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Marawi City in conflict: ARMM seeks investments in other areas By Manuel T. Cayon |
@awimailbox Mindanao Bureau Chief
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AVAO CITY—The Autonomous Region in Muslim Mindanao (Armm) believes it has found a panacea to the ills that come with underdevelopment: more investments. The ARMM broke the P1-billion mark in investments in 2012, a year after the then caretaker administration of Mujiv Hataman implemented sweeping reforms anchored on transparency. The region was able to generate P203.16 million from the Department of Education alone in the first 100 days of Hataman’s administration. Improved governance also generated a lot of attention on the region.
Indigenous peoples march on August 31 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 now surpassed 100 days. The Autonomous Region in Muslim Mindanao believes pouring in more investments in the region would address the violence stemming from economic underdevelopment. AP
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That year, the Armm reported P10.736 billion in investments. Invest ments since t hen inc lude t he Delinanas Development Corp., a subdiary of the US-based Del Monte Foods Inc., which spent P569 million to initially develop 550 hectares in Maguindanao for its exportable Cavendish bananas. Other investments that followed were from the Tabung Haji Janoub Philippines Plantation Inc., with crude palm oil and palm kernel operation in Lanao del Sur for the Malaysian market and the Agumil Philippines, crude oil-palm refinery mill in Buluan, Maguindanao. Likewise, investments included the following: Mount Kalatungan Agri-Ventures Inc. in Bumbaran, Lanao del Sur; La Frutera Inc. in Buluan, Maguindanao; Continued on A2
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Wednesday, September 6, 2017 Vol. 12 No. 328
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hen it comes to financing a federal form of government, stateowned think tank Philippine Institute for Development Studies (PIDS) said size matters, with the additional cost to be incurred from running an expanded bureaucracy ranging from P33 billion to P63 billion annually, depending on the structure to be adopted.
Mine, mine, mine
₧33B-₧63B
Teddy Locsin Jr.
free fire
The estimated additonal budget the government will need under a federal system yearly, according to PIDS
On the sidelines of a PIDS forum on Tuesday, PIDS senior research fellow Rosario G. Manasan told the BusinessMirror that government spending for its operations would See “Legislature,” A2
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Bloated legislature to make federal govt costlier to run By Cai U. Ordinario
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haven’t said anything about mining. Let me fix that. Mining always takes out far more than it ever gives back. But that is true of any economic activity. Except primitive agriculture by cavemen and buffalo hunting by Injuns. Even then the buffalo nearly became extinct. Minerals don’t grow back. After mine owners get the lion’s share of proceeds, nothing worth mentioning ever goes back to the earth or to the people in the mined-up places. Continued on A10
Fuel prices seen increasing due to weaker peso Domestic processing of minerals
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i l i p i n o s should brace for higher oil prices in the coming months due to the depreciation of the peso, according to the National Economic and Development Authority (Neda). Data from the Philippine Statistics Authority (PSA) showed that inflation accelerated to 3.1 percent in August due to higher food and transportation costs. The August inflation was faster than the 2.8 percent posted in July and the 1.8 percent recorded a year ago. Socioeconomic Planning
Secretary Ernesto M. Pernia said the weaker Philippine peso could make oil and electricity prices higher in the months ahead. “The continuing surge in domestic petrol prices, coupled with depreciation in the peso-dollar rate, may exert upward pressures on inflation, leading to increases in the cost of electricity, gas and other fuels in the near term,” Pernia said. Pernia also warned that the economic disruptions caused by Hurricane Harvey in the United States may also
dampen energy supplies and further increase oil prices. On the domestic front, this could cause higher transportation and electricity costs in the near term, the Neda official added. University of Asia and the Pacific (UA&P) School of Economics Dean Cid L. Terosa agreed and said other factors that could speed up inflation in the coming months include the increase in consumer spending during the holidays. See “Fuel prices,” A2
Youth to have a say in Asean agenda
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sean member-countries are aiming to integrate inputs from the youth sector in Asean policy-making with the launch of a formal association to represent the youth’s voice in the region. Steering the Second Asean Youth Entrepreneur Carnival (AYEC) on
Tuesday, the Department of Trade and Industry outlined a broad strategy to first set up youth organizations in Asean, then move forward on planning prospectively. “We’d like to solicit fresh inputs from the youth today. I would expect perspectives with a youth dimension, like programs that will
PESO exchange rates n US 51.1830
link them on Asean issues, such as economic integration, trade and investments. On the business side, we want an enhancement of new business models and more input on Asean from the youth on the role of technology in business,” Trade Secretary and Asean See “Youth,” A2
needs incentives, support–solon By Jonathan L. Mayuga @jonlmayuga
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arty-List Rep. Arnel U. Ty of LPGMA, the chairman of the Committee on Natural Resources of the House of Representatives, underscored the need for more incentives to promote domestic processing of minerals. During his speech at a mining conference on Tuesday, Ty said calls to put up more mineral-processing plants in the country should be backed by incentives and assistance to achieve sustainability in the mining sector. The solon said there’s a measure proposed in the Lower House to ban the export of raw ores, coupled with the necessity of putting up processing plants. “There should be proper assistance and incentives to make
|investments in mineral processing attractive and competitive with other countries in the region,” Ty said during the opening ceremonies of the Mining Philippines 2017 International Conference and Exhibition at a hotel in Pasay City. He added there must be a balance in determining a new revenuesharing scheme between the mining sector and the government. The Philippines is still the world’s top supplier of nickel ore while it remains to be one of the major producers of copper and gold. Currently, the Mining Industry Coordinating Council is reviewing the mining industry’s current fiscal regime. Meanwhile, Ty also emphasized the need for the government to step up its implementation of the mining law.
“Legislative reforms will be useless if we cannot implement them. Mining needs heavy regulation because of the high risks involved in its operations,” Ty said. “The ability of the government to strictly regulate mining operations will be critical.”
Sphere of influence
ACCORDING to Ty, the Department of Environment and Natural Resources (DENR) must be fully equipped with the best technology and professionals to strictly monitor and enforce regulations to all mineral-extraction operations, from the biggest to the smallest mining company. “This gravity of the DENR’s mission cannot be overemphasized, as the consequences of failure threaten not just economic damage but can lead to tragic loss of lives,” Ty said.
n japan 0.4665 n UK 66.1899 n HK 6.5412 n CHINA 7.8357 n singapore 37.7289 n australia 40.6495 n EU 60.8924 n SAUDI arabia 13.6480
Continued on A12
Source: BSP (5 September 2017 )
A2 Wednesday, September 6, 2017
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Marawi City in conflict: ARMM seeks investments in other areas Continued from A1
Alip River Development and Export Corp., a Cavendish banana plantation in Datu Paglas town, Maguindanao; Itil Plantation Inc. in Itil, Balabagan, Lanao del Sur; Philippine Trade Center Inc. (PTCI) in Barangay Kalsada, Sultan Kudarat town, Maguindanao, both in cassava-starch production; BJ Coco Mill Inc. in Tanjung, Indanan, Sulu (coco crude oil and copra meat); Mindanao Coconut Coir Industries (MCCI) Inc. in coco- fiber mat and coco-coir dust and garment-making; and Lamsan Inc. in Crossing Simuay, Sultan Kudarat town, Maguindanao, in corn-starch production. The bus firm Weena Express Inc. had invested P120 million in acquiring new buses. The Minrico Lumber Enterprise Co. Inc. poured in P36 million for veneer production and manufacturing in Barangay Gang, Sultan Kudarat town, Maguindanao. El Manuel Depot and Development Corp. also
Legislature. . . Continued from A1
balloon by at least 0.5 percent of GDP annually under a federal system. Using 2016 figures, Manasan said this translates to about P33 billion to as much as P63 billion worth of additional revenues that needs to be chanelled to the bureaucracy every year. “This could mean an additional budget, or reallocation, or reduction of the budget for other things,” Manasan told BusinessMirror. Manasan said if the federal government’s format will follow the structure of the Autonomous Reg ion of Muslim Mind anao (ARMM) under Republic Act 9054, this will add another 812 legislators nationwide.
Fuel prices. . .
invested in veneer plywood and a wooden-boxes production plant in Barira, Maguindanao.
vestors to come and invest in the island provinces.” Improved governance and a lot of attention given to the ARMM netted for it P10.736 billion in investments as of latest monitoring by the ARMM. The Bureau of Public Information of the ARMM, said only one fore ig n d i rec t i nvestor, Delinanas, came in but invested heavily in a banana plantation in Maguindanao. The banana plantation is in Datu Abdullah Sangki in Maguindanao and would cater to its market in the Middle East and South Korea with its projected annual production of 2.1 million boxes per year. Each box contains 13.5 kilos.
Improved governance
DURING the roadshow in Zamboanga City two weeks ago, the ARMM RBOI disclosed it has granted a Certificate of Registration to J. Sayang Shipping Lines Inc., whose president, Mohammad Faisal Jamalul, also announced it was investing P33.5 million for a cargo-shipping project in Bongao, Tawi-Tawi. The ARMM information office said Sulu and Basilan “are surrounded by rich fishery grounds, such as Basilan Strait, Moro Gulf, Sulu Sea and the Celebes Sea, producing quality aqua-marine products and fishes”. “Both provinces have good soil attributes and sound climatic conditions suitable for high-value agricultural and industrial crops such as corn, coconut, rubber and many others,” it added. “These positive characteristics attract in-
Cash, jobs
DELINANAS’S operation would hire 866 employees and would bring in P80.9 million to the local economy each year in workers’ payroll. Notwithstanding the images of conflict, the ARMM has already
and operate networks to provide telecommunications services with fixed and mobile services in the ARMM provinces”. It invested P1.5 billion and plans to hire 6,000 workers. The Marawi Resort and Hotel Inc. invested P430 million to expand its hotel resort in the city. Minrico Lumber Enterprise spent P36 million in its veneer production and manufacturing, while El Manuel invested P12 million, also in veneer plywood and woodenboxes production. Both operates in Maguindanao. Ellen Lourdes Kionisala of the BOI-Cagayan de Oro City Extension Office said, “the high-risk environment due to the issues of conflict and terrorism that have stricken the region for decades was the reason some investors hesitate to invest in the ARMM”. However, Kionisala said the Marawi siege by the Isis-linked Maute Group “has not affected the Mindanao’s economic activities, since it is business as usual”.
of regions are also included in the national level legislations. We cannot have only one chamber when we go federal,” Manasan said. The shift to a federal form of government was among the many campaign promises of President Duterte. The idea behind this is the wide inequality in terms of growth and development between urban and rural areas. This is the reason the National Spatial Strategy (NSS) of the administration in the 2017 to 2022 Philippine Development Plan advocated the decentralization of growth and development. In a presentation, National Economic and Development Authority Undersecretary for Regional Development Office Adoracion M. Navarro said the NSS seeks to strengthen five major urban
centers, including Metro Manila, Metro Cebu, Metro Davao and Metro Cagayan de Oro. There will also be 37 regional centers that have a population of 120,000 to 1.2 million each. Around 22 of these centers will be in Luzon, 10 in Mindanao and five in the Visayas. They will serve as administrative centers, international gateways and tourism hubs. There will also be 117 subregional centers composed of 74 locales in Luzon, 27 in Mindanao and 16 in the Visayas. These subregional centers will all be guided in tackling challenges of urbanization and other development needs. These subregional centers will act as tourism, agri-industrial, industrial and higher-education learning centers/hubs.
Major investments
The ARMM format includes having three legislators elected by popular vote in each legislative district, plus sectoral representatives not exceeding 15 percent of the total number of elected legislators. The “more expensive” proposal is the one made by former Senator Aquilino Q. Pimentel Jr., which will add 1,356 new legislative officials to the existing bureaucracy. Under Pimentel’s proposal, there will be three legislators elected by popular vote in each province/city and three sectoral representatives in each province/city. The most expensive option is the format in the proposed Bangsamoro Basic law (BBL), which would require an additional 2,380 officials. Under the BBL version, at least
10 legislators per legislative district will be added. Around 40 percent of these officials will be elected by popular vote, 50 percent w i l l be pa r t y repre sentatives, and the remaining 10 percent will be composed of sectoral representatives. “But if the BBL is passed, then that’s it, because it’s just right that the same structure be followed for all state governments,” Manasan said. But Department of Interior of Local Government Assistant Secretary Epimaco V. Densing added the government is open to adopting a unicameral legislature, or a government that has one parliamentary chamber, which could be cheaper to operate. “While I recognize the potential additional cost, I just want to say
that we will cross the bridge when we get there,” Densing said. “The additional cost under the assumption of Dr. Manasan is we have a presidential and a bicameral system. But our assumption is parliamentary, only one chamber.” However, Ma nasa n sa id a bicameral legislature is “nonnegotiable” in a federal form of government, citing countries that are under a federal system. Manasan explained that the lower chamber is focused on m a k i n g lo c a l l aw s t h at t he states will need, while the upper chamber, which will be composed of state representatives, will focus on laws that will be implemented nationwide. “[This is important] in ensuring local governments have a voice in writing laws so that the perspective
side risks,” Pernia said. PSA data showed that inflation in Metro Manila, or the National Capital Region (NCR), was significantly higher compared to Areas outside of NCR (AONCR). Inflation in NCR increased 4 percent in August, higher than the 3.8 percent posted in the previous month and 1.2 percent last year. The PSA noted there was a double-digit growth in inflation in transport of 11 percent. In AONCR, inflation was at 2.8 percent. In July, the rate stood at 2.6 percent.
Espenilla Jr. said in a statement following the release of the August inflation figures the higher inflation during the month is still within their expectations and will bode well for their policy setting meeting this month. “The BSP continues to see a manageable inflation outlook over the policy horizon after taking into consideration the latest inflation reading in August,” Espenilla said. The central bank expects inflation to settle within the midpoint of its 2 to 4 percent target range for the year. Espenilla said the inflation path for the remainder of the year will be supported by their favorable outlook for domestic activity with appropriare liquidity conditions and well-anchored inflation expectations. “The within-target path of inflation over the policy horizon provides the BSP with the flexibility to asses our monetary tools to enhance further our responsiveness to the evolving requirements of the economy,” he added. The BSP will be have its next monetary policy setting on September 21. This will be the BSP’s sixth meeting for the year. In its latest monetary policy meeting, the BSP moved to maintain all policy rates, as the expected higher inflation trajectory is still within the scope of their target range for the year.
Continued from A1
Philippine economy is at its strongest during the last quarter of the year due to higher consumer spending. The Philippines remains dependent on consumption spending to drive its economy. Terosa added the impact of the recent bird flu outbreak and the suspension of transportation net work company (TNC) company Uber will be minimal compared to the depreciation of the peso. “Inflation in September will remain in the 3 to 3.3 percent range. The effect of poultry prices and transportation and transportation costs won’t be as crucial as the weakening peso and gradually increasing demand due to the ‘-ber’ months,” he said.
MANY of the 26 major investments in the region were mostly in agriculture production and processing.
Mount Kalatungan Agri-Ventures Inc. poured P906 million in its business in Lanao del Sur, while La Frutera is investing P526.3 million in Maguindanao. Alip River is investing P440.04 million in two projects in Datu Paglas town, Maguindanao, all in Cavendish banana. Itil Plantation is spending P173 million in Lanao del Sur, wh i le t he P TC I i s i nvest i ng P87.88 million for their respective cassava-starch production. BJ Coco Mill is investing P147 million for its coco crude-oil and copra-meat business in Sulu. MCCI is investing P29.6 million in coco-fiber mat and coco-coir dust and P111.25 million in garment making. Lamsan is investing P194 million on corn-starch production in Maguindanao. Big investments were also seen in nonagriculture, such as that of EA Trilink Corp., a telecommunications company franchised by the ARMM Regional Legislative Assembly “to construct, install
generated a lot of investment the previous years. The biggest so far was the Tabung Haji Janoub Philippines Plantation Inc., with interest in crude palm oil and palm kernel for the Malaysian market. The oil-palm plantation is located in Tagoloan II in Lanao del Sur with a project cost reaching P5.17 billion. It would hire 5,000 workers. The autonomous region groups t he geog raph ic a l ly sc at tered provinces of Maguindanao and Lanao del Sur in central Mindanao and Basilan, Sulu and TawiTawi, the southwestern Mindanao island provinces. Another company, the Agumil Philippines, has invested P360.78 million in crude oil-palm refinery and P132.4 million in expanding and modernizing its mill in Buluan, Maguindanao.
Pernia said these risks could be offset by higher domestic productivity in agriculture and the impact of favorable weather conditions on commodity prices. While the August inflation was slightly higher than market expectations of 3 percent, Pernia said this is still within the government’s target of 2 to 4 percent. Pernia said inflation picked up in August due to the increase in the prices of vegetables, fish, corn, flour, and bread. “Inflation is still expected to remain well within government’s target for the year despite accelerating for the second time in a row. Nonetheless, we should continue to closely monitor upside and down-
‘Manageable inflation’
The Bangko Sentral ng Pilipinas (BSP) said the slight acceleration in the growth of consumer prices in August is still proof that inflation movements will be “managable” up until the end of 2017. Central Bank Governor Nestor A.
Cai U. Ordinario and Bianca Cuaresma
Youth. . .
Continued from A1
Economic Ministers Chairman Ramon M. Lopez said in a news briefing on Tuesday. Rommel Gerodias, president of the Philippine Young Entrepreneurs Association and chairman of the Asean Young Entrepreneurs Council, shared that the first step was the adoption of the Asean Young Entrepreneurs Assocation (Ayea) Charter in January at the Asean Business
Domestic destination. . .
Continued from A12
[meetings, incentives, conventions, exhibitions], cruise, and more.” Her message was read by Assistant Secretary Malou Japson. PTM’s “Sale ng Bayan” offered “ book a nd buy” promot iona l holiday packages, one-time promotional deals on international and domestic airfares, accommodation and other tourismrelated ser vices. “More important, our continued partnership [with private tourism stakeholders] has enabled us to develop new tourism destinations, such as Batanes, Surigao del Sur and Siquijor. This has become instrumental in spreading the economic and social benefits of tourism to the countryside,” the DOT chief added. In an interview with Teo last year, she said the weak peso would “keep Filipinos closer to home” during their holiday travels, and attract more foreigners to come to the Philippines. “A weak peso makes it more expensive for Filipinos to travel abroad,” she noted. According to the National Tourism Development Plan for 2016-2022, visitors to domestic destinations are projected to reach 73.3 million in 2017, up 4 percent from the
est i m ated 70. 5 m i l l ion l a st year. This year’s PTM featured Asean+3 offerings with special airfares and vacation packages to any Asean destination + 3, namely China, Japan and Korea. “Allow me to also laud your initiative to twinning Asean destinations with your tour packages, in line with the 50th year anniversary of Asean, as this will allow us to grab a slice of the huge tourism market in the region,” Teo noted. The DOT secretary had signed several tourism-cooperation agreements with Asean neighbors Thailand and Cambodia, as well as China. For his part, Cruz said they started offering Asean tours three years ago, and added China, Japan and Korea this year in support of the Asean cooperation with the three countries. During the travel fair, there were several cultural shows featuring the Eco Chorale and other performers, as well as competitions such as Harana ng Kundiman (kundiman singing contest), Patimpalak ng Kasuotang Pilipino (Native Filipino Costume contest), Cultural Dance Competition and the Philippine Tourism Quiz Bee Finals.
and Investment Council. The Ayea—a more inclusive organization open to all youths and will serve as a platform to engage with non-Asean youth—was scheduled for launch on Tuesday. “This is poised to be launched as a full organization today. The Ayea is more inclusive under the Ayec and is open to all youth members of business organizations aged 21 to 45,” Gerodias said. No policy initiatives are being proposed yet, but planning for program-crafting w ill follow, added Trade Undersec ret a r y
Nora K . Ter rado. A proposa l for funding for young entrepreneurs will be included in the future agenda. “We are studying a way of putting funding for young entrepreneurs at the Asean level. It’s still under study, but we will push forward with this in Singapore’s hosting,” Gerodias added. A statement from the Asean youth delegates outlining their future engagement with the Asean leaders is expected at the end of the second Asean Youth Carnival on Tuesday. Catherine N. Pillas
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No need for Congressional imprimatur for return of Marcos wealth–lawmaker By Jovee Marie N. dela Cruz @joveemarie
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member of the so-called M a g n i f ice nt 7 i n t he House of Representatives on Tuesday said President Duterte does not need any new law or authority from the Congress to negotiate for the return of any or all the alleged ill-gotten wealth of the Marcos family. At a news conference, Rep. Edcel Lagman of Albay said the Presidential Commission on Good Government (PCGG) was created with the mandate to recover the Marcos’s alleged ill-gotten. “But why involve Congress in a negotiation where the Marcos heirs are at best ambivalent and which may not even prosper beyond propaganda?” Lagman asked. According to Lagman, the PCGG, which was created by the late-President Corazon Aquino under Executive Order 1 on February 28, 1986, is “charged with the task of assisting the President” in “the recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad.” Under EO 1, the President can
also cause the investigation of the cases of graft and corruption, which he may assign to the PCGG. “The President even on his own accord can negotiate the surrender of the ill-gotten hoard in the same manner that he can negotiate for the surrender of a high-profile suspected criminal without any act of Congress,” he said. However, Lagman said the unwritten rule in the projected negotiation must conform to transparency, accountability and no conditionality. “I am saying that we should not amend that but if the supermajority will give him that authority, then we can’t do anything about it,” Lagman said. “He [Duterte] can ask for this authority, but I will ask Congress not to do so because the authority granted to the president under Executive Order 1 is to prosecute, and not to surrender the cases.” Earlier, the Palace asked Congress to authorize Duterte to negotiate for the return of the Marcos wealth to the government. This, after the President said he was approached by a representative of the Marcos family on its willingness to “open everything and return” some of the wealth in question.
Editor: Vittorio V. Vitug • Wednesday, September 6, 2017 A3
PET junks Bongbong’s motion on integrity of 2016 poll result
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By Joel R. San Juan
@jrsanjuan1573
HE Presidential Electoral Tribunal (PET) dismissed on Tuesday former Sen. Ferdinand “Bongbong” Marcos Jr.’s bid to declare null and void the proclamation of Vice President Maria Leonor G. Robredo on the ground that the automated election system (AES) used in the 2016 national and local elections was unreliable.
In a 34-page resolution, the PET said Marcos’s election protest would proceed despite the dismissal of his first of the three causes of action. The former senator’s first of cause of action specifically sought to declare null and void the Robredo’s proclamation as duly elected vice president because the certificates of canvass generated by the Consolidation and Canvass System are not authentic due to several violations of Republic Act 8436, or the AES law, which rendered the whole AES unreliable, and consequently, the election results, as well.
During the preliminary conference, the PET noted that Marcos’s lawyer, George Garcia, admitted that, even if his client would be able to prove the first cause of action, this would not mean that he would have proven to be proclaimed as vice president, as there would still be a need to do a manual recount of all the votes to determine who obtained the highest votes for the said contested position. However, when asked whether its camp would be willing to expand the manual vote recount to include all precincts in the country, Garcia answered in the negative.
Thus, the PET branded the first cause of action as “meaningless and pointless”. “Even if protestant [Marcos] succeeds in proving his first cause of action, this will not mean that he has already won the position of vice president, as this can only be determined by a manual recount of all votes in all precincts,” read the ruling made public on Tuesday. “And if this is a relief protestant has clearly stated he is not praying for, then, allowing the first cause of action to continue would be an exercise in futility and would have no practical effect,” it said. “To be sure, the tribunal cannot allow this exercise to even begin, especially if it were to consider the amount of resources and time it will demand from the tribunal,” it added. The PET held that the first cause of action may be dispensed with for “judicial economy” and for the speedy resolution of the case. The tribunal described judicial economy as “efficiency in the operation of the courts and the judicial system”, such as to minimize duplication of effort and to avoid wasting the judiciary’s time and resources. It also did not give weight to the claim of the camp of Marcos that the first cause of action is “complementary” to the second and third causes of action.
The second cause of action requires the revision or manual recount of the actual ballots to determine the votes cast in all the 36,465 protested clustered precincts, while the third cause of action sought the annulment of election results for the vice-president position in the provinces of Maguindanao, Lanao del Sur and Basilan, on the ground of terrorism, intimidation and harassment of voters, as well as preshading of ballots in all of the 2,756 protested clustered precincts in the areas. Robredo’s lawyer, Romulo Macalintal, immediately welcomed the PET ruling. “We are very, very happy with the results of this resolution of the PET, because from this resolution of the tribunal, it only shows that, indeed, the protest of Marcos has no basis. It is only based on some speculations and conclusions,” he said in a news conference. “We look forward for an early dismissal of the case of Marcos,” the veteran poll lawyer said. But in the same resolution, the PET granted the plea of Marcos for retrieval of ballot boxes precincts in contested provinces cited in his protest. It ordered the retrieval of ballot boxes in three pilot provinces—Camarines Sur, Iloilo and Negros Oriental - for the purpose of recounting of votes as sought by Marcos.
Economy
A4 Wednesday, September 6, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon
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ERC OKs P52-B VisMin grid interconnection project
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By Lenie Lectura
@llectura
ower-resource sharing between the country’s major islands will soon become a reality, following the regulators’ approval of the National Grid Corp. of the Philippines (NGCP) P52-billion grid interconnection project proposal. The Energy Regulatory Commission (ERC) on Wednesday said it issued a provisional authority to the NGCP to proceed with its Visayas-
Mindanao Interconnection Project with certain conditions. For one, the proposed project shall be subject to optimization
based on its actual use and/or implementation during the reset process for the next regulatory period; the NGCP is required to conduct competitive bidding for the purchase of major materials in the implementation of the project and NGCP’s payment of the permit fee. The project involves the interconnection of the Visayas and Mindanao via Cebu and Zamboanga. The converter stations in the Visayas and Mindanao will be in Sibonga, Cebu, and Aurora, Zamboanga del Sur, respectively. The project is estimated to be completed in 46 months. “ T he prov isiona l approva l granted to NGCP to implement the Visayas-Mindanao Interconnection Project will enable pow-
er-supply importations among the Luzon, the Visayas and Mindanao grids. For instance, the deficiency of supply in Visayas may be supplied by importing power from Luzon or Mindanao. Hence, this Visayas-Mindanao Interconnection will help address the insufficient power supply and will also help optimize the available power supply in the Philippine grid,” ERC Officer in Charge Alfredo J. Non said. A news statement issued by the NGCP said it is “eager to begin the project as we intend to make good on our commitment to president Duterte finish this project by 2020.” “The interconnection will not only be a major milestone for NGCP,
as it finally implements a project that has remained on the government's drawing board for 3 decades, but it will go a long way into power stability, as it will allow, when completed, power sharing amongst all 3 grids,” the statement added. The Visayas-Mindanao Interconnection Project is in support of the government’s vision to interconnect the major grids into a single national grid, which is expected to help improve the overall power-supply security in the country, as sharing of reserves will already become possible. The project also aims to reinforce the operation of the electricity market by maximizing the use of available energy resources and additional
generation capacities in the Visayas and Mindanao, which include renewable-energy resources. In an NGCP-commissioned hydrographic survey conducted from September to November 2016, a viable route along the country’s western seaboard, “beginning in Cebu and terminating in Dipolog”, was determined as viable for the implementation of the plans of interconnecting the Visayas and Mindanao grids. The project is envisioned to be finished by 2020, assuming all regulatory approvals are secured on time. The Luzon and Visayas grids have long been connected via NGCP’s Naga-Ormoc High Voltage Direct Current line.
Tourism revenues rose 67.93 percent to ₧885 billion in 2014–PSA data By Cai U. Ordinario
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@cuo_bm
hilippine tourism revenues surged to nearly to a trillion pesos in 2014, according to data released by the Philippine Statistics Authority (PSA). Based on the results of the 2014, Survey of Tourism Establishments in the Philippines (STEP), tourism revenues increased 67.93 percent to P885 billion in 2014, from P527 billion in 2009. The data was obtained from some
39,325 establishments engaged in tourism activities, such as food and beverage, transportation and accommodation, among others. “The 2014 STEP aims to provide data on the supply and capacity in terms of facilities and services; gather data on employment by sex and nationality; gather data on revenue generated from tourist; and provide information on indicators for future expansion and/or renovation plans,” the PSA said. Data showed the food and bev-
erage service activities earned the bulk of the total revenue with P306 billion, or 34.6 percent of the total. This was followed by transport operators, as well as tour and travel agencies, which earned P229.6 billion; health and wellness, P142.9 billion; and other tourism activ ities industries, P122.3 billion, respectively. The PSA said, however, that the accommodation industry posted the least income with just P84.2 billion, or 9.5 percent of the total.
Revenue generated from tourists in 2014 amounted to P497.3 billion, accounting for 56.2 percent of the total revenue for all establishments. Food and beverage service activities generated the largest share, or 35.7 percent of the total revenue amounting to P177.7 billion. Health and wellness, meanwhile, generated the smallest share amounting to P45.3 billion, or 9.1 percent of the total. Meanwhile, PSA data showed there was a total of 4,486 establish-
ments, or 11.4 percent, engaged in tourism characteristic industries had plans for expansion within the next five years. Another 6,323 establishments, or 16.1 percent of the total the PSA said, had plans to renovate within the next five years. “[Around] 65 percent of the total number of establishments that reported to have plans for expansion within the next five years were establishments engaged in food and beverage industry with 2,914
establishments,” the PSA added. The 2014 STEP is the second survey round conducted and is a rider to the 2014 Annual Survey of Philippine Business and Industry (ASPBI). Data collected will provide information on the available supply of tourism goods, products and services which are valuable inputs in the compilation the Philippine Tourism Satellite Account. This is a nationwide survey conducted by the PSA in April 2015, with the year 2014 as a reference period.
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Editor: Jennifer A. Ng • Wednesday, September 6, 2017
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‘Poultry growers deserve fair compensation’
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By Jasper Emmanuel Y. Arcalas
@jearcalas
ocal producers said government compensation for culled fowls must be based on the fair market value of the poultry to help farmers immediately get back on their feet and encourage them to report bird-flu outbreaks.
Philippine Egg Board Association (Peba) President Irwin Ambal on Tuesday said the Department of Agriculture (DA) should take its cue from the South Korean government, which indemnified farmers based on the fair market value of their affected fowls. “The compensation should be based on the fair market value. Production cost could be used as a basis. For example, compensation for laying hens should not go below P300 per head,” Ambal told reporters in a news briefing in Quezon City. “Farmers would hide outbreaks of diseases as their businesses would be affected. No amount of legislation would force them to open up, even if you penalize or jail them, unless they are compen-
sated fairly,” he added. As for broilers, Ambal said the compensation could be based on the average age of the affected flock. The breakeven farm-gate price of broiler in the Philippines ranges from P70 to P75 per kilogram. While he is cognizant of the consequences of not reporting “unusual” chicken deaths, Ambal said the offer of fair compensation would be a better incentive than penalizing farmers. “The government could consider tapping the Acef [Agricultural Competitiveness Enhancement Fund] to compensate farmers,” he said, adding that other countries are able to easily contain outbreaks of avian diseases because of their compensation schemes. Ambal said the Bureau of Ani-
mal Industry (BAI) should also explore the possibility of accrediting the in-house veterinarians of some commercial poultry farms as a way of helping them practice self-regulation. To better inform consumers about bird flu, the United Broiler Raisers Association (Ubra) asked the government to review the country’s AI protocol program and adopt some of the measures rolled out by Southeast Asian countries. “We have to review the protocol, and [the] more important part of the protocol is the communication plan. Although the government has been saying the right things about AI, however, the prevailing story is that the disease is dangerous,” Ubra President Elias Jose Inciong told reporters in the same news briefing. “There should be a better way of communicating with the consuming public. We should inform the public about the nature of the disease and the protocols being undertaken even before there is a confirmed AI outbreak,” Inciong added. Inciong said the government could also consider limiting areas to be monitored and placed under quarantine so as not to disrupt the local trade of poultry products. “Our experts said that, in other countries, only areas within the 1-kilometer radius are being
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monitored,” he said. Ambal said the Philippines could learn from the protocols implemented by T ha i land to add ress A I outbrea k s. “L ook at Thailand, they always have A I but they are sti l l able to ex por t chicken. A nd how do they do it? They cook the fowls
prior to export.” Inciong also said the government should consult the private sector before implementing new rules to avoid disruptions. “Before imposing new regulations, government should first consult the private sector and farmers, and conduct a risk assessment
study. More regulations could result in higher production cost,” he said. “Higher production cost would just burden consumers, as this would increase the price of commodities. The government should work with the private sector instead of imposing more regulations,” Inciong added.
conference to decide Group sees egg shortage during holiday season Tripartite on new tobacco floor prices T T he Philippine Egg Board Association (Peba) on Tuesday said the country could face an egg shortage in December following the bird-flu outbreak in San Luis, Pampanga and two towns in Nueva Ecija. Peba President Irwin Ambal said even before the confirmation of the bird-flu outbreak in Pampanga and Nueva Ecija, supply was already tight as bakers and restaurants had stepped up their egg purchases. “Before the AI [avian influenza], the farm-gate price of a medium-sized egg is around P4.50 to P4.70 per piece, which is a record high. And the price is high because of the production shortfall,” Ambal told reporters in a news briefing. “After the bird-flu outbreak, imagine that price dropping to as low as P1.50 per piece. Our worry is that come Christmas, which is always a peak season for egg producers, there is a high probability that we will not have enough supply,” he added. Ambal said restrictions im-
posed by some loca l gover nment units (LGUs) in the Visayas could worsen the supply situation in the island in the coming months. He noted that some LGUs in central Philippines have prohibited the transport of poultry products from Luzon due to health concerns. He appealed to local government officials in the Visayas to ease these restrictions and heed the pronouncement of the Bureau of Animal Industry that poultry products from Luzon are safe for consumption. “We do not blame the government, whether national or local, for being protective, but let’s base precautionary measures on science. Passing unreasonable legislation will only hurt the local economy,” Ambal said. He added members of Peba in Batangas had been forced to sell eggs at lower prices to avoid incurring losses caused by the restrictions imposed by some LGUs in the Visayas. “ The provinces of Bulacan, Pampanga and Nueva Ecija are
currently being f looded w ith cheaper eggs from Batangas,” he said. Batangas, which is regarded as the country’s egg basket, has a layer population of about 12 to 16 million birds producing around 40 millions eggs a day, according to Ambal. Ambal said producers would rather sell eggs cheaply than let it rot. Unlike dressed chicken, he said eggs have a shorter shelf life. The Peba chief added he expects the layer industry, particularly those directly hit by bird flu, to recover some time after December. “Unlike broilers, which could be harvested after 20 days, it takes 20 weeks before a day-old chick could produce eggs,” he said. While eggs could be in short supply, the United Broiler Raisers Associations President Elias Jose Inciong assured that the country will have enough poultry meat during the holidays. Inciong said farm-gate price of broiler has started to recover since the Department of Agricul-
ture (DA) lifted the ban on the shipment of poultry products from Luzon to other parts of the country. The farm-gate price of broilers fell to below P15 per kilogram after the government confirmed the outbreak of bird flu in Central Luzon. After the DA eased the restrictions on poultry shipments from Luzon, Inciong said the farm-gate price of broiler improved to P40 per kg. This, however, is still lower than the production cost of P70 per kg to P75 per kg. As of August 21, data from the National Meat Inspection Service (NMIS) showed that the country’s dressed chicken inventory reached 25,649.75 metric tons (MT), nearly 50 percent more than the 17,306.32 MT recorded during the week AI was discovered in San Luis, Pampanga. More than half of the August 21 dressed-chicken inventory, or 14,569.70 MT, were locally produced. T his is 73.45 percent higher than the 8,399.85 MT recorded as of Aug ust 7. Jasper Emmanuel Y. Arcalas
o decide new floor prices of tobacco for the next cropping season, the National Tobacco Administration (NTA) will convene the Tripartite Consultative Conference on September 6 and 7 at the NTA Central Office in Quezon City. NTA Administrator Robert L. Seares said in a statement that the biennial tripartite conference serves as a venue for the tobacco farmers and the tobacco firms (cigarette manufacturers, tobacco dealers and exporters) to evaluate and negotiate the floor prices of unprocessed tobacco leaves. Floor price is the minimum price allowed by the government for the procurement of tobacco buyers from the farmers. This is set based on the prevailing market conditions, such as production cost, reasonable margin of profit for stakeholders and growing conditions. Farmer leader Mario E. Cabasal, president of National Association of Tobacco Farmers Associations and Cooperatives, said the conference gives the tobacco farmers an opportunity to protect their interests and guarantee a profit margin for their produce. “Upon consultation with their
members at a pretripartite meeting in Candon City last month, we are ready with the consolidated unified cost of production per tobacco type, which we will bring to the negotiating table,” Cabasal said. The current floor prices for the highest grade of each tobacco type are P81 for Virginia, P68 for Burley and P70 for Native type. Based on data from the NTA Regulation Department, floor prices (per kilogram) for high to medium grades of tobacco in the past two tripartite conferences (2013 and 2015) have an average increase of P4.48 for Virginia, P4.8 for Burley and P3.88 for Native type. The last tripartite conference was held on September 29, 2015. The new adjustment of floor prices for this year’s tripartite conference will be implemented during the tobacco trading years 2018 and 2019. As mandated by Presidential Decree (PD) 627 (for all tobacco types except Virginia), PD 1481 (for Virginia) and PD 1143 as amended (for Burley), NTA is authorized to set/ fix tobacco floor prices by adopting a tripartite consultative conference, through its regulation office as the lead department.
Hunters, government, industry at odds over deer urine
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LBANY, New York—Deer hunters who like to lure their quarry with a dab of eau de doe-in-rut will have to find another way to attract a trophy buck in New York if state wildlife biologists have their way. Proposed regulations would add New York to a growing list of states and Canadian provinces banning deer urine lures in an effort to prevent the spread of chronic wasting disease, a deadly brain infection that’s working its way through North American deer, elk and moose populations. The disease is similar to so-called mad cow disease, which affects cattle. Both diseases are caused by infectious proteins called prions, which are believed to be shed in saliva, feces and urine and can contaminate forage plants and build up in soil. “Not only does this horrible disease kill animals slowly, but wild white-tailed deer hunting represents a $1.5-billion industry in the state,” Department of Environmental Conservation Commissioner Basil Seggos said in releasing a draft plan
to control it last month. Since the disease was first recognized in captive mule deer in Colorado about 50 years ago, it has slowly spread to 24 states and two Canadian provinces. States have spent millions of dollars trying to halt it; Wisconsin even hired sharpshooters to kill deer in an infected area. Wasting disease was discovered in a handful of wild and captive white-tailed deer in central New York in 2005, prompting the state to enact measures to halt it. They include a feeding ban to avoid concentrating deer in one area, a prohibition on hunters bringing deer carcasses from infected states into New York, and a ban on deer farms importing livestock. It’s the only state to have eliminated the disease after it was found in wild populations, Seggos said. Now the state is taking public comments through September 15 on additional rules, the most controversial being the ban on scent lures using natural deer urine. That ban doesn’t sit well with deer farmers who collect and sell urine, manufacturers who market it under names like “Code
Blue” and “Buck Bomb”, and hunters who dribble the foul-smelling fluid on foliage or cotton balls hung near their tree stands. “When you’re bowhunting, you have to draw the deer in close,” said Dave Vanderzee, president of the New York Deer Farmers Association and operator of a private hunting preserve. “Attractant is the only way to do it in New York because you’re not allowed to have a bait pile.” Ed Gorch, an upstate New York hunter who has been bowhunting for 45 years, said he uses deer urine and other scents, even skunk, to distract deer from his own smell. “As for switching to synthetic scents, I don’t think it would make much difference,” Gorch said. “I think most sportsmen would go along with that once they realize the danger of chronic wasting disease.” Of about 275 deer farms in New York, 10 percent to 15 percent collect urine in barns with grated floors that allow urine to drain into a collection vat, Vanderzee said. A state ban on urine scents would devastate the captive deer industry, which has already suffered under a host of ever-
stricter state regulations, he said. Dr. Nicholas Haley, a veterinary researcher at Midwestern University, said the captive deer producing urine used by hunters are some of the healthiest animals in the country. Disease transmission, he said, is less likely from urine than from deer meat brought in by hunters from infected areas. New York allows hunters to bring in venison and hides from infected states but not deer bones and brains, which are considered more likely to carry disease prions. “We’re all for the health of the herd, which is why we partnered with the Archery Trade Association in developing stringent guidelines for collection facilities to minimize the potential for contamination,” said Chip Hunnicutt, spokesman for the scent-maker Tink’s. Tink’s also makes synthetic scent lures that are allowed in states with urine bans. Alaska, Arizona, Vermont, Virginia, Ontario and Nova Scotia have banned the use of natural deer urine and other aromatic deer secretions. Jeremy Hurst, a New York state bi-
ologist, said “research clearly suggests there is some risk” of transmitting wasting disease through deer-urine scents. In recent years, he said, the disease has been detected in captive herds previously thought to be free of it. Krysten Schuler, a Cornell University biologist who has been researching chronic wasting disease since 2002 and helped develop New York’s response plan, said there’s no commercially available test to ensure urine products are free of disease prions. AP
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The World
Wednesday, September 6, 2017 • Editor: Lyn Resurreccion
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Muslims hit Suu Kyi, Myanmar govt over Rohingya plight
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AKARTA, Indonesia—A Nobel laureate and Muslim nations in Asia criticized Myanmar’s persecution of its Rohingya Muslim minority as thousands in Indonesia and elsewhere staged angry protests against Aung San Suu Kyi and her government.
The UN refugee agency says 123,000 Rohing ya ref ugees have entered Bangladesh since August 25. Malala Yousafzai, the youngest person to win the Nobel Peace Prize, said her “heart breaks” at the suffering of Rohingya Muslims and urged Myanmar’s leader, a fellow Nobel laureate, to condemn the violence against the Rohingya minority. “Over the last several years I have repeatedly condemned this tragic and shameful treatment,” she said in a statement posted on Twitter. “I am still waiting for my fellow Nobel Laureate Aung San Suu Kyi to do the same. The world is waiting and the Rohingya Muslims are waiting.” The latest eruption of violence in Rakhine state has killed more than 400 people and triggered an
123,000 The estimated number of Rohingya refugees who have entered Bangladesh since August 25
exodus of Rohingya into Bangladesh. It began after insurgents attacked Myanmar police and paramilitary posts in what they said was an effort to protect their ethnic minority from persecution by security forces in the majority Buddhist country. In response, Myanmar’s military unleashed what it called “clearance operations.” Human Rights Watch says satellite imagery shows 700 buildings were
burned in the Rohingya Muslim village of Chein Khar Li, just one of 17 locations in Rakhine state where the rights group has documented burning of homes and property. Myanmar denies citizenship to Rohingya, who have lived in the country for generations, and the group has frequently faced hostility and violence from the Buddhist majority, often fanned by hard-line monks and inflammatory comments from officials. Reports of killings by security forces and images of lines of people, including children and the elderly, attempting to cross the swampy border into Bangladesh have sparked anger and battered the reputation of Suu Kyi, previously lionized for her decades of resistance to Myanmar’s former military rulers. Tens of thousands of people took to the streets in Russia’s predominantly Muslim Chechnya to protest what the Chechen leader called “genocide of Muslims” in Myanmar. Indonesian President Joko Widodo has called for an end to violence in Rakhine state and sent his foreign minister to Myanmar, where she with met on Monday with Suu Kyi and armed forces commander Min Aung Hlaing. Interviewed by Indonesian TV after the meeting, Foreign Minister Retno Marsudi sidestepped
questions about domestic pressure in the world’s most populous Muslim nation to sever diplomatic ties with Myanmar. She said Myanmar security authorities need to immediately stop all violence in Rakhine and allow Indonesia and other Southeast Asian nations to assist with humanitarian-aid distribution. Suu Kyi responded positively to a five-point Indonesian plan to stabilize the situation, Marsudi said. “God willing, we would be able to directly help the Rohingya refugees,” Marsudi added. “The priority is the safety of the Rohingya refugees.” Pakistan’s foreign ministry said it is deeply concerned by reports of growing numbers of deaths and the forced displacement of Rohingya Muslims. It urged Myanmar’s gov-
ernment to investigate reports of massacres and to hold those involved accountable. Several hundred Muslim women demonstrated outside Myanmar’s embassy in the Indonesian capital, Jakarta, on Monday, calling for the government to take a tougher stance against persecution of the Rohingya. Dozens of armed police are guarding the embassy, which is cordoned behind barbed wire, after a Molotov cocktail was thrown at it over the weekend. Protesters, organized by an Islamic group called Friends of Muslim Rohingya, shouted “Save Rohingya,” and held big banners that read, “Unite the people to free Rohingya Muslims” and “Stop Muslim genocide in Myanmar!” Protests were also staged in other major Indonesian cities, in-
cluding Bandung and Surabaya. Over the weekend, protesters in Jakarta set fire to a poster of Suu Kyi outside the Myanmar embassy and further protests are set for this week. Local media reported that one group plans to stage a protest at Borobudur, a famous ancient Buddhist temple in central Java. “The world remains silent in the face of the massacre of Rohingya Muslims,” said Farida, an organizer of Monday’s protest who uses a single name. “They have been tortured and killed like animals by Buddhists in Myanmar,” she told the crowd outside the embassy. “We demand the government puts pressure on the Buddhist government of Myanmar. We demand mobilization of our military to rescue the Rohingya.” AP
Obama’s letter to Trump briefs N. Korea solution can on Inauguration Day: only be peaceful–Merkel Sustain international order
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n a letter left on Inauguration Day for President Donald J. Trump that was both congratulatory and cautionary, former President Barack Obama urged the incoming president to guard democratic institutions and traditions and “sustain the international order.” “This is a unique office, without a clear blueprint for success, so I don’t know that any advice from me will be particularly helpful,” Obama wrote in the letter, which CNN published last Sunday. “Still, let me offer a few reflections from the past eight years.” CNN reported the letter was written in longhand on White House stationery and left in the top drawer of the Resolute Desk in the Oval Office. The letter highlighted the concerns of a departing president who acknowledged the enormous responsibility of the job domestically and on the world stage. Obama wrote Trump, a billionaire who had family wealth and made fortunes in real estate, that “we’ve both been blessed, in different ways, with great good fortune,” adding, “Not everyone is so lucky.” It is important to “build more ladders of success for every child and family that’s willing to work hard,” he wrote. He emphasized that “our wealth and safety” depend on maintaining “the international order that’s expanded steadily since the end of the Cold War.” He also made a case for preserving “instruments of democracy” regardless of what the “push and pull of daily politics” may bring. Trump has shown the letter to White House visitors, and one of them shared a copy with CNN, the network reported. The White House did not immediately respond to a request for comment Sunday. It is a tradition for presidents who are leaving office to write letters to their successors offering advice and well wishes. When George W. Bush left the Oval Office, he wrote to Obama: “There will be trying moments. The critics will rage. Your ‘friends’ will disappoint you. But, you will have an Almighty God to comfort you, a family who loves you and a country that is pulling for you, including me.” Obama advised Trump to spend time with friends and family, and wrote, “Michelle and I wish you and Melania the very best as you embark on this great
adventure, and know that we stand ready to help in any ways which we can.” He wished Trump “Good luck and Godspeed,” and signed it “BO.” Trump has spent much of his presidency trying to undo the Obama administration’s policies and regulations, leading The Washington Post to keep a tally of the uprooting. Even so, Trump has spoken warmly of the letter, telling ABC News in January that it was “beautiful” and “complex.” “In fact, I called him and thanked him for the thought that was put into this letter,” Trump said. Here is the letter in its entirety, as reported by CNN: “Dear Mr. President, “Congratulations on a remarkable run. Millions have placed their hopes in you, and all of us, regardless of party, should hope for expanded prosperity and security during your tenure. “This is a unique office, without a clear blueprint for success, so I don’t know that any advice from me will be particularly helpful. Still, let me offer a few reflections from the past eight years. “First, we’ve both been blessed, in different ways, with great good fortune. Not everyone is so lucky. It’s up to us to do everything we can [to] build more ladders of success for every child and family that’s willing to work hard. “Second, American leadership in this world really is indispensable. It’s up to us, through action and example, to sustain the international order that’s expanded steadily since the end of the Cold War, and upon which our own wealth and safety depend. “Third, we are just temporary occupants of this office. That makes us guardians of those democratic institutions and traditions—like rule of law, separation of powers, equal protection and civil liberties— that our forebears fought and bled for. Regardless of the push and pull of daily politics, it’s up to us to leave those instruments of our democracy at least as strong as we found them. “And, finally, take time, in the rush of events and responsibilities, for friends and family. They’ll get you through the inevitable rough patches. “Michelle and I wish you and Melania the very best as you embark on this great adventure, and know that we stand ready to help in any ways which we can. “Good luck and Godspeed, “BO”
SEOUL, South Korea—German Chancellor Angela Merkel has condemned North Korea’s latest nuclear test as a “flagrant violation” of international conventions, but also said there can only be a “diplomatic and peaceful solution” of the crisis. Merkel, who was speaking to the German parliament on Tuesday, said North Korea’s distance from Germany should not keep the country from helping to end the crisis. Merkel also talked to US President Donald J. Trump late on Monday to discuss the latest provocation by North Korea. Both leaders “condemned North Korea’s continued reckless and dangerous behavior” and reaffirmed the importance of close coordination at the United Nations. AP
Survey: Decade-high growth for the euro zone LONDON—A closely watched survey is showing that the euro zone economy is headed for its best year of growth for a decade. Financial information firm IHS Markit said on Tuesday that its purchasing managers index—a broad gauge of economic activity—was unchanged at 55.7 points in August. Anything above 50 indicates expansion. Though output growth in the third quarter is slightly down on the second quarter, the firm said the single currency bloc, which is made up of 19 countries, is on course for growth of 2.1 percent this year, its highest since 2007, when the global financial crisis flared. AP
Putin refrains from any Trump criticism MOSCOW—Russian President Vladimir Putin has refrained from making any criticism of US President Donald Trump. Speaking at a news conference on Tuesday, Putin dismissed a question whether he was disappointed in Trump as “naive.” In comments carried by Russian news agencies, Putin said Trump is “not my bride, and I’m not his groom.” Asked how Russia would feel if Trump were impeached, Putin said it would be “absolutely wrong” for Russia to discuss domestic US politics. Russian officials cheered Trump when he was elected last year, and Putin praised him as someone who wanted to improve ties with Russia. However, further US sanctions on Russia and the US decision to close a Russian consulate have raised concerns that the two countries remain far apart. AP
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Wednesday, September 6, 2017 A7
trump administration urges fuel cutoff
US envoy: North Korea begging for war
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ASHINGTON—The Trump administration, warning that North Korea is “begging for war,” is pressing China and other members of the United Nations Security Council to cut off all oil and other fuels to the country. The effort, which senior administration officials described as a last best chance to resolve the standoff with the North using sanctions rather than military means, came as South Korean officials said on Monday they had seen evidence that North Korea may be preparing another test, likely of an intercontinental ballistic missile (ICBM). That test, which would be the nation’s third in a month, could be timed to mark the anniversary of the founding of North Korea by Kim Il Sung, the grandfather of the current leader. It is unclear where the test might be aimed, but Pentagon officials said they were examining options in case it was meant to demonstrate that the North could put a missile, with accuracy, off the coast of Guam, an American territory.
China’s fear: US ally on its border
The call for the fuel cutoff, which is expected to be part of a draft resolution that the US is beginning to discuss privately with other members of the Security Council, came a day after North Korea’s most powerful nuclear test in the 11 years it has been detonating nuclear weapons. It is far from clear that China’s president, Xi Jinping, would be willing to go along with the highly aggressive step of cutting off fuel to the North. Roughly 90 percent of North Korea’s trade, and nearly all of its imported energy supplies, come from China. China’s overall trade with the North was up significantly in the past 12 months, and it has long feared that an oil cutoff would lead to the collapse of the regime. That, in China’s eyes, would only invite South Korea to take over the
90%
The estimated volume of North Korea’s trade with China, composed nearly all of its imported energy supplies North, and put an American ally on China’s border. The subject of a fuel cutoff is likely to come up in a phone call with President Donald J. Trump that the White House was trying to arrange. Speaking to the Security Council in an emergency session on Monday, Nikki R. Haley, the US ambassador to the United Nations, said North Korea’s leader, Kim Jong Un, “is begging for war.” “Enough is enough. War is never something the United States wants. We don’t want it now. But our country’s patience is not unlimited,” Haley said. “We have kicked the can down the road long enough,” Haley told the council in an emergency meeting. “There is no more road left.” Haley did not threaten unilateral military action by Washington or repeat the president’s statement on Twitter that South Korea’s effort to engage the North directly was a form of “appeasement.” She said instead that “the time has come for us to exhaust all of our diplomatic means before it’s too late.”
South Korea continues exercises
Even as Haley called for more diplomacy, Trump agreed in a phone call on Monday evening with South Korea’s president, Moon Jae-in, to
A South Korean navy ship fires during a drill in South Korea’s East Sea on September 5. South Korean warships conducted live-fire exercises at sea on Tuesday as Seoul continued its displays of military capability following US warnings of a “massive military response” after North Korea detonated its largest-ever nuclear-test explosion. South Korea Defense Ministry via AP
allow South Korea to build more powerful non-nuclear ballistic missiles, said Park Soo-hyun, a spokesman for Moon. While the South has pressed for such permission for many years, the change is unlikely to alter the strategic balance on the Korean Peninsula. “President Trump reaffirmed the United States’s ironclad commitment to defend South Korea,” Park said. “The two leaders also agreed to push for maximum pressure and sanctions against North Korea.” South Korean warships conducted live-fire exercises at sea on Tuesday as Seoul continued its displays of military capability following US warnings of a “massive military response” after North Korea detonated its largest-ever nuclear-test explosion. South Korea’s presidential office also said Washington and Seoul have agreed to remove bilaterally agreed warhead restrictions on South Korean missiles, which would allow the South to develop more powerful weapons that would boost its preemptive strike capabilities against the North. The South’s military exercises on Monday involved F-15 fighter jets and land-based ballistic
missiles simulating an attack on North Korea’s nuclear-test site to “strongly warn” Pyongyang over the recent detonation. The heated words from the US and the military maneuvers in South Korea are becoming familiar responses to North Korea’s rapid, as-yet unchecked pursuit of a viable arsenal of nuclear-tipped missiles that can strike the US. The most recent, and perhaps most dramatic, advance came last Sunday in an underground test of what leader Kim Jong Un’s government claimed was a hydrogen bomb, the North’s sixth nuclear test since 2006.
Chinese reluctance
Inside the White House, there is little expectation that the drive to cut-off North Korea’s fuel—which echoes the energy embargo that the US used to try to force Japan to change its behavior in 1941, before the attack on Pearl Harbor—will work because of the Chinese reluctance to take that step. Nonetheless, fuel-related sanctions are the focus of the Trump administration’s latest efforts at the Security Council, according to the senior American officials.
Haley’s comments on Monday were notable, in part because while they called for a last stab at diplomacy, they also ruled out the one diplomatic option considered the most viable first step—a Chinese and Russian proposal for a “freeze” on the North’s nuclear and missile testing in return for some kind of freeze on US military exercises. She said that at a time that the North was threatening the US, it would be unwise to trim back training with allies. “There are some good reasons for not doing a freeze-for-freeze,” said Richard N. Haass, the president of the Council on Foreign Relations, and a former senior diplomat in both Bush administrations. “But that doesn’t mean no freeze for something. The US has not put forward our own options, what we would be prepared to sign up for. There’s a diplomatic vacuum.”
No enforcement
AS Trump considered his options, however, he is also confronting the implications of some of his own rhetoric. He declared that North Korea would not be permitted to fire ICBMs—“It won’t happen!” he
tweeted on January 2—and they were fired. He said the US would bring “fire and fury” to the North if it was threatened, and last Sunday’s nuclear test, claimed by the North to be a hydrogen bomb, was accompanied by North Korea’s announcement that the weapon could be fitted on a missile that could reach the US. In short, Trump has run the risk of doing what he charged President Barack Obama with doing in Syria: drawing a line and not enforcing it. His senior aides say that it is too early to make that judgment, and that a combination of crushing economic pressure and stepped-up military patrols, missile defenses and practice bombing runs may eventually change Kim Jong Un’s behavior. The president’s only declared line, they argue, is that he will never allow the US to be under the threat of a nuclear attack by the North. So far, intelligence agencies have stopped short of formally assessing that the North has all the elements it needs to reach the US with a weapon. But if it is missing some elements—including the ability to protect a warhead from burning up during the stresses of reentering the atmosphere—it seems likely to achieve them soon. Monday’s meeting of the Security Council was the second time in less than a week that the most powerful body of the UN had met to discuss North Korea, and the 10th time it has done so this year. Last month the council tightened sanctions against North Korea, unanimously adopting a resolution that Haley called “the most stringent set of sanctions on any country in a generation.” But since then, North Korea carried out one of its most provocative missile tests in recent years, hurling a ballistic missile directly over Japan that prompted the government in Tokyo to warn residents in its path to take cover. And Sunday’s test was the most powerful yet, with a blast that experts said was far more destructive than the bombs that the US dropped on the Japanese cities of Hiroshima and Nagasaki during World War II. New York Times News Service and AP
Trump’s decision on young immigrants seen to begin Republican ‘civil war’
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ASHINGTON—A plan President Dona ld J. Trump is expected to announce to remove a shield from deportation for young immigrants brought to the country illegally as children is being embraced by some top Republicans and denounced by others as the beginning of a “civil war” within the party. The response was an immediate illustration of the potential battles ahead if Trump follows through with a plan would hand a political hot potato to Republicans on the Hill who have a long history of dropping it. Two people familiar with Trump’s decision-making said last Sunday the president was preparing to announce an end to the Deferred Action for Childhood Arrivals (Daca) program, but with a six-month delay intended to give Congress time to pass legislation that would address the status of the hundreds of thousands of immigrants covered by the program. The White House has said Trump’s decision would be announced on Tuesday. The Justice Department announced late on Monday that Atty. Gen. Jeff Session would address the program at a morning briefing. Trump’s decision would come after a long and notably public deliberation. Despite campaigning as an immigration hard-liner, Trump has said he is sympathetic to the plight of the immigrants who came to the US illegally
as children and in some cases have no memories of the countries they were born in. But such an approach—essentially kicking the can down the road and letting Congress deal with it—is fraught with uncertainty and political perils that amount, according to one vocal opponent, to “Republican suicide.” Still other Republicans say they are ready to take on a topic that has proven a nonstarter and careerbreaker for decades. “If President Trump makes this decision we will work to find a legislative solution to their dilemma,” Republican Sen. Lindsay Graham said. Officials caution that Trump’s plan is not yet finalized, and the president, who has been grappling with the issue for months, has been known to change his mind at the last minute ahead of an announcement. It also remains unclear exactly how a six-month delay would work in practice, including whether the government would continue to process applications under the program, which has given nearly 800,000 young immigrants a reprieve from deportation and the ability to work legally in the country in the form of two-year, renewable permits. House Speaker Paul Ryan and a handful of other Republicans urged Trump last week to hold off on scrapping Daca to give lawmakers time to come up with a legislative fix. But Congress has repeatedly
Supporters of the Deferred Action for Childhood Arrivals (Daca) chant slogans and holds signs while joining a Labor Day rally in downtown Los Angeles on September 4. President Donald J. Trump is expected to announce this week that he will end Daca, but with a six-month delay, according to two people familiar with the decision-making. AP/Richard Vogel
tried—and failed—to come together on immigration overhaul legislation, and it remains uncertain whether the House would succeed in passing anything on the divisive topic. The House under Democratic control passed a Dream Act in 2010, but it died in the Senate. Since Republicans retook control of the House in late 2010, it has taken an increasingly hard line on immigration. House Republicans refused to act on the Senate’s comprehensive immigration bill in 2013. Two years later, a GOP border security bill languished because of objections from conservatives. Many House Republicans represent highly conservative districts,
and if the president goes through with the six-month delay—creating a March deadline—the pressure is likely to be amplified as primary races intensify ahead of the 2018 midterm elections. One cautionary tale: the primary upset of House Majority Leader Eric Cantor to a conservative challenger in 2014 in a campaign that cast him as soft on illegal immigration. That loss convinced many House Republicans that pro-immigrant stances could cost them politically. The Obama administration created the Daca program in 2012 as a stopgap as they pushed unsuccessfully for a broader immigration
overhaul in Congress. Many Republicans say they opposed the program on the grounds that it was executive overreach. Legislation to legalize the so-called Dreamers has been lingering in Congress for years, with a handful of bills currently pending in the House and Senate. The one that has received the most attention, introduced by Sens. Graham, Republican-South Carolina, and Dick Durbin, Democrat-Illinois, would grant permanent legal status to more than 1 million young people who arrived in the US before they turned 18, passed security checks and met other criteria, including enrolling in college, joining the military or finding jobs. It’s unclear, however, whether the president would throw his support behind that or any other existing legislation. He could encourage the writing of a new bill—tied, perhaps, to funding for his promised border wall or other concessions like a reduction in legal immigration levels. But it’s unclear how much political capital the president would want to put on the line given his base’s strong opposition to illegal immigration, his campaign rhetoric blasting Daca as illegal “amnesty” and his reluctance to campaign hard for other priorities, like health-care overhaul. Graham said in a statement Monday that he would support the president if he decided ultimately to go
through with the plan as outlined. “I have always believed Daca was a presidential overreach. However, I equally understand the plight of the Dream Act kids who—for all practical purposes—know no country other than America,” Graham said in a statement. Sen. James Lankford, Republican-Oklahoma, agreed, saying that it should be up to Congress, not the White House, to set immigration policy. “We must confront the nation’s out-of-date immigration policy and finally resolve the issues of strong border enforcement and merit immigration,” he said. “It is right for there to be consequences for those who intentionally entered this country illegally. However, we as Americans do not hold children legally accountable for the actions of their parents.” But Rep. Steve King, an Iowa Republican who believes that Daca is unconstitutional, warned that pushing the decision to Congress would be a big mistake. “That would cause a great big civil war among the Republicans,” he said last week. “We’ve got enough of never-Trumpers in Congress that are undermining the president’s agenda.” “Ending DACA now gives chance 2 restore Rule of Law. Delaying so R Leadership can push Amnesty is Republican suicide,” he added on Twitter late Sunday night. AP
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Banking&Finance
Wednesday, September 6, 2017 • Editor: Jun B. Vallecera
BusinessMirror
news@businessmirror.com.ph
Manila seen completing $200-M panda bonds sale
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he Bureau of the Treasury (BTr) looks to sell so-called panda bonds by next month or soon after, and is close to completing the documentation and registration process that Philippine and Chinese authorities require for such a sale. According to Deputy Treasurer Erwin D. Sta. Ana, the government is finalizing all the requirements needed by the Chinese government, as well as that of the Bangko Sentral ng Pilipinas (BSP) for the issuance of panda bonds. “The plan to issue the panda bond is still on the table. We are finalizing registration requirements with the Chinese government, as well as other internal documentation that we need to coordinate with the BSP,” Sta. Ana told financial reporters. The Department of Finance (DOF)
earlier held discussions on the matter with the Bank of China and Standard Chartered as lead issuer. According to Finance Secretary Carlos G. Dominguez III, the Treasury will issue $200 million worth of panda bonds by October or November this year, when the regulatory approvals from Philippine and Chinese authorities shall have been fully satisfied. Panda bonds are Chinese renminbidenominated securities from a non-Chinese issuer sold in the People’s Republic of China.
Sta. Ana said Dominguez and officials from the BTr will be visiting the Republic of China at the end of the month to conduct road shows with Chinese stakeholders. T he tea m w i l l conduct h igh-level economic br iefings w ith Chinese aud ience i n t he proposed e xerc i se a l so dubb e d a s a de a l road show, Sta. Ana said. The deputy treasurer also said the target month for the issuance of the bonds will depend on market conditions. The BTr is eyeing factors such as pricing for the bond and demand, among others. “October or November, depending on the market. Again, we are looking at pricing if the current environment is advantageous to us,” he said. Earlier, National Treasurer Rosalia V. de Leon said bond rates should be aligned with funding costs and that the same should be advantageous to the government. “If we see that there’s an opening in the market, the rates would have to be aligned with our funding cost for both rates. Then we will proceed,” de Leon said. Rea Cu
Airport-fee recalibration in the drawing board
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he government is planning a recalibration of fees levied against airlines at airports around the country in hopes of boosting revenues and encouraging domestic tourism at the same time. This was learned from Finance Secretary Carlos G. Dominguez III who said the Department of Finance is in discussion with the Department of Transportation on the matter of charging airlines a new schedule of fees. “We are looking at several ways to improve the revenues of the Civil Aviation Authority of the Philippines [Caap] and to encourage traffic and tourism outside the Metro Manila area,” Dominguez told financial reporters. Some of the changes being planned include changing the manner by which the Caap charges airlines a flat fee for the use of airport gates and, possibly, a recalibration of the landing fee structure charged the various airlines. He said airlines could be charged a higher landing fee during peak traffic hours when airport departures and arrivals are at their busiest. The authorities could also charge airlines differently for the use of airport gates instead of the flat rate being charged the airline industry at the moment. Alternatively, the various airlines could
T his was in response to A irA sia Group CEO Tony Fernandes, who said the airline plans to expand its services in the Philippines to include flights from Davao City to key cities in China, Korea and Malaysia. Fernandes proposed the lowering of airport or departure tax in small airports, saying this will help realize AirAsia’s expansion plans in the country.
By Justice S J Ranada Jr.
LAWYERS–failure to deliver on professional duty For a lawyer’s failure to timely and diligently deliver on his professional undertaking (despite having received fees for his services), as well as for his failure to keep complainant (client) abreast of relevant developments in the purposes for which his services were engaged, said lawyer falls short of the standards imposed by Canon 18 of the Code of Professional Responsibility, which requires lawyers to serve clients with competence and diligence. Murray v. Cervantes 07 Feb 2017
Bitcoin tumbles as PBOC declares initial coin offerings illegal
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itcoin tumbled the most since July after China’s central bank said initial coin offerings (ICOs) are illegal and asked all related fundraising activity to be halted immediately, issuing the strongest regulatory challenge so far to the burgeoning market for digital token sales. The People’s Bank of China (PBOC) said on its web site on Monday it had completed investigations into ICOs, and will strictly punish offerings in the future while penalizing legal violations in ones already completed. The regulator said those who have already raised money must provide refunds, though it didn’t specify how the money would be paid back to investors. It also said digital token financing and trading platforms are prohibited from doing conversions of coins with fiat currencies. Digital tokens can’t be used as currency on the market and banks are forbidden from offering services to ICOs. “This is somewhat in step with, maybe not to the same extent, what we’re starting to see in other jurisdictions—the short story is we all know regulations are coming,” said Jehan Chu, managing partner at Kenetic Capital Ltd. in Hong Kong, which invests in and advises on token sales. “China, due to its size and as one of the most speculative IPO markets, needed to take a firmer action.” Bitcoin tumbled as much as 11.4 percent, the most since July, to $4,326.75. The ethereum cryptocurrency was down more than 16 percent on Monday, according to data from Coindesk. ICOs are digital token sales that have seen unchecked growth over the past year, raising$1.6 billion. They have been deemed a threat to China’s financial-market stability as authorities struggle
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he Comm it tee on Appropr i ations at the House of Representatives has endorsed for approval the P19.73-billion budget of the Department of Finance (DOF) for 2018. This represented a 16-percent decrease from this fiscal year’s allocation of P23.23 billion. According to Finance Secretary Carlos G. Dominguez III, the 2018 DOF budget dropped by P3.5 billion from 2017 because the majority of its investment outlays and its property, plant and equipment were already provided through this year’s budget. “The DOF voluntarily submitted a lower budget for 2018 compared to the preceding year to set an example for other departments to operate efficiently,” Dominguez said. Along with reductions in the capital outlays of other DOF-attached agencies, the 2018 budget cut for the DOF, which sought a P21.30-billion outlay this year, was also the result of the significant decline in the allocation for the Bureau of Treasury (BTr). The BTr budget of P6.46 billion for 2017 went down by P2.10 billion to P4.36 billion for 2018. For this year, the BTr budget represented a 288-percent hike from the previous year owing to capital subscriptions to foreign financial institutions, including the Asian Infrastructure
Case clippings
Dominguez
win the use of airport gates via competitive bidding so that such charges are transparent for everyone to see. Dominguez said, if the proposed changes in the schedule of fees generate high enough revenues for the nation’s coffers, then the government could prospectively lower or even do away with other fees and charges in small airports seen as a boost to domestic tourism down the line. “But again this has to be looked at together with the DOTr,” Dominguez said. Earlier, the DOF bared the possibility of lowering or removing airport taxes in small airports that would help slash travel costs and boost tourism.
DOF seeks smaller budget for 2018
to tame financing channels that sprawl beyond the traditional banking system. Widely seen as a way to sidestep venture capital funds and investment banks, they have also increasingly captured the attention of central banks that see in the fledgling trend a threat to their reign. The central bank’s Monday directive made no mention of cryptocurrencies, such as ether or bitcoin. There were 43 ICO platforms in China as of July 18, according to a report by the National Committee of Experts on the Internet Financial Security Technology. Sixty-five ICO projects had been completed, the committee said, raising 2.6 billion yuan ($398 million). “This is a positive move given the rapid proliferation of low quality and possibly fraudulent coin sales promising the moon,” said Emad Mostaque, London-based cochief investment officer at Capricorn Fund Managers Ltd. “There is tremendous value in the model but we need to see more separation of high quality, ethical offerings versus those seeking to circumvent securities law for a quick buck.” A cross between crowdfunding and an initial public offering, ICOs involve the sale of virtual coins mostly based on the ethereum blockchain, similar to the technology that underpins bitcoin. But unlike a traditional IPO in which buyers get shares, getting behind a start-up’s ICO nets virtual tokens—like mini-cryptocurrencies—unique to the issuing company or its network. That means they grow in value only if the start-up’s business or network proves viable, attracting more people and boosting liquidity.
AC 5408 Leonen, J
Development Bank (AIIB). Of the P19.7-billion proposed DOF budget for 2018, P17.97 billion were new appropriations, while P1.75 billion represent automatic appropriations. Of this amount, P602 million was set aside for retirement and life-insurance premiums and P1.152 billion will go to the Special Accounts in the General Fund for several programs under the Bureau of Customs (BOC), the Bureau of Internal Revenue (BIR) and the Insurance Commission (IC). “While there is a slight reduction in the DOF budget, the department will continue to expand its programs, projects and services: particularly the BIR’s Revenue Administration Program, which comprises 79 percent of its budget; the BTr’s Financial Asset Management Program, which also comprises 79 percent of its budget; and the BOC’s Customs Revenue Enhancement Program, which comprises 38 percent of its total budget,” said Rep. Luis Raymund F. Villafuerte Jr., vice chairman of the House Appropriations Committee. Villafuerte sponsored the DOF’s 2018 budget during floor deliberations at the second reading of the proposed 2018 General Appropriations Act. The House currently holds plenary debates on House Bill 6215, or the 2018 General Appropriations Bill, which proposes a national budget of P3.767 trillion for the upcoming fiscal year. The allocations for the DOF-attached agencies in 2018 also declined: the BOC budget decreased from P3.82 billion in 2017 to P3.11 billion in 2018; the BIR, from P8.57 billion to P8.04 billion; the IC, from P7 million to P6 million; the Securities and Exchange Commission, from P646.86 million to P629.87 m i l l ion; a nd t he Cent ra l B oa rd of Assessment Appeals, from P19.11 million to P18.63 million. T he budget of t he P r iv at i z at ion Management Office went up by P21.79 million, from P54.23 million in 2017 to P76.01 million in 2018, along with the Bureau of Local Government Finance from P263.10 million to P305.13 m i l l ion, a nd t he Nat ion a l Ta x R e search Center from P51.20 million to P57.43 million.
Does your vehicle have a warranty?
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aving been first involved in automotive business as a banker more than 30 years ago and more recently on the distribution side, I have come across horror stories of people buying both branded and “unbranded” vehicles who ended up with units that broke down and could no longer be used. Thinking that they got a great deal turns out not such a great deal after all. Legitimate automotive companies would typically be members of government-recognized organizations, such as the Chamber of Automotive Manufacturers of the Philippines and the Truck Manufacturers Association. They subject themselves and police their ranks to comply with various government regulations coming from the LTO, the BOC, the DENR, the DTI and so on. There are a number of other automotive importers that bring in both “brand new” and surplus vehicles that they are able to sell to presumably an unsuspecting public at much lower prices than from legitimate automotive distributors and dealers who provide written warranties on their products, fully supported by their dealership and service-center networks. Many buyers are driven by the attraction of such a “cheap” price that
FINEX free enterprise George S. Chua they forget that the initial purchase price is only one consideration in the cost of ownership. The other, of course, is the maintenance. As an example, I have heard of many people and businesses who have bought multicabs which are surplus mini-truck units mostly coming from Japan and Korea, at absurdly low prices hovering in the range of over P100,000 and, in some cases, even less. The buyer may be able to use these units for a few months or over a year but once they break down, the cost of repairing and maintaining them would exceed the initial acquisition cost. In most cases, these units could not even be repaired properly due to the lack of available spare parts. In the case of brand-new units that are not imported by the distr ibutor, some customers specifically want these units because they are cheaper or the legitimate distributor does not import
certain models. The buyer’s problems starts when the vehicle needs to be serviced or something goes wrong and a part needs to be replaced. What good is buying a car or SUV at 20 percent or even 30 percent cheaper if you could only use it for two years or less? I also wonder how these “importers” are able to bring in second hand vehicles in spite of Executive Order 156 issued by then-President Gloria Macapagal-Arroyo on December 12, 2002, banning the importation of used vehicles, with some exceptions. These “importers” are also able to bring in brand-new vehicles at prices that the legitimate distributors are unable to do so. Perh aps, t here i s i ndeed a ba si s for t he Sen ate to i n vestigate the operations of the BOC. More important, would you want to buy any vehicle without a warranty? Of course not, but don’t let yourself be carried by the sales talk that their vehicles carry a warranty. Ask to see where they keep their spare parts and do a little research about the company selling you the unit. What may initially seem like such a good deal can easily turn into a nightmare. Comments may be sent to georgechuaph@yahoo.com.
ExportUnlimited BusinessMirror
DTI-EMB supports ‘Pitch Jerusalem’ technology start-up competition
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HE Export Marketing Bureau (EMB) of The Department of Trade and Industry (DTI) partners with the Israel Chamber of Commerce of the Philippines and the Embassy of Israel to present “Pitch Jerusalem”, a competition for innovative technology-oriented start-ups. Recognizing Israel as a leader in venture-capital investments, the competition is set to open global opportunities for Filipino “techpreneurs” with promising business ideas. Pitch Jerusalem will be held on September 19, at the QBO In-
novation Hub, DTI International Building in Makati City. The deadline for submission of application is on September 12. The competition is open to all Filipino technology-oriented startups which are software-based (mobile, Web, IoT); preseed/seed stage; and live product/service and traction. Priority will be given to young entrepreneurs within the 23- to 35-year age group. The grand winner will fly to Israel to participate in an international start-up event dubbed as “Start Jerusalem” [Start JLM]”
from November 5 to 11. The winner will join other founders from around the globe to take part in a “boostcamp” with activities, such as workshop sessions, visits to leading companies in Israel and exclusive networking meet-ups with the city’s start-up community, all designed to take products and solutions to the next level. Pitch Jerusalem is also supported by the Department of Science and Technology, QBO Innovation Hub, Dayanan Business Consultancy, Payoneer and TrueLogic Online Solutions.
DTI eyes Muntinlupa as halal center in NCR By Roderick L. Abad @rodrik_28 Contributor
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HE Department of Trade and Industry (DTI) is bullish on the potential of Muntinlupa to further lead the development of the halal market in Metro Manila and Southern Luzon. The city’s strategic location and its support to the Muslim community cement the possibility for its being the metropolis’s center for the trading of goods, such as food, medicines, clothing and services permissible according to Islamic law.
DTI Assistant Secretary Abdulgani Macatoman said the agency has plans in turning Muntinlupa to be a halal-hub, first in the National Capital Region (NCR), during the recent Islamic Micro Finance Poverty Alleviation Program Forum held in Alabang. During the conclave, he discussed the DTI’s proposal in opening up the possibilities for the establishment of a halal market in the region. “Having presented it with President Duterte, we in the DTI will be supporting the realization of this agenda in view of Republic Act 10817 Philippine Halal Export
Development and Promotion Program,” he said. Macatoman added that, as Muntinlupa gears to become halalready, it will open opportunities for the region, attracting local and foreign investors to export halal products and services. He extended his thanks to Mayor Jaime Fresnedi for his unwavering support to the Muslim community in Muntinlupa. Just recently, the city government, through the Muntinlupa Scholarship Program, provided educational assistance to 163 bakwits, or displaced Marawi residents, staying in the city for refuge.
Editor: Efleda P. Campos • Wednesday, September 6, 2017 A9
PHL’s IT-BPM companies to meet with South Korean ICT delegates By Maria Luz S. Medialdia | Supervising TIDS DTI-EMB
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HE Philippine Department of Trade and Industry-Export Marketing Bureau (DTI-EMB), together with the Korea Association for ICT Promotion (KAIT), is set to meet with 13 Korean information and communications technology (ICT) companies during the two-day Inbound Business Matching Mission in the country.
This undertaking, scheduled on September 7 and 8, is part of the continuous support of the EMB to promote the Philippine information technology-business process Management (IT-BPM) sector through a showcase of the country’s IT offerings during the conduct of the business-tobusiness (B2B), as well as to develop the network of collaboration with KAIT member-companies. Dubbed as the “2017 PhilippinesKorea ICT Partnership Program”, the two-day event aims to provide a venue for the ICT companies of both countries to exchange business experiences and develop possible business relationships in the area of ICT. The B2B event
is also an opportunity for the Philippine ICT companies to expand their network of contacts in Korea. The first day, September 7, focuses on the business matching scheduled at Makati Shangri-La Hotel. Company visits, focusing on discussions with the two major telecommunication companies in the Philippines, namely Globe Telecom and the Philippine Long Distance Co., take place on the second day. The main areas for business opportunities among Philippine ICT and the 13 Korean delegates cover digital-advertising solution, Internet of Things cloud-platform provider, smart-center platform solut ion, d at aba se - enc r y pt ion
solution, geographic information system, education technology and software digital-signage solution, among others. The Philippine companies that will meet with Korean delegates are Alliance Software Inc., IQOR, Collabera, Northstar Solutions Inc., Dynaquest Technology Services Inc., Personiv, DTSI Group, CPI Outsourcing, CAI-STA Philippines Inc., ADEC Innovations, Xurpass Enterprise, Global Outsourcing, Red Core Solutions, AMMEX iSupport Worldwide, Jones Lang LaSalle Philippines Inc., Lares Inc., Robinson’s Land Inc. and Learning Development. With the onset of 4G technology, the Philippines has been identified by the KAIT as one of the targeted countries to engage with for their future plans for the convergence of ICT services in the Asian region. The event is coorganized by the DTI-EMB and the Korea Ministry of Science and ICT through its National IT and Promotion Agency, and supported by the Philippine Software Industry Association (PSIA). Specifically, the EMB spearheaded the pre-B2B and conduct of the business-matching component. The KAIT organized and heads the delegation of Korean companies and funded and hosted the whole event. The PSIA supported actively through the dissemination of information and sending invites to their member-companies.
A10 Wednesday, September 6, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
The worst is over for PHL poultry sector
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oultry growers heaved a collective sigh of relief after the Department of Agriculture (DA) limited the ban on the shipment of their products within the 1-kilometer-radius control zones in three towns struck by avian influenza (AI) or bird flu. Agriculture Secretary Emmanuel F. Piñol recently issued a memorandum circular that lifted the ban on poultry shipments from the 7-kilometer-radius AI control zones in San Luis, Pampanga, and Jaen and San Isidro in Nueva Ecija. Piñol said he did so upon the recommendation of the DA’s biosecurity experts. Following the discovery of the bird-flu outbreak in San Luis, Pampanga, on August 11, the DA initially banned the shipment of poultry products from Luzon to the Visayas and Mindanao. Apart from the restrictions on shipments, the government also culled thousands of fowls, and quarantined and disinfected AIaffected areas. The government had to act as quickly as possible to prevent the spread of the virus to other areas in the country. While the ban alone caused poultry growers to incur huge losses, these precautionary measures ensured that poultry farms outside of Luzon would be spared from bird flu. Based on its follow-up report to the World Organization for Animal Health (OIE) dated September 4, the Philippine government said there were no new outbreaks of bird flu in ground zero or other parts of the country. This development will certainly help restore the confidence of Filipinos in local poultry products. As for exporting chicken, the Philippines may have to wait a while before it can resume the shipment of poultry products to other countries. According to the United States Department of Agriculture (USDA), the OIE prescribes a 90-day period after the last disinfection procedure before a zone or region can be declared free from bird flu. The USDA noted that poultry-importing countries would reinstate trade after this 90-day period. Among the countries that imposed restrictions on Philippine poultry shipments were South Korea, Japan and the United Arab Emirates. The same report of the government to the OIE indicated that it is now in the process of determining how the highly pathogenic AI (HPAI) H5N6 virus infected fowls in San Luis, Jaen and San Isidro. The completion of this study would be crucial to government efforts to prevent future bird-flu outbreaks. Officials suspect that the virus may have come from smuggled poultry products or from migratory birds caught by farmworkers. In the meantime, the government should implement the necessary measures to stop the entry of smuggled poultry products into the Philippines. Farmers should also be discouraged from hunting and consuming migratory wild birds. The DA, in tandem with local government units, must regularly monitor poultry farms, particularly those in ground zero. The Philippines is just a few weeks away from regaining its freedom from HPAI, so the government must do everything possible to prevent the country from going back to square one. Since 2005
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You’ve gone a long way, Baby! Art Amansec
All About Social Security
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he Social Security System’s (SSS) officials and employees are on heightened joyful mood this month of September, as they celebrate the 60th year of the SSS as the prime socialinsurance provider of the country. The celebration is nationwide and overseas because the SSS has 278 branches all over the archipelago and 23 offices in different parts of the globe where there are big numbers of working Filipino citizens. It has branches in the Middle East, in the United States and in Europe. The latest branch to open is in Calgary, Canada. It is well to boast that, over the years, the SSS has become the sanctuary of hundred thousand employees who want to be secured against the contingencies of life, like natural calamities, sickness, disability and death. It is also the home and sanctuary of thousands of employers who want their employees to be happy working for them, a happiness that is made possible by the social security they enjoy. President Manuel Roxas is the father of the SSS. He proposed a bill in Congress creating the SSS during his tenure as president. Due to his untimely demise, the SSS concept was implemented by President Elpidio Quirino, who created the Social Security Commission that drafted the SSS law. Republic Act (RA) 1161 or the
Social Security Act of 1954 became a law during the incumbency of President Ramon Magsaysay. It was amended by RA 1792 in 1987 and then by RA 8282 in 1997 during the incumbency of President Fidel V. Ramos. The SSS is a state-run socialinsurance system. It counts as its members Filipinos who are employed in the private sector. However, over the years, its membership has been expanded to include the self-employed, like actors and actresses, small business entrepreneurs and the less formally employed, like overseas Filipino workers, tricycle and jeepney drivers, farmers and fishermen. Through the years of its existence, the SSS, largely due to the managerial talents and investment expertise of its vice presidents and managers, has amassed assets worth more than P480 billion and has serviced about 35.5 million members. The SSS has huge investments in government securities, equities and banking institutions. It is a monopoly and has no business competitors, which makes it one of the most viable and biggest business
Mine, mine, mine Teddy Locsin Jr.
Free fire Continued from A1
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his is why mining must take several steps more than pure extraction. This is the polite way of saying scrapping off the thin fertile layer of the earth and leaving nothing behind on which anything can grow. That said, let me add: every country has lived by mining; every civilization did more mining to become great. The Roman Empire thrived on mining. Mining even created jobs for slaves, but it must be said that miners today at least pay slave wages. The United States grew great by
mining itself near to desolation. So did Canada. So did every strong country in the world. England tore up its countryside and cut down all its trees and mined all its coal to pay the cost of navy and empire before they paid dividends. So did France and Germany, and Latin America when it was rich at the turn of the
The SSS is a state-run social insurance system. It counts as its members Filipinos who are employed in the private sector. However, over the years, its membership has been expanded to include the selfemployed like actors and actresses, small business entrepreneurs, and the less formally employed like OFWs, tricycle and jeepney drivers, farmers and fishermen.
institutions in the country today. The SSS recently came into prominence when it approved a P1,000 pension increase to all retiree, death or disability pensioners. The SSS committed to grant an additional P1,000 increase in about four years hence or less. When Dean Amado D. Valdez took over stewardship of the SSS as chairman of the Social Security Commission, fulfilling the President’s election promise of a pension increase was an impossible task. The outgoing administration has just rejected as unsustainable any pension increase, fearing that it would deplete SSS funds leading to its eventual bankruptcy in a few years’ time. Then came forth three Cabinet Secretaries, the country’s economic managers, who led the chorus of antipensionincrease advocates. However, patiently and valiantly, Valdez and SSS President and CEO Emmanuel F. Dooc persisted in their pension-increase advocacy, and the rest is history. President Duterte, during his first 2017 Cabinet meeting, after long discussions and impassioned debates, upheld the position taken by Valdez and Dooc and approved a pension increase, rejecting the position taken
It is wrong to say that all mining is bad. That is like saying cattle grazing and farming are bad. Taken to extremes, they create deserts where grass doesn’t grow nor buffalo run. The correct thing to say is that mining, like farming and cattle raising, is fine if responsibly done so the earth renews itself and these activities can continue—productively, sustainably; wiser and more profitably done. last century as it never will be again. Not to mine at all indeed to condemn mining across the board are correct—until you stop and think: “What is the value of minerals to men if they stay in the ground?” Nothing. You cannot even admire the beauty of minerals underground. It is wrong to say that all mining is bad. That is like saying cattle grazing and farming are bad. Taken to
by his economic managers. On January 14 the Manila Bulletin came out with an Editorial, entitled “A gov’t that sees common people’s needs”, which, in pertinent part, reads: “The SSS officials must be commended, for it is they who proposed the two-installment pension plan after they made a study of their own finances. They and the majority of Cabinet members who helped President Duterte make up his mind in favor of a pension increase—no matter how limited—are the kind of officials we hope to see more of in [the] government. We value the expertise of economists in government who look at the big picture of national finances, with eyes fixed on such statistics as GDP growth. But along with such statistical prosperity, we value a government that sees and understands common people’s needs and strives to meet them.” Very recently, EON Communications and Research, a prestigious foreign-based research organization, came out with a survey it conducted from March to April among 1,200 Filipinos aged 18 and above. The results of the survey showed that the SSS garnered a 94-percent overall trust rating and 55-percent extreme trust rating among all government agencies. The SSS was second to the Philippine Health Insurance Corp., which garnered a trust-level rating of 95- percent overall trust and 58-percent extreme trust rating. Indeed, after 60 years of operations, the SSS has gone a long way in social insurance and public service. Nice going and congratulations, Baby!
extremes, they create deserts where grass doesn’t grow nor buffalo run. The correct thing to say is that mining, like farming and cattle raising, is fine if responsibly done so the earth renews itself and these activities can continue—productively, sustainably; wiser and more profitably done. Mining is not renewable; so do it in a way that the land left behind sustains another activity when all the mining is done. It is wrong to say that all mining is bad. A distinction must be made. And the mining industry must take the initiative. Instead of hanging together the good miners with the bad—usually small time miners—leave the irresponsible to hang separately. And in lieu of the present Chamber of Mines, put up another in its place. A group composed of responsible miners. And call it—the Respectable Chamber of Mines.
Opinion BusinessMirror
opinion@businessmirror.com.ph
Ways to cushion worst ‘traffic-al’ climate in horizon Michael Makabenta Alunan
on the contrary
W
E joke about having the worst traffic in the world, with Edsa as the longest parking lot, and laugh, “We have no choice, we have a ‘traffic-al’ climate”.
Traffic will get worse before it gets better because P160.8 billion in massive construction will go full swing simultaneously in Metro Manila, resulting in paralyzing gridlocks, unless innovative immediate solutions are done. No great luck with gridlock. One such project is a bridge connecting Bonifacio Global City to the Ortigas business center in Pasig, which will absorb 25 percent of Edsa’s traffic. Any major construction alone causes tentacular massive ripple effects of traffic spillovers, what more a simultaneous construction frenzy of underpasses, flyovers, road-widening, Metro Rail Transit (MRT) and Light Rail Transit (LRT) projects. Already, traffic is at its worst, relates Rochit Tanedo on her way home from Makati at 3 p.m. one recent Friday, trying to hail a taxi to Pasig, only to be rejected five times after a long wait at a seniors’ taxi queue. She crossed streets to no avail, neither could she dread the rush hour MRT queue nightmares. By 7 p.m., she took the Point-toPoint bus to Robinson’s Galleria, arriving at almost 8:30 p.m. Buses/jeepneys were full, and neither could bring her inside Valle Verde, so she waited another hour for a cab or Grab and got a taxi by 10 p.m. and, finally, arrived home by 11 p.m. for a short distance of one kilometer with the driver often nodding to sleep and had to be nudged on every few feet of traffic. Rochit’s case contributes to the P2.4 billion a day in losses and lost opportunities, says a Japan International Cooperation Agency (Jica) study done years back, stressing this can soar to P6 billion a day. Nobody sees elephant in room? Eighty percent of traffic is caused by private cars, which is the proverbial “elephant in the room” that many planners can’t seem to see. Imagine, Congress blames public transport, while experts of the National Economic and Development Authority’s Philippine Institute of Development Studies faulted buses. In contrast, ordinary drivers grounded on reality see the culprit—the volume of cars as competitors for road space, causing 80 percent of traffic. The Jica says private cars carry an average of 1.2 passengers against a bus with 60 seated and 10 to 20 more standing on the aisles. One bus is therefore equivalent to 50 to 60 cars of road space, or more with space intervals needed inbetween cars. Public-transport franchises were frozen since 2003, despite rising commuter demand, triggering “colorums” while transport got more inefficient, jampacked and unsafe. Thus, people shun more public transport and want to buy cars, or patronize the 125,000 Uber/Grab units and contribute to traffic. Against the odds, go even. Meanwhile, immediate measures must be done to ease traffic. Against all odds and the same limited road space, the only recourse is efficient spatial management by maximizing road and vehicle capacities and distributing volumes over time. Private cars can be required to undergo odd-even schemes during rush hours, say 6 to 7:30 a.m. for oddending numbers and 7:30 to 9 a.m. for even numbers, and similar skeds in the evening rush. Ex-Metropolitan Manila Development Authority General Manager Tim Orbos got it wrong when he introduced odd-even with multiple skeds, only confusing motorists. Key here is in execution details and doing test runs. This will wipe out heavy traffic instantly, and still allow people to use and own cars even if sales of 4-wheeled vehicles reached 415,000
in 2016. It takes me 15 minutes to the airport before dawn, but three hours with daytime traffic only because cars go out simultaneously, slowing down each other to a snail’s pace. By simply distributing volume, we can even out the odds. ‘Standing policy’ for buses? Another immediate solution is removing bus seats, but keep a few for elderly, handicapped, etc. This will accommodate more passengers from the original 60 seated, at three and two-seaters to a row, plus 10 to 20 standing along the aisles, to over 100 to 120 passengers. Wider aisles will allow faster unloading and loading, lesser time at bus stops, faster and more turnovers that prevent traffic buildups. By installing separate entrances and exits and another conductor, buses will welcome the resulting increase in passenger volume and turnovers. If MRT/LRT passengers are made to stand, why not bus passengers? If Singapore, with its smaller population, requires, standing bus passengers, why not here. Just install speed limiters. Truck bans don’t work? Truck bans supposedly to ease traffic do more harm. For one, it is causing more traffic owing to their massive buildup at the outskirts during the bans, which flood suddenly in mass when bans are lifted. Second, they are antibusiness, as they slow down the flow of goods, affecting costs, supply-flow and prices. Of the 400,000 trucks nationwide, a bulk passing Metro Manila is affected. So lift the truck ban and, instead, program truck deliveries over 24 hours through daytime charges and nighttime incentives like in other countries. Slap high car-parking fees. Another measure is congestion pricing that is captured through high car-park fees, which can help fund infrastructure projects. This will discourage motorists from bringing their cars. Singapore collects about $6 billion in car-park fees, which can be done here. As public roads were built from people’s money, public transport should be given more priority over cars, which must be slapped with fat parking fees. As people shift to public transport, the government can even absorb all colorums, which are actually sources of corruption. Any excess transport during lean hours can be corrected through platoon-dispatch systems. B.L.E.S.S. in disguise? The monstrous traffic is a blessing in disguise for innovative out-of-the-box solutions like Voi Aguilar’s team proposes, a Bus Livelihood through Efficient Sustainable Systems (BLESS), a private bus-shuttle service, which corporations, homeowners, cooperatives, etc., can operate for their members, employees, etc. to encourage them to leave their cars behind to help solve traffic and join their extended respective communities on wheels, in a koop-like modest-earning BLESS bus that can be equipped with Wi-fi, GPS and all the gadgetry and amenities designed for motorists. There are other specific short-term measures, plus bigger medium-term solutions, while waiting for the big projects like railways, flyovers, etc., but this entails a separate full discourse. Wisdom nuggets mo? It is worth pondering some nuggets of wisdom, like Columbian economist-politician Gustavo Petro’s quote, “A developed country is not a place where the poor have cars. It’s where the rich use public transportation”; and our own environmentalist lawyer Tony Opposa’s statement, “In our desire for individual mobility [cars], we end up in collective dismobility [gridlock].”
E-mail: mikealunan@yahoo.com
Extreme weather Edgardo J. Angara
E
xtreme weather has been causing death and destruction in many parts of the world. In August Hurricane Harvey barreled through the Caribbean and the Gulf of Mexico before making landfall in the United States, where it devastated a huge swath of Texas and Louisiana. In six days, Hurricane Harvey dropped a record-breaking 27 trillion liters (51 inches) of rain, leaving up to 30,000 people in need of temporary shelter. Economic losses have been estimated to range from $70 billion to $190 billion. Sadly, 65 lives were lost.
While Houston and many parts of Texas were drenched, an intense Los Angeles heat wave led to forest fires in La Tuna Canyon last Friday, burning over 5,895 acres—around 23.86 square kilometers—of brush and forcing nearly a thousand people to evacuate. In July heavy rains over Southern China caused the Yangtze and more than 60 other rivers and lakes to overflow, leading to massive floods and landslides—affecting nearly 12 million people and killing up to 56. The damage and destruction spread across 11 provinces. The Guangxi
province alone incurred up to $430 million in damage to infrastructure and economic losses. Meanwhile, heavy monsoon rains over India, Bangladesh and Nepal have led to massive flooding that displaced nearly 41 million and damaged or destroyed up to 950,000 homes. According to the International Federation of Red Cross and Red Crescent Societies, around 1,200 people have already died since the rains started to fall in June. Also in June the central municipality of Pedrógão Grande in Portugal saw the start of the
Wednesday, September 6, 2017 A11
Iberian country’s worst forest fire in history, which burned up to 300 square kilometers. Similar to Los Angeles, Portugal was, at the time, experiencing a particularly intense heat wave. Sixty-four people were killed, most of whom were caught inside their cars as the surrounding brush ignited in a blaze. The main fire was quickly extinguished but, by August, the Portuguese government needed to ask for help from other European Union members to douse up to 250 separate, though significantly smaller, fires. A month earlier the Famine Early Warning Systems Network created by the United States Agency for International Development calculated that up to 2.9 million Somalians were in dire need of emergency food aid. Below-average rainfall throughout 2016 and early-2017 led to droughts that, as of April, have already claimed 524 lives, from hunger but also disease. In March this year the New York Times wrote that drought—exacerbated by war—could lead to famine not just in Somalia, but also South Sudan, Nigeria and Yemen. And with up to 20 million lives at risk, international-aid officials said that they could face the greatest humanitarian disaster since World War II. Such weather-induced death and destruction happened across several
The indispensable role of actuaries Dennis B. Funa
INSURANCE FORUM
T
he eighth Insurance Core Principle states: “The supervisor requires an insurer to have, as part of its overall corporate-governance framework, effective systems of risk management and internal controls, including effective functions for risk management, compliance, actuarial matters and internal audit.” Indeed, actuarial duties form part of the internal-control functions within the insurer. The actuarial duties are closely related with the subject of risk management and internal controls. All of these are the primary duties of the board of directors. Senior management implements the board’s policies with respect to these matters. Discoursing on the actuarial functions, the International Association of Insurance Supervisors states that: “The supervisor requires the insurer to have an effective actuarial function capable of evaluation and providing advice regarding, at a minimum, technical provisions,
premium and pricing activities, capital adequacy, reinsurance and compliance with related statutory and regulatory requirements.” It, moreover, adds that a “robust actuarial function plays a key role as part of the insurer’s overall systems of risk management and internal controls.”
Just what are the main functions of an actuary within the insurer? Among others, the actuary must give advice on “the insurer’s insurance liabilities, including policy provisions and aggregate-claim liabilities, as well as determination of reserves for financial risks”; “assetliability management with regards to the adequacy and the sufficiency of assets and future revenues to cover the insurer’s obligations to policyholders and capital requirements”; the insurer’s investment policies and valuation of assets; an insurer’s solvency position; and the adequacy and soundness of underwriting policies. Some jurisdictions require an “appointed actuary” (also known as “statutory actuary” or “responsible actuary” in some jurisdictions). This position requires independence; hence, any conflict of interest should be avoided. The role of actuaries as a tool of regulation has been described as actuaries being part of the “supervisory model”. In any case, actuaries have differing roles in different jurisdictions.
When the rich said no to getting richer
A
By David Leonhardt | New York Times News Service
half-century ago, a top automobile executive named George Romney—yes, Mitt’s father—turned down several big annual bonuses. He did so, he told his company’s board, because he believed that no executive should make more than $225,000 a year (which translates into almost $2 million today).
He worried that “the temptations of success” could distract people from more important matters, as he said to a biographer, T. George Harris. This belief seems to have stemmed from both Romney’s Mormon faith and a culture of financial restraint that was once commonplace in this country. Romney didn’t try to make every dollar he could, or anywhere close to it. The same was true among many of his corporate peers. In the early1960s, the typical chief executive at a large American company made only 20 times as much as the average worker, rather than the current 271-1 ratio. Today, some CEOs make $2 million in a single month. The old culture of restraint had multiple causes, but one of them was the tax code. When Romney was saying no to bonuses, the top marginal tax rate was 91 percent. Even if he had accepted the bonuses, he would have kept only a sliver of them. The high tax rates, in other words, didn’t affect only the posttax incomes of the wealthy. The tax code
also affected pretax incomes. As the economist Gabriel Zucman says, “It’s not worth it to try to earn $50 million in income when 90 cents out of an extra dollar goes to the IRS.” The tax rates helped create a culture in which Americans found gargantuan incomes to be bizarre. A few years after Romney turned down his bonuses from the American Motors Corp., Lyndon B. Johnson signed legislation that lowered the top marginal tax rate to 70 percent. Under Ronald Reagan, it dropped to 50 percent and kept falling. Since 1987, the top rate has hovered between 30 percent and 40 percent. For more than 30 years now, the United States has lived with a top tax rate less than half as high as in George Romney’s day. And during those same three-plus decades, the pay of affluent Americans has soared. That’s not a coincidence. Corporate executives and others now have much more reason to fight for every last dollar. The theory behind all those high-
end tax cuts—a theory that I once found persuasive, I admit—was that it would unleash entrepreneurial energy: The lure of great wealth would inspire business leaders to work harder and smarter, and the economy would flourish. The first half of that theory may well have come true. Many of the world’s most successful companies are American—not only Amazon, Apple, Facebook and Google, but also Exxon Mobil, Walmart, Johnson & Johnson and JPMorgan Chase. The second half of the theory, however, has been a bust. Most Americans have not flourished in the era of a reduced top-end tax rate. Incomes for the middle class and poor have grown sluggishly since 1980, while the upper middle class has done modestly better. Only the wealthy have enjoyed the sort of healthy pay increases that had been the norm in the 1950s and 1960s. The decline in high-end tax rates has helped change the culture of money. George Romney, a highly successful and personally decent man who thought that making even a couple million dollars a year was unseemly, beget Mitt Romney, a highly successful and personally decent man who has made a couple hundred million dollars. Across society, the most powerful members of organizations have
countries in different countries simultaneously or sequentially only within the past three to six months. Each clearly demonstrates that climate change is real and already here, causing deep human grief. There is wide scientific consensus that global warming—induced by carbon-intensive activities of man—has brought about all of this disaster, destruction and death. But does the average Filipino know about this connection? Are they personally affected, even if they have had their share of such climatechange related tragedy? More important, do our policymakers take climate-change risks into account in the rules and laws they make? In the “Build, Build, Build” program, which may be the country’s most ambitious infrastructure development plan, it only has one or two projects that deal with flood management or disaster-risk reduction. The Tax Reform for Acceleration and Inclusion, where the version passed by the House (HB 5636) earmarks the extra revenues to social programs that will benefit many Filipinos, makes no mention of climate change.
E-mail: angara.ed@gmail.com, Facebook and Twitter: @edangara
An actuary is defined as “a professional trained in evaluating the financial implications of contingent events. Actuaries require an understanding of the stochastic nature of insurance, the risks inherent in assets and the use of statistical models. These skills are often, for example, used in establishing premiums and technical provisions for insurance products, using the combination of discounted cash flows and probabilities”. In other words, the actuary determines the adequacy of premiums (tariffs) and must understand the probabilities of insurance risks (e.g., mortality, morbidity, claim frequencies). The actuary must apply the use of statistical models and the use of discounted cash flows. He must give advice on these matters. To provide contrast, the external auditor gives opinion on the financial statements in accordance with identified financial reporting framework. Lawyer Dennis B. Funa is the current insurance commissioner. Lawyer Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.
fought to keep more money for themselves. They have usually won that fight, which has left less money for everyone else. What would be the right top tax rate today? I don’t know the precise answer. A top rate of 90 percent clearly has the potential to drive away entrepreneurs. But I am convinced that the current top tax rate, 39.6 percent, is too low. It has contributed to soaring inequality, with the affluent having received both the biggest pretax raises and the biggest tax cuts. Plus, there is no evidence that a modestly higher rate would hurt the economy. The recent president with the strongest economic record, Bill Clinton, increased the rate, while the one with the weakest economic record, George W. Bush, cut it. This week, President Donald J. Trump and Congress will turn their attention to tax policy. After the failure of their health-care bill, they are desperate for a legislative win and hope to pass a bill by year’s end. Of course, they are not considering a higher top tax rate. The question is whether their plan will further cut taxes on the wealthy. The early evidence is that it will—enormously—while Trump pretends otherwise. If so, the tax bill will deserve the same fate as the health-care plan: energetic and organized opposition, followed by defeat.
2nd Front Page BusinessMirror
Demand for domestic destination drives Philtoa travel fair D By Ma. Stella F. Arnaldo
@akosistellaBM Special to the BusinessMirror
OMESTIC travel still accounted for majority of the sales of the exhibitors at the 28th Philippine Travel Mart (PTM) at the SMX Convention Center in Pasay City, last weekend. I n a n i nte r v ie w w it h t he BusinessMirror, Cesar Cruz, president of the Philippine Tour Operators Association (Philtoa), which mounts the annual PTM, said: “In terms of sales, Boracay would still be the leading destination. Based on [the clients’] wish list, the most requested destina-
tions are Batanes, Coron, El Nido, and Siargao.” As of 4:30 p.m. on Tuesday, sales generated from the PTM reached P162 million, still P18-million shy of Philtoa’s sales target this year. But Cruz stressed, “We hope to reach our target as we tally the last remaining sales reports.” He
Teo: “The theme ‘50 Shades of Fun’ highlights the wide spectrum of attraction and activities that the Philippines has to offer.”
explained that there were private exhibitors, which joined the provincial and regional pavilions, but failed to submit their sales reports as of press time. In the PTM 2016, sales generated by Philtoa’s exhibitors reached P180 million. Over 200 exhibitors, up from last year’s 175, offered a wide variety of travel options at bargain prices at this year’s three-day PTM, which opened on September 1. The event was copresented by the Department of Tourism (DOT), and
carried the theme “50 Shades of Fun at Visit Asean 50”. The popular travel fair occupied four halls at the SMX Convention Center with a total exhibition floor area of 9,130 square meters (sq m). “We had 32 pavilions this year, measuring 36 sq m to 54 sq m, compared to last year where we only had 27 pavilions,” Cruz added. Tou r i sm Sec ret a r y Wa nd a Corazon T. Teo said at the travel fair’s opening ceremony: “The theme ‘50 Shades of Fun’ highlights the wide spectrum of attraction and activities that the Philippines has to offer. With the help of all tourism stakeholders, we have successfully diversified our tourism product offerings from the typical sun-sea-sand to ecotourism, cultural heritage tourism, food tourism, MICE See “Domestic destination,” A2
Domestic processing of minerals needs incentives, support–solon Continued from A1
“As legislators, this is beyond our sphere of influence. We can only benefit from mining if the government can enforce mining laws.” Meanwhile, Ronaldo Recidoro, executive director of the Chamber of Mines of the Philippines (COMP), said incentives needed by mining companies to invest in downstream processing include tax holidays, power subsidy, as well as shipping of ores from one island to another, citing the high cost of power and interisland shipping costs. He also cautioned the Duterte administration against imposing a nickelore export ban like Indonesia. The policy, he said, “will not work”, citing the case of Indonesia, which imposed a nickel-ore export ban in 2014. Early this year Indonesia started to roll back partially its policy to ban export of nickel ore to China. “We don’t want that to happen in the Philippines,” Recidoro said.
More mining
ACCORDING to Recidoro, to promote downstream processing in the Philippines, mining companies would look at, first, adequate supply, such as in the case of steel manufacturing. “To encourage processing of iron, we need to mine more iron,” he said. “We only have one. So we need to issue permits.”Recidoro added this year’s conference on mining will focus on redefining responsible mining and going beyond compliance. “In the coming days, we will be hearing stakeholders from various fields discuss what we are already doing on the grounds and what we should be doing to enhance our impact not just on the environment but also in the communities that host our operations,” he added. According to Recidoro, for the past two years, the industry has been at the center of a policy storm after President Duterte made his inaugural speech ranting about the environmental destruction caused by irresponsible mining operations. “He really wanted to overturn the mining industry. He wanted a more responsible mining industry, one that is patterned after Australia, Canada and
‘SPEED UP INFRA PROGRAM’ Foreign investors called on the Philippine government to match the construction activity of the private sector by fast-tracking the rollout of its P8-trillion infrastructure program, which will be funded by official development assistance. Private developers continue to change the skyline and even the economic landscape of areas, such as the Makati Central Business District, through their real-estate projects. NONIE REYES American standards.”
Palace meeting
RECIDORO said Duterte called COMP members to a meeting in Malacañang in August. “It was a surprising meeting. We were expecting a dressing down. But, contrary to our expectations, he was like a father.” He added the President was “very fatherly” in his approach. “He reminded us of the facts, that No. 1, he cannot stop mining because of the law and, No. 2, since there is the law, he wanted us not make him look stupid. He wanted us to plant trees and take care of the communities,” Recidoro said.“So we decided, let us show the President and the Filipino public that we are listening and we plan to redefine what responsible mining is. We just not comply with the law, but we go beyond.” He added that under the new leadership, COMP will now be more aggressive in self-policing. “We will be increasing or improving our current operating standards,
not just for mining operations but for social development and environmental protection,” he said. “Those are three thematic areas we want to see marked improvement among our members.”
Cautiously optimistic
ACCORDING to Recidoro, this year’s conference on mining is more dynamic, noting the increased number of participants and exhibitors. “We are seeing a pivot; a slow pivot from negative to, hopefully, positive.” Recidoro said COMP is optimistic to see clarity on the audits, open-pit ban, perhaps on pending legislation, such as the proposal to require legislative franchise on mining operation. “We are still cautiously optimistic. While the situation has vastly improved from the time of Secretary Lopez, there is still a little doubt but better than what we experienced under Lopez. Considering that secretary [Frank] Cimatu is a more sober Secretary, we are keen to participate,” he added.
COMP, he said, is hopeful about the reversal of the ban on open-pit mining method soon, but was quick to say that the defining moment for the industry is when the moratorium on new mining projects is finally lifted. “No matter if the open-pit mining ban is lifted, if the DENR is not lifting the moratorium and not accepting new application, [there’s nothing],” he said. According to Recidoro, lifting the moratorium on new mining projects will allow investment to flow in, hence, enhancing economic opportunities in the countryside. Meanwhile, he said most players in the mining industry support Cimatu’s confirmation by the Commission on Appointments. “He is very sober, very intelligent who can appreciate what is mining technology,” he said. “If you notice, we are really reaching out. This will be a very different Chamber of Mines moving forward,” he said. “We will be very active in our outreach activities. We will be very active in self-policing.”
www.businessmirror.com.ph
SOLONS:VAGUE PUBLIC SERVICES DEFINITION HURTING ECONOMY
file photo: NONOY LACZA
A12 Wednesday, September 6, 2017
L
eaders of the House of Representatives on Tuesday defended the passage of a measure allowing foreigners to fully own telecommunications and transport sectors, saying this will trigger competition in more areas of basic services in the country. House Committee on Economic Affairs Chairman Arthur C. Yap of the Third District of Bohol said House Bill (HB) 5828, which provides for a statutory definition of a public utility, will also improve the quality and lower the cost of services in the country. “These proposed amendments to the Public Service Act will effectively allow for greater competition in more areas of basic services, which will redound to improved quality of services and lower prices to make the Philippine economy competitive and, thus, improve the quality of life in the Philippines, “ he said. HB 5828, which seeks to amend Commonwealth Act 146, or the Public Service Act, was approved on second reading last week and is now scheduled for approval by the lower chamber within the week. This bill is one of the 13 legislative priorities endorsed by the Legislative-Executive Development Advisory Council (Ledac). House Committee on Appropriations Vice Chairman Joey S. Salceda of the Second Distrct of Albay, one of the principal authors of the bill and head of the technical working group drafting the committee’s consolidated proposal, presented the measure as a long-overdue initiative of Congress to perform its legislative function of defining a public utility. The proposed measure aims to ensure the proper implementation of Section 11, Article XII of the Constitution, which states that only companies that are 60-percent owned by Filipinos may operate public utilities. According to Salceda, the absence of a law defining a public utility has led to uncertainty, fewer investments and limited consumer choices. “It’s about time that the legislature exercised its job as the chief policymaking body in a democratic system. The ultimate objective of this law is to promote consumer welfare and international competitiveness. With more players in the industry, there will be greater competition, which will lead to better-quality services, greater access to services for far-flung areas and lower rates,” Salceda said. Moreover, Yap said telecommunication and transport services are used by Filipinos every day, and are necessary for the maintenance of “our lives and our occupations”. . These proposed amendments include the definition of public utility, instituting an appropriate mechanism for fixing rates based on reasonable rate of return; increasing the penalties for violations; and recognizing the transfer of functions of the Public Service Commission to various administrative agencies. According to Yap, the loose interchangeability of terms and definitions has lumped certain key services as “public utilities”, subjecting them to constitutional limitations and restrictions on their operation and management. “We must ensure that public services as defined, are not loosely interchanged with public utilities, so as to allow more public service businesses, greater flexibilities for growth, reform and investments,” he said. Under HB 5828, public utility refers to a person that operates, manages and controls for the public use, the distribution and transmission of electricity as defined by the Electric Power Industry Reform Act, and water pipeline distribution system or sewerage-pipeline system as defined by the act creating the Metropolitan Waterworks and Sewerage System. Yap added these three sectors are being retained as public utilities based on a study that reexamined the legal and economic framework used to clarify businesses as public utility. The bill also said no other person, business or service shall be deemed a public utility under the act unless otherwise provided by law. The measure said the National Economic and Development Authority (Neda) secretariat, with the Philippine Competition Commission (PCC), shall recommend to Congress the classification of a person, business or service as a public utility. It said that, with the exception of those enumerated in the act, no public service shall operate in the Philippines without possessing a valid and subsisting franchise, certificate, or any other appropriate form of authorization for the operation of a public service as the case may be, to the effect that the operation of said service and the authorization to do business will promote the public interests in a proper and suitable manner. Yap said that, compared to the current process where foreign investors are still able to invest more than the current 40-percent ownership through “dummy accounts”, this amendment will ensure that the entire process and criteria of foreign ownership will be rightfully managed and overseen through our government bodies—particularly the Neda and the PCC. Yap also noted the weakness of the original Public Service Act regarding its penalty provision. With this proposed amendment, the penalty of just P200 a day currently will be adjusted to up to P5 million per day, which is indexed to the cost of money based on the cumulative 360-day Treasury bill rate. Last week Rep. Edcel C. Lagman of the First District of Albay questioned the constitutionality of HB 5828. Lagman said if the lower chamber wants to define a public utility, it should amend the economic provisions of the Constitution either by a constituent assembly or constitutional convention. Yap and Salceda, however, clarified that the 1987 Constitution only restricts operation and not ownership of public utilities. Jovee Marie N. dela Cruz