’t buy. Another case of hidden wealth was shared by one of my former colleagues in the bureau. After six years in the bureau, Popo Borbon’s close friends teased that she should share whatever wealth she accumulated in the government. After all, she was assigned to supposedly lucrative positions, including the Office of the Commissioner. A piece of paper given preferential attention by virtue of monetary consideration can really increase one’s paycheck. Recommending for approval something not meritorious is another way of earning extra income in the bureau. As she has left the bureau, she imagined how much wealth she could have gained if she ventured into the nefarious activities the bureau was unfortunately known for. She never did. Popo recently told me that she left the bureau and applied for work in a major government department. During her job interview, she immediately earned the trust of her future boss even if he did not know Popo personally, because of one character reference in her resume. According to Popo, when the interviewer learned that she served under a Mison for four years, she got the job. Popo was “wealthy” enough to have worked with a commissioner whose name was associated with good values. Some leave the government service with a “healthy” bank account. Others leave with little money but a reputation for integrity. To Popo, her reputation of a positive work ethic and integrity in the bureau were her own version of hidden wealth. Wealth does not have to be quantified to money, although it almost always is. Wealth can come in the form of many friends, in the form of good health or, just as in the case of my father and of Popo Borbon, in the form of reputation. In Proverbs 22:1, the Bible tells us, “A good name is more desirable than great riches; to be esteemed is better than silver or gold.” In Ecclesiastes 7:1, it says, “A good name is better than fine perfume.” Just as my father’s father, as well as my own father, was happy to see their respective children attain this kind of wealth, I long to see my own children do the same. Any father or parent would always wish that for his children—wealth in the form of a good name. Thank you Papa for your gift, which is more precious than silver or gold. For questions and comments, please e-mail me at sbmison@gmail.com.
Continued from A1
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omponents. There are five parts of this provision: (1) the subject which is the agreement, (2) of the amendment, alteration or modification, (3) which requires mutual agreement, (4) embodied in a written document and (5) signed by authorized representatives of the parties to the public-private partnerships (PPP). Optional inclusion. The insertion of this provision, like any other provision in the main PPP contract, while desirable, must be agreed upon between the Parties. All terms of the contract have a purpose and their inclusion and exclusion have an impact. Consensual. Like the PPP contract, the subsequent agreement must be voluntarily and consensually arrived at by the Parties. No party—government and the private-sector proponent (PSP)—
can be forced to amend the contract. Amendment is an option. While the option is contractually agreed upon, the amendments must be mutually adopted. Rationale. PPP contracts, often long-term agreements that can last for 50 years, are characterized as “incomplete contracts”. No matter how robust a contract is, supervening or unforeseen events may occur. To accommodate these, and in order to preserve the substance of
DEBIT CREDIT
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he Board of Accountancy (BOA) has recently overhauled the Certified Public Accountant (CPA) Licensure Examinations that it administers. The changes were brought about in BOA Resolutions 274 and 275 Series of 2015, and 114 Series of 2016. These resolutions were directed toward updating the CPA Licensure Examination coverage and format. It has been about 40 years since the CPA Licensure Examinations were last revised. The BOA Resolution 275-2015 prescribes new topics for the subjects of regulatory framework for business transactions (RFBT) and taxation beginning the October
2017 CPA Board examinations. These new topics include the regulatory measures and laws that are encountered even by the new CPAs in the course of their work
PPP contracts, often long-term agreements that can last for 50 years, are characterized as “incomplete contracts”. No matter how robust a PPP contract is, supervening or unforeseen events may occur. To accommodate these, and in order to preserve the substance of the arrangement in pursuit of the public good, amendments may be introduced.
the arrangement in pursuit of the public good, amendments may be introduced. Amendment, not revision. This provision does not contemplate an overhaul of the contract or the project. Revision is not covered. Thus, for example, a bulk water project cannot be changed to a reclamation project. A reclamation project is a distinct project, which must be vetted through a separate selection process. Material and formal. Case law has taught us that material deviations cannot be made after a PPP
East Asia’s looming missile-arms race Ricardo Saludo
DIPLOMASIA
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F—and it probably won’t—Korea doesn’t become World War Central, it will still look more and more ready to ignite thermonuclear war, with more and more fearsome missiles mushrooming all around in years ahead.
With the North’s screw-theworld leader Kim Jong Un unrepentant in developing more powerful and destructive ballistic missiles, and firing them in ways that alarm the planet, South Korea and Japan, and their top ally America, are beefing up rocket forces to deter the projectile-packing despot. In coming years, through domestic development or foreign purchases, Seoul and Tokyo aim to deploy missile batteries more powerful than they’ve ever had—as Pyongyang has done over several decades. Last Saturday the office of South Korean President Moon Jae-in announced that United States President Donald J. Trump agreed to ease limits on the South’s missile development, now capped at 800-kilometer range and half-ton payload under a treaty amended in 2012. “The two leaders agreed to the principle of revising the missile guideline to a level desired by South Korea…to strengthen South Korea’s defense capabilities in response to North Korea’s provocations and threats,” Seoul’s presidential Blue House said. Missiles of, say, 1,000-km range could target all of North Korea and
Developing preemptive strike capability, if undertaken, would further advance Japan’s move toward wider use of military force. That took a leap in 2015 under Prime Minister Shinzo Abe, when the Constitution was interpreted as allowing Japan Self-Defense Forces to fight for allies under attack. parts of China and Russia from anywhere in South Korea. So, they can hit not just Pyongyang’s forces, but also Beijing and Moscow’s troops near the peninsula. And if the South goes for 1,200-km rockets, they can reach all the way to Beijing.
Japan debates the first-strike option
Tokyo’s missile musings are even more unsettling. Now publicly debated is the option of preemptive attack with cruise missiles. The day after North Korea fired a rocket over Japan two weeks ago, the liberal-leaning Mainichi Shimbun paper wrote: “Should we possess preemptive strike capability?” That question was taboo in Japan
New topics in the CPA Board examinations Joel L. Tan-Torres
Monday, September 4, 2017 A15
and engagements. The new topics include provisions of the Financial Rehabilitation and Insolvency Act (Fria). This law was passed on August 16, 2010. The Fria expressly repealed Insolvency Act (Act of 1956) and impliedly repealed the Rules of Procedure on Corporate Rehabilitation promulgated by the Supreme Court in 2008. Accordingly, the subtopics covered in the RFBT syllabus and table of specifications (specifically those covered in sections 4.2.1 to 4.3.5 in BOA Resolution 275-2015) are modified, to cover the provisions in the Fria of general provisions and definition of terms, voluntary and involuntary proceedings, suspension of payment or stay order, various types of rehabilitation plans, insolvency of individual
debtor, liquidation of insolvent juridical and individual debtors and rehabilitation receiver and the committee and liquidator. The other new topics in RFBT are the pertinent provisions in the Revised Securities Act, Security Exchange Commission circulars and issuances, Code of Corporate Governance, Cooperative Code, the Philippine Deposit Insurance Corp. law, secrecy of bank deposits and unclaimed balances law, general banking law, the Anti-Money Laundering Act, the New Central Bank Act, intellectual-property law, law on patents, law on trademark, service marks and trade names and the law on copyright. On the other hand, the new topics to be covered in the taxation subject in the CPA Board examination include taxation under the Local
contract has been consummated. Material or substantive deviations either result in greater burden to government or more benefits for the PSP not stated in the main contract. If this is allowed, the winning PSP is put in a favored position to the disadvantage or other bidders. There will be no level playing field. However, some argue that material deviations may be allowed if the right to amend is expressly mentioned in the bid documents, draft PPP contract and terms of reference of the selection process. In this case, fairness is sustained because, regardless of who the winning PSP is, it will have the option to amend. Again, the government cannot be compelled to amend. Supplementary contract. A contract that amends a contract must be distinguished from a contract that supplements a contract. The latter is effectively an addendum or ancillary contract, the substance of which are contemplated or envisioned, expressly or impliedly, by the parent contract. A supply, surety or insurance contract may be a supplementary contract.
since 1945, with its pacifist constitution barring war as an instrument of national policy. But now, Japanese defense experts and security-minded members of the ruling Liberal Democratic Party want to at least consider going beyond the current two-tier missile-defense system, which target projectiles as they fly skyward or when they get within 20 kilometers of the ground. Developing preemptive strike capability, if undertaken, would further advance Japan’s move toward wider use of military force. That took a leap in 2015 under Prime Minister Shinzo Abe, when the Constitution was interpreted as allowing Japan Self-Defense Forces to fight for allies under attack. But more than first strike, what may worry East Asians who remember Japan’s ag gression in World War II is the change in defense thinking which the new defense stance would entail: that Japan may use military force to prevent attack, not just defend against it. That may pave the way not just for cruise missiles to destroy enemy rocket bases, but also for powerful, even nuclear arms, to deter attack with the threat of nuclear retaliation. For that may be the only effective way Tokyo can guard against Pyongyang’s threat. After all, if America, with its immense naval and air forces bristling with high-tech rockets and bombs, can’t be sure of destroying all nukebearing North Korean missiles, then even more of the projectiles would survive a far less potent Japanese first strike. So, as it has been for decades, the only effective way to prevent North
Korea from nuking anyone is the deterrence of assured destruction from massive retaliation.
Government Code, senior citizens law, magna carta for disabled persons, Special Economic Zone Act, Omnibus Investments Code (Book 1 of Executive Order 226), Barangay Micro Business Enterprises Act, Tariff and Customs Code of 1978 (as amended by the Customs Modernization and Tariff Act). The principles in double taxation agreements will also be included in the examination in light of the globalization thrust of businesses. BOA Resolution 114-2016 also clarified that the Code of Ethics for Professional Accountants and Republic Act 9298, or the Accountancy Act of 2004, are included in the coverage of the CPA Board examinations. The same resolution also provided that “Effective Communication to Stakeholders” shall be incorporated in all the six
examination subjects. This emphasizes the importance of CPAs being competent in their verbal and written skills. It is clear that the qualification examination system for CPAs has been fine-tuned to meet the requirements of the times and the accountancy profession.
Seoul and Tokyo doubt Washington
Which brings us to the bigger reason missile bugs are biting Japan and South Korea: doubts about the US nuclear umbrella. If Seoul and Tokyo were sure that Washington would incinerate Pyongyang if Kim Jong Un fired missiles at any of them, then that would be deterrence enough for the alliance. But doubts about America’s response to North Korean nukes have emerged. For one thing, Trump let it be known that American forces may pull out of Europe and Asia unless allies paid up. Well, if Washington would remove its protective umbrella over military costs, it could very well do the same for what is surely a far bigger matter for Americans than money: the threat of North Korean nuclear retaliation against the US. Or, to paraphrase a Cold War comment, will Washington risk Los Angeles and New York to protect Seoul and Tokyo? In fact, in the current missile crisis, the Trump administration has shown that it would risk devastating war in Korea and much of East Asia, just to spare the US from the fear of North Korean nukes, something the region has lived with for decades. More than Kim’s missiles, it is the realization that America, like other nations, puts its national security above all, which may now lead South Korea and Japan to take steps toward deterring nuclear attack without relying on Uncle Sam’s umbrella.
Chairman Joel L. Tan-Torres is the chairman of the Professional Regulatory Board of Accountancy. He is a Certified Public Accountant who placed No. 1 in the May 1979 CPA Board Examinations. He is concurrently a tax partner of Reyes Tacandong & Co. CPAs. He was the former commissioner of the Bureau of Internal Revenue from 2009 to 2010. This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com.
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www.businessmirror.com.ph
US producers ready to lend expertise to fast-track PHL recovery from bird flu
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By Jasper Emmanuel Y. Arcalas
@jearcalas
ÃO PAULO, Brazil—The USA Poultry and Egg Export Council (USAPEEC) said it is willing to help speed up the recovery of the Philippine poultry sector from the outbreak of avian influenza (AI) or bird flu.
USAPEEC President James H. Sumner told the BusinessMirror that his group is willing to extend its technical expertise to local poultry growers in Central Luzon who suffered huge losses due to the bird-flu outbreak. “We are concerned with the AI case in the Philippines. In fact, we
had discussions with our government officials on how we might assist, especially with technology and technical expertise. Because, unfortunately, we had a lot of experience dealing with AI,” Sumner said in an interview on the sidelines of the International Poultry and Pork Show here. “We would like to
₧85 per kilogram
The farm-gate price of broiler prior to the bird-flu outbreak in Central Luzon help the Philippine government if there is any way possible”. Sumner, who is also president of the International Poultry Council, said members of his group are concerned that the outbreak of bird flu in Pampanga and Nueva Ecija could cut their poultry exports to the Philippines. “I understand it has tremendously affected the process industry in the Philippines. And a lot of our products go to Philippines for processing and being reexported to Japan and other countries,” he said. “This business is being
affected [due to the AI].” The USAPEEC chief said American officials are considering to sending some of their technical experts to help the Philippines improve its biosecurity measures and AI protocol program. “Our foreign agricultural office and our Animal Plant Inspection Service is in the Philippines. We are trying to see how our industry and our government can assist in some way by making available some of our experts based on information on we what we have learned in dealing with AI,” Sumner said. “We think maybe some scientific expertise might the best approach. Surely, we can assist the Philippines in improving its biosecurity measures,” Sumner added. Sumner also revealed that his group thought of sending equip-
ment to the Philippines to fasttrack the government’s depopulation process. But logistical concerns caused them to abandon the plan, he said. He urged countries, especially those that have experienced an AI outbreak for the first time, to intensify their biosecurity protocols, as time will come that the virus could become endemic across the world. “AI is becoming endemic in so many countries in the world, in the European Union, Asia and Africa. We are going to know how to coexist with avian influenza,” Sumner said. “With all the backyard flocks and other issues going on, we are not going to be able to get rid of AI in the near future. We may not ever get rid of it,” he added. In 2015 the US suffered its worst bird-flu outbreak in history when
AI subtype H5N2 struck and swept poultry farms in the midwestern region of the country, resulting in the death of at least 49 million birds. That H5N2 outbreak caused the US to lose some $4.2 billion in revenues, of which $1.292 billion represent export losses as countries closed their borders to American poultry products, according to Sumner. On August 31 Agriculture Secretary Emmanuel F. Piñol issued a memorandum circular ordering the lifting of the ban on the shipment of poultry and poultry products from the 7-kilometer control area in San Luis, Pampanga and Jaen and San Isidro, Nueva Ecija. The first-ever AI case in the Philippines caused the farm-gate price of broiler chicken to fall below P15 per kilogram from as much as P85 per kg.
Korea d.o.t. reopens Toronto Cabangon family businesses North tested hydrogen office to entice more meant mark founder’s 83rd birthday bomb for ICBMs Canadians to visit phl T S
he more than 20 companies that make up the ALC Group of Companies held a simple celebration to commemorate the 83rd birthday of Ambassador Antonio L. Cabangon Chua, founder of the business organization, last Wednesday (August 30). The family of the Ambassador, led by his spouse Bienvenida A. Cabangon, joined officers and employees, relatives and friends in a Thanksgiving Mass concelebrated by Fathers Reynaldo Adalid, Rufino C. Sescon Jr., Joselito Buenafe and Hans Magdurulang at the Gencars Showroom of Dominga III Building, head office of the ALC Group, on Chino Roces corner De La Rosa Streets, Makati. Cabangon Chua was born in Manila on August 30, 1934. Starting from a humble sari-sari store and a pawnshop that is in operation to this day, he eventually grew his business organization into companies engaged in insurance and financial services, media and publishing, preneed, banking, hotels, property development and other businesses. In his opening remarks before
the mass, Sescon said, “Death does not mean separation, but rather a celebration of the meaningful life of a great man, such as the Ambassador, whose works made a big difference in the lives of so many people.” “One who has great faith in the Lord, like the Ambassador, lives forever in his soul,” Sescon added. Father Magdurulang, who gave the homily, recalled the Ambassador as a man of honesty and integrity with respect for the human individual, no matter what a person’s social status or economic standing may be. As one who had worked closely
Ofreneo said many workers, particularly those in the professions covered by the agreements, are able to move around because of worker demand. This occurs when an Asean member-country announces its needs for certain kinds of workers, such as engineers, accountants, doctors and nurses. “There’s freer movement [of skilled labor] but there’s no free movement,” Ofreneo said. “They will hire you [only] if they need you. MRAs are more [concerned about]the supply side [of labor].” Meanwhile, according to the WTO, the GATS has four modes of supplying services—cross-border trade, consumption abroad, commercial presence and presence of natural persons. Mode 4 on the presence of natural persons covers citizens of WTO member-countries, who enter another member-country to supply services as accountants, doctors and/or teachers, among others. W TO doc u ment s re vea led that while there are a number of
EOUL, South Korea—North Korea carried out its sixth and most powerful nuclear test last Sunday, saying it had detonated a hydrogen bomb that could be mounted on an intercontinental ballistic missile (ICBM). The test, which the North called a “complete success”, came hours after Pyongyang announced it had developed such a weapon. It was an extraordinary show of defiance by its leader, Kim Jong Un, against President Donald J. Trump, who had threatened to bring “fire and fury” to the North if it continued to threaten the United States with nuclear missiles. But it was unclear whether the North had, in fact, tested a hydrogen bomb, a far more powerful weapon than the atomic bombs it has tested in the past. A seismic tremor detected at 12:36 p.m., emanating from the Punggye-ri underground nuclear test site in northwestern North Korea, set off a scramble to determine whether the North had carried out another test. The South’s military soon confirmed that it had. The US Geological Survey estimated that the tremor had a magnitude of 6.3. The South Korean Defense Ministry’s estimate was much lower, at 5.7, but even that would mean a blast “five to six times” as powerful as the North’s previous nuclear test, a year ago, said Lee Mi-sun, a senior analyst at the South Korean Meteorological Administration. Just last week, North Korea fired a ballistic missile over Japan, sharply escalating tensions in the region. In July, Pyongyang launched an ICBM capable of reaching the US mainland, and the North responded to Trump’s “fire and fury” rhetoric by threatening to fire missiles into the waters around Guam, a US territory that is home to military bases. Japan’s foreign minister, Taro Kano, said Japan had requested an emergency meeting of the UN Security Council. President Moon Jae-in of South Korea and Prime Minister Shinzo Abe of Japan called emergency meetings of their national security councils. Earlier in the day, Abe and Trump had spoken by telephone and resolved to put more pressure on North Korea. North Korea has conducted
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with the Ambassador in the Catholic Mass Media Awards (CMMA), where the latter served as chairman and president, he was familiar with many “words of wisdom” imparted by the Ambassador. He found especially impressive the Ambassador’s admonition that “ isang direksyon lang ang sagwan,” or “paddle only in one direction” as he called for unity among his people to gain success in company goals. “May we remain united in remembering and living by the values that he passed on to us so that his legacy will continue to live on,” Magdurulang concluded.
Asean told to address challenges in labor deal Continued from A1
time,” former Tariff Commission Head George Manzano told the BusinessMirror. “If you go to the World Trade Organization [WTO], the agreement on services is also not moving as fast. [The] Asean can look into that.” Manzano said the Asean economic ministers can address these concerns by prioritizing discussions on the removal of investment restrictions, such as those included in negative lists. The Philippines’s own Regular Foreign Investment Negative List (RFINL) contains a list of professions and industries where foreign ownership is 100 percent restricted or have caps. The RFINL list is based on the country’s laws and regulations, as well as the 1987 Constitution. But the Duterte government is already in the process of liberalizing certain professions and industries. “[The Asean economic ministers can focus on addressing] restrictions on investments, such as those included in negative lists. [In the
Philippines], this includes public utilities,” Manzano said. Former Labor Undersecretary Rene E. Ofreneo said while the MRAs have been in place for a long time, many countries do not use them because of differences in protocols for workers in each Asean member-country. The Asean explained in a May 2016 brief that MRAs allow for a worker’s skills, experience and accreditations to be recognized across the region. This will enable them to work outside their country. The region currently has MRAs in place for six sectors—engineering, nursing, architecture, medicine, dentistry and tourism. There are also MRA framework agreements for Surveying and accountancy. Ofreneo said the issues concerning the use of these MRAs are focused on differences in requirements, such as years of training and visas for skilled laborers, such as engineers and accountants. This makes hiring foreign workers “selective” in the region. Since the use of MRAs is complicated,
TOURISM Secretary Wanda Corazon T. Teo congratulates the organizers for uniting the Filipino community in Canada through the Mabuhay Philippines Festival. Photo courtesy of DOT
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HE Department of Tourism (DOT) has reopened its Toronto office in Canada, in a bid to encourage more Canadians to visit the Philippines. Tourism Secretary Wanda Corazon T. Teo made the announcement of the office reopening during the recent Philippine Tapestry Gala, which was held in conjunction with the Mabuhay Philippines Festival from August 22 to 27, according to a statement from the DOT. “Soon you will get a good glimpse of the Philippines right here when we reopen the DOT-Toronto office to promote our country’s diverse destinations,” Teo said in her speech to gala guests. “Surely, this will inspire you to take a flight halfway across the world,” she added. Ontario has a population of some 13.5 million, of which 2.73 million, or 20 percent, live in Toronto, according to 2016 data from Statistics Canada. Filipinos also comprise some 5.5 percent of Toronto’s ethnic population, and at 156,515 as of 2011, represented the largest concentration of Filipinos in Canada. Other Filipinos live in Vancouver, Winnipeg and Calgary. “This is an opportune time for our kababayan [fellow Filipinos] to help spread the word about the good things and positive developments now taking place back home under the leadership of President Duterte,” the DOT chief stressed. “Do find time to visit and bring along a friend to experience the Filipino hospitality,” she said. Through the annual Ambas-
sadors and Consuls General Tour to the Philippines, a program hatched by the Philippines Department of Foreign Affairs in partnership with the DOT under the term of President Gloria Macapagal-Arroyo, thousands of Filipino-Canadians have visited the Philippines, bringing with them family and friends among original Canadian residents. The Canadian tour group has since been spun off to the Winter Escapade, the last of which was held from February 3 to 11, where participants visited Bacolod and Davao. Teo also assured Canadians that the Philippines was not just a beautiful place to have fun, but also a place to retire and invest. In 2016 there were 175,631 Canadians who visited the Philippines, an increase of 12.3 percent from 2015. In the first half of 2017, visitors from Canada jumped by 18.4 percent to 108,243, putting them in seventh place among the Philippines’s top source markets for tourists. Canadian tourists are also among the top sources of tourism receipts in the Philippines, with expenditures reaching over P80,000 per person during their holiday in the country. Meanwhile, Philippine Ambassador to Canada Petronila Garcia agreed it was the perfect time to reestablish the DOT’s office in Toronto to nurture the growing interest among Canadians for travel to the Philippines. See “DOT,” A2