Risk assessments needed in anticorruption and data-privacy protection
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By Henry J. Schumacher
erforming effective risk assessments can be a difficult art to master. The very phrase—“compliance risk assessment”— can encompass a wide range of risks: antibribery, whistle-blower retaliation, data-privacy breach, workplace harassment, anticompetition, product safety and much more.
What are the risks of poor-risk due diligence? What are the risks that compensation schemes will lead sales agents to bribe their way to a performance bonus? What are the risks that internal controls won’t detect bribery payments or data-privacy breaches? That complexity must now become a permanent fixture of corporate compliance and risk-management programs. More risks will emerge in the future, whether they come from business operations, government regulation or external forces.
»continued on A14
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Tuesday, September 12, 2017 Vol. 12 No. 334
Asean to dictate terms of RCEP commitments A
By Catherine N. Pillas
@c_pillas29
sean member-states aim to dictate the negotiations on the trade in goods modalities under the proposed Regional Comprehensive Economic Partnership (RCEP)—now composed of 16 negotiating parties— as reflected in the “Key Elements for Significant Outcomes by End of 2017” document endorsed by Southeast Asian economic ministers.
In d ictating the RCEP ter ms, the 10-member regional bloc wants its trading partners Australia, China, India, Japan, South Korea and New Zealand to go for liberalization levels unseen in Asean freetrade agreements (FTA). Trade Secretary and Asean Economic See “Asean,” A2
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Economy sustains strength, stable growth
92 percent
The percentage of goods that Asean wants to be traded at zero tariff under the 16-nation RCEP
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THE ENTREPRENEUR
he government and private economists, as well as international institutions, are all optimistic about the bright prospects for the Philippine economy for 2017, based on its performance in the first half of the year.
Gross domestic product, or the total output of goods and services, grew by 6.4 percent in the first quarter and improved to 6.5 percent in the second quarter, for an average GDP growth of 6.4 percent in the first semester. Continued on A10
BMReports
State moves to hasten recovery of hospitals, health-care sector
This file photo shows the façade of the Quirino Memorial Medical Center (QMMC) in Project 4, Quezon City. As a hospital, the QMMC is also subject to the provisions of the anti-deposit law, which increased penalties to those turning away patients requiring emergency medical treatment. Nonoy Laczat By Claudeth Mocon-Ciriaco Correspondent
T
Part Two
HREE years ago the Philippine government launched the Nurses Deployment Program (NDP) to replace the Registered Nurses for Health Enhancement and Local Service (RN Heals). The latter was implemented in 2011 “to tackle the lack of skilled and experienced nurses in the rural and underserved areas of the country,” the Department of Health (DOH) said.
The new program, the NDP, aims to improve local health systems and support the country’s attainment of universal health care, the DOH added. “It also aims to give opportunities to the growing number of unemployed nurses in the country.” According to the DOH, nurses enrolled in the NDP were assigned to areas covered by the Conditional Cash Transfer (CCT) Program, a poverty-alleviation strategy hatched under President Gloria MacapagalArroyo’s administration. Continued on A2
PESO exchange rates n US 50.7630
Resorts World Manila Charity Run Over 3,000 early risers participated in Resorts World Manila’s second “Run With Me” celebrity charity race held at the McKinley West in Taguig City last Sunday. Proceeds from this year’s run will go to charitable institutions, such as YesPinoy Foundation, Hero Foundation Inc. and COR Foundation. ALYSA SALEN
Thrift banks seek lower tax rate for deposits By Kathryn T. Jose
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Correspondent
he Chamber of T hr if t Banks (CTB) seeks a lower tax rate on interest income from savings under the fourth package of the Duterte administration’s tax-reform program to cushion the impact of the proposed higher taxes on certain goods and
encourage Filipinos to save for future emergency needs. The chamber said the tax on interest-earning deposits at 20 percent runs counter to the goals of the tax reform and saving for low- and middle-income earners. “We want to see, as the Department of Finance [DOF] says, what is equitable, simple and fair. For example, savings that people keep
for emergency are taxed 20 percent, so you have to look at the impact and the purpose of saving. Most Filipinos resort to savings because they can’t afford investments,” CTB President Gregorio B. Anonas III told the BusinessMirror. Anonas said the lower tax rate will encourage saving as part of better fund management. The DOF said it will eventually
tackle the tax on interest-earning deposits and other banking services when it begins restructuring the capital income tax under the fourth package of the Comprehensive Tax Reform Program. The DOF has laid out five packages that also include tax reforms on property, corporate income and bank secrecy. Continued on A14
n japan 0.4692 n UK 66.9462 n HK 6.4973 n CHINA 7.8229 n singapore 37.8546 n australia 40.8896 n EU 61.0222 n SAUDI arabia 13.5365
Source: BSP (11 September 2017 )
BMReports BusinessMirror
A2 Tuesday, September 12, 2017
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State moves to hasten recovery of hospitals, health-care sector Continued from A1
The nurses were on a “Contract of Service” arrangement renewable every six months for a maximum of two years based on a “very satisfactory” performance rating. Higher salaries are also given to them equivalent to a Nurse 1 position. The higher salary is provided because the budget for employing nurses has doubled as sin taxes increased, the DOH said, quoting Center for Health Development (CHD) Bicol Director Gloria J. Balboa. “This makes them hired-employed rather than deployed after they are awarded with certificates of employment.” Before, nurses in the RN Heals program received a monthly allowance of P8,000 from the DOH and P2,000 from the rural health unit, community or hospital where they were assigned. The DOH said the NDP can hire nurses at higher-than-usual salary rates because the work is a short-term contract: the longest is one year with two six-month contracts. The idea is to provide experience and eventually absorb the good performers in the available permanent government
Asean. . .
Continued from A1
Ministers Chairman Ramon M. Lopez said the ambitions of the RCEP should now be better than any FTA forged by the Asean, or the so-called Asean+1 FTAs. “The important thing is that whatever the landing zone or objective will be, it will have to be better than the current individual Asean country FTAs, or Asean+1 FTA.” On the level of trade in goods liberalization, for instance, the Asean wants 92 percent of all merchandise to be traded at zero tariff under the RCEP. This “magic number”, Lopez said, is being rejected by non-Asean
posts, Health Secretary Paulyn Jean B. Rosell-Ubial explained.
Deployment
AROUND 12 percent of the deployed nurses are eventually hired into permanent posts in government hospitals or public health offices. However, Ubial has admitted the NDP reduced the number of hired nurses by 6,970 in 2017. Still, she said, “Nobody will really lose their job [for those currently hired in the program] because the nature of such hiring is on a contractual basis, not a permanent one.” “The proposed 2017 budget for the program raised their salaries and therefore, after adjustments, resulted in fewer hires,” Ubial explained. In contrast to the nurses, only 70 percent of the slots for doctors in the Doctors to the Barrios (DTTB) deployment program were filled up in 2016. This means that despite the available positions and funds backing the DTTB, 30 percent of the available slots remained vacant. The DOH’s deployment program for doctors, nurses, midwives, dentists and medical technologists is generally successful, Ubial said. In recent years the supply of members of the RCEP. “We have been saying that these participating countries [the six dialogue partners] will have to recalibrate and be more realistic in setting their expectations on RCEP so we can really move this forward. We’re requesting them that they base their offers on this [level],” the AEM chairman said, noting that the quicker the other countries adjust their position, the faster a substantial conclusion can be met. The regional bloc wants a partial deal by November at the Asean Leaders Meeting in Manila. The Asean bloc, led by the Philippines this year, said it has put forward a unified stance in the “Key Elements for Significant Outcomes
nurses in the Philippines markedly increased in response to high demand for nurses in foreign countries facing shortages. Some doctors even retrained to become nurses just to go abroad, she added. However, with a decline in demand for nurses in overseas market, there is an increase in local unemployment of nurses, Ubial has said.
Anti-deposit law
THERE’S a specter haunting hospitals: Republic Act (RA) 10932. Owners have expressed fear of possible bankruptcy following the signing of RA 10932, otherwise known as an “Act Strengthening the Anti-Hospital Deposit Law”. The law, which amends Batas Pambansa (BP) 702, increased the penalties for the refusal of hospitals and clinics to administer appropriate initial medical treatment in emergency or serious cases. Private Hospitals Association of the Philippines (PHAP) President Rustico Jimenez said the “provisions present in the new law [are] too oppressive to the private hospitals.” “ W hy do we need to have this kind of law, which is too by End of 2017” paper. The document contains the parameters and guidelines that will dictate the terms of a “substantial conclusion” of the RCEP. This is infused with an “Aseanled” mind-set, according to Trade Undersecretary and the Philippines’s Asean Economic Ministers Lead Ceferino S. Rodolfo. Generally, the key elements endorsed cover market access and technical rules on the RCEP. The paper spells out the broad parameters of the RCEP’s level of liberalization, timing, percentage inclusion and the controversial value-added mechanisms. “We have to emphasize that RCEP is Asean-led and Asean-centric. This led to general acceptance
oppressive?” Jimenez, also a physician, said. “It will also cause bankruptcy in small hospitals, especially in the provinces.” Under the law, any official, medical practitioner or employee of the hospital or medical clinic who violates the provisions of this Act can be imprisoned for not less than six months and one day but not more than two years and four months. Violators found guilty also could be fined with not less than P100,000 but not more than P300,000. Higher penalties of imprisonment of four to six years, or a fine of not less than P500,000 but not more than P 1 million, or both, are imposed upon directors or officers of hospitals or clinics responsible for the formulation and implementation of policies or instructions violative of this Act. Three repeated violations, added RA 10932, shall result in the revocation of the health facility’s license to operate by the DOH.
Legal impact
JIMENEZ said there was no need to increase the penalty because they are also doing their part to help the poor patients. He said of the 17 cases of among the six dialogue partners and they will now consult their respective capitals and ponder on Asean’s more concrete position to move forward,” Lopez said. The six Asean trading partners in the RCEP, upon consideration of the parameters of the “Key Elements” paper, can begin their respective domestic consultations and submit their counter offers to the Asean starting September 22. These offers will be the substance of the discussions in the last RCEP Trade Negotiating Committee in October. The results will be forwarded to the economic ministers in time for the November Asean summit. Deputy Secretary-General for
complaints filed in the last 10 yea rs ( BP 702 w a s en ac ted in 1984), “only one was decided and never implemented because of the scarcity of hospitals, especially in the provinces.” “So what we are doing is to refer to them, for example, in one area or in a province. You have a big hospital there, you refer all the CT scans, MRI, there instead of [asking them to go] to Manila,” Jimenez explained. “Of course, the patients usually are on the lower income group. Especially in our areas around Manila Bay, there are a lot of informal settlers and these are the cases that are hard to treat.” He admits hospitals are not supposed to turn down all those patients. “You have to treat them but they will not be able to pay us,” Jimenez said. “That’s why we refer all these to Asec. [Health Assistant Secretary Elmer G.] Punzalan.” In return, Jimenez said Punzalan will call the public hospital that are equipped enough to accommodate the patient. “If the patient [is] still in the hospital, we advise them to go the [Philippine] Charity Sweepstakes [Office] because they can get funds there [however] limited.” To be concluded
Asean Dr. Lim Hong Hin said the median level of trade in goods liberalization across all Asean+1 agreements in 90.3 percent. The RCEP, he noted, must build on this and go higher. Lopez said half of the six dialogue partners already expressed w i l l ing ness to adjust to t he 92-percent level proposed by the Asean. The other three are vying for either a lower commitment or much higher than what the Asean is ready to give. “Some want 100-percent inclusion, some 98 percent, others are below. We, Asean, is saying let’s just look at this one level of 92 percent. That level is still better than other FTAs the bloc has done,” Lopez added.
South China Sea. . .
Continued from A14
The administration of Indonesian President Joko Widodo, whose top administrative priorities since taking office in October 2014 include transforming his country into a maritime power, has ordered authorities to blow up hundreds of foreign fishing vessels seized while illegally fishing in Indonesian waters. Joko, during a visit to Japan in 2015, said in a newspaper interview that China’s nine-dash line had no basis in international law. He also chaired a Cabinet meeting on a warship off the Natunas just days after last year’s third naval skirmish—a move analysts viewed as a show of resolve to Beijing. On July 14 Indonesia’s Ministry of Maritime Affairs and Fisheries held a conspicuously high-profile news conference to release its first national territorial map since 2005, including the unveiling of the newly named North Natuna Sea. The new map also included new maritime boundaries with Singapore and the Philippines, with which Indonesia had concluded agreements in 2015. Arif Havas Oegroseno, a deputy minister at Indonesia’s Coordinating Ministry of Maritime Affairs, told journalists that the new Indonesian map offered “clarity on natural resources exploration areas”. That same day, Indonesia’s Armed Forces and Ministry of Energy and Mineral Resources signed a memorandum for warships to provide security for the highly profitable fishing grounds and offshore oil and gas production and exploration activities within the country’s exclusive economic zone near the Natunas. Gen. Gatot Nurmantyo, commander of the Indonesian armed forces, said at the time that offshore energy exploration and production activities “have often been disturbed by foreign-flagged vessels”—which some analysts took as a reference to China. Although several countries take issue with China’s territorial claims in the South China Sea, few do so publicly, and the Trump administration has recently sent mixed signals about how willing it is to challenge China on its claims. That has made the Indonesian pushback more intriguing. Frega Ferdinand Wenas Inkiriwang, a lecturer at the Indonesian Defense University, said Indonesia’s public naming of the North Natuna Sea “means that Indonesia indirectly becomes a claimant state in the area, perhaps due to territorial integrity issues. “It’s in the vicinity of the Natunas,” he said, “and the Natunas contain natural resources that are inherited and will be beneficial for Indonesia’s development.” Analysts say that the Indonesian navy would be no match for the Chinese navy in a fight, although the first of last year’s clashes involved only a Chinese coast guard ship and an Indonesian maritime ministry patrol boat. It is unlikely that the two countries’ navies would clash within Indonesia’s exclusive economic zone, according to analysts. Members of the 10-state Asean have repeatedly expressed concern about China’s aggressive posture in the South China Sea, including its naval standoffs and landreclamation projects in disputed areas, and the stationing of military personnel and surfaceto-air missiles in the Paracel Islands, which are controlled by China but are also claimed by Taiwan and Vietnam. Indonesia, the grouping’s largest member and de-facto leader, had in the past remained on the sidelines of the various South China Sea disputes and offered to help mediate between Asean claimant states and Beijing. Given that China is among Indonesia’s biggest investors and trade partners, some analysts say Jakarta will go only so far in challenging China’s territorial claims, at least publicly. But its more aggressive military posture and other moves regarding the Natunas are nonetheless sending signals to China. “It doesn’t make Indonesia a claimant state,” said Aaron Connelly, a research fellow at the Lowy Institute for International Policy in Sydney, Australia, who follows the South China Sea disputes. “They’ve never accepted the legitimacy of the nine-dash line, which is why they say there’s no overlap” with its exclusive economic zone. “China says it has ‘traditional fishing rights’, but Indonesia is doing things in a legalistic way right now,” Connelly said. “This is a more effective way of challenging it.” Evan A. Laksmana, a senior researcher on security affairs at the Center for Strategic and International Studies in Jakarta, agreed that the naming of the North Natuna Sea was not specifically done to trigger a dispute with China. “But the international legal basis underpinning Indonesia’s new map is clear,” he said. “We do not recognize China’s claims in the Natuna waters—we don’t feel like we should negotiate our map with Beijing or ask their consent,” Laksmana said. The New York Times News Service
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US deploys Gray Eagle drone over Marawi City By Rene Acosta @reneacostaBM
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he United States has deployed an unmanned aerial vehicle (UAV) in Marawi City as it raised its surveillance support to the ongoing military operations against members of the Maute terrorist group who are trying to fend off a government offensive to boot them out from the city. The deployment of the Gray Eagle took place following a statement of the military that it was already in its final phase of operations against remnants of the terror group that had been battling soldiers since they lay siege to Marawi City in May. Armed Forces Chief of Staff Gen. Eduardo M. Año has earlier assured that the operations will be over before he retires on October 26, vowing the rebellion in the city would be the last in Mindanao, and even in the whole country by rebels and terrorists. “Compared to current surveillance platforms used in the region, the Gray Eagle has a longer flight duration, which will enable a larger area of reconnaissance and surveillance,” said the US Embassy in a news statement over the deployment of the drone. The presence of the Gray Eagle complements the presence of the P-3 Orion, which the US is also using to gather intelligence information in
the battle areas in support of the operating Filipino troops. Over the weekend, Australia has decided that it will send a small contingent of Australian soldiers to the country to support the ongoing operations against the terrorists by way of providing technical support, including intelligence information. Australia had earlier deployed three spy planes in Marawi City, still as a form of intelligence and surveillance support for the Filipino soldiers. The use of the Gray Eagle in the operations against members of the Maute Group followed an earlier report that the US Department of Defense wanted to conduct air strikes against the terrorists in the city. However, Año said that, while they really appreciate any form of assistance from the US, the air strikes remain a plan until it is officially communicated with the military through the Philippine government. He also noted that US involvement in direct military operations in the country is not covered by the defense treaty with the Americans, unless Manila is attacked by another country. “The existing Mutual Defense Treaty provides that only technical assistance and training may be allowed under the Mutual Defense Board-Security Engagement Board,” Año said.
Editor: Vittorio V. Vitug • Tuesday, September 12, 2017 A3
House okays barangay, SK polls postponement to May 14, 2018 By Jovee Marie N. dela Cruz
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@joveemarie
he House of Representatives on Monday approved on third and final reading the measure postponing the October 2017 barangay and Sangguniang Kabataan (SK) elections. Voting 213-10, the lower chamber passed House Bill 6308 deferring the October 23, 2017, barangay and SK elections to May 14, 2018. The lower chamber is eyeing to synchronize the barangay elections with the plebiscite for Charter change and the proposed Bangsamoro basic law in May next year, according to Majority
Leader Rodolfo C. Fariñas of the First District of Ilocos Norte. Under the bill, current barangay officials shall act in a holdover capacity until the next elections is held. The last barangay elections was conducted in October 2013. For his part, Rep. Raul V. del Mar of the First District of Cebu, who voted
“no” on the postponement of the village polls, said the postponement of barangay elections violate the intent and purpose of holding regular elections. He added that it violates the will of the voters, as well. “Why should we deprive voters of their right to choose barangay officials if we grant the right to them for all officials of the government?” del Mar said. “To postpone it once again to the second Monday of May next year for the second time is two postponements too much,” he added. For her part, Party-list Rep. Arlene D. Brosas of Gabriela said “Narco-politics should not be invoked to replace the people’s right to vote.” President Duterte has called for the postponement of the barangay elections, saying the government is con-
cerned that if the elections were held in October as originally scheduled, the candidates backed by money from drug lords would likely win. Party-list Rep. Sherwin Tugna of Cibac, chairman of the House Committee on Suffrage and Electoral Reforms, said the approval will help the campaign of the President against illegal drugs. Earlier, lawyer Edmund Abesamis, national president of Liga ng mga Barangay sa Pilipinas, backed the postponement of the barangay polls, admitting that there is a valid concern that drug syndicates and personalities will use drug money to infiltrate and influence the elections. He said the postponement of the barangay elections will facilitate the clearing of drug-affected barangay officials who have already been identified to be involved in illegal drugs.
Senate committee lines up remedial legislation for illegal-drugs seizures By Butch Fernandez @butchfBM
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heSenateBlueRibbonCommittee looking into the P6.4-billion shabu shipmentsmuggledfrom China is lining up a package of remedial legislation updating protocols for handling illegal-drugs seizures. Sen. Richard J. Gordon, Blue Rib-
bon chairman, confirmed on Monday the panel is drafting at least five proposals for inclusion in a committee report recommending amendments to the existing dangerous drugs law. Gordon made the disclosure following another hearing on the 604 kilos of shabu seized by authorities from a warehouse in Valenzuela after
the container van carrying the contraband was allowed to pass through the Port of Manila without being inspected by the Bureau of Customs. The senator said the committee is not ready to wrap up the inquiry as it still needs to tie up loose ends, even as Gordon admitted that the panel will be drawing up remedial measures to be submitted to the Senate plenary for
enactment into law. The committee also intents to conduct further hearings on the illegal-drugs menace. Among the remedial legislation being finalized, Gordon said, are amendments in existing law that will require arresting authorities to immediately report drug seizures and burning of seized drugs as soon as possible to prevent “recycling”.
Economy
A4 Tuesday, September 12, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon
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Major overhaul of DA’s 2018 proposed budget sought
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By Jovee Marie N. dela Cruz
@joveemarie
party-list lawmaker has asked the leadership of the House of Representatives to implement a major overhaul to the P54.2-billion proposed budget for the Department of Agriculture (DA) next year.
Bazaar glitter A wide variety of goods, such as clothing, accessories, bags and food, are available at a bazaar in Makati City. According to the vendors, bazaars start to boom during “ber” months. ALYSA SALEN
PHL ready for Asean mutual pact on tourism
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hilippine tourist arrival is growing at a steady rate. The Department of Tourism (DOT) reported that in May 2017, for the first time this year, visitor arrivals surpassed the 500,000 mark at 532,757, a 19.6-percent increase compared to May 2016. Visitor arrivals have been recorded from Asia (63.11 percent), Americas (19.01 percent), Europe (8.78 percent) and Australasia (4.75 percent). With this bright outlook for tour-
ism and to further bolster the industry, compliance with the recently formulated Mutual Recognition Agreement (MRA) on Tourism Professionals by the Asean is necessary. The Asean MRA facilitates the free movement and employment of qualified and certified personnel among Asean member-countries to boost job opportunities in hotels and resorts across the region. It also seeks to standardize training for employees and tourism education for stu-
dents, and encourage best practices across the Asean. “It aims to open up the region to talented and skilled tourism professionals to work anywhere within the region. With the new Asean MRA, the tourism industry is set to be more professionalized in all of the Asean. This means that the quality of service and products related to tourism will be more standardized,” said Tina Aquino, chairman of the Tourism Industry Board Foundation Inc.
Party-list Rep. Cecilia Chavez of Butil, in a news statement, said the lower chamber should implement “drastic changes in the DA budget to ensure national food security and support the Filipino farmers. “The DA budget needs a major surgery and not a mere cosmetic change,” Chavez said. The approval of the DA’s budget remains to be seen as of this writing. Last week the House of Representatives deferred the approval of the DA budget of P54.2 billion as there are other issues the DA needs to explain during the plenary deliberation. The DA proposed budget is 32.5 percent more than this year’s appropriation of P45.2 billion. Chavez has moved for the deferment of the DA budget proposal, saying that the issues and concerns she raised on several items under the DA 2018 budget are serious enough to merit a more thorough review. Moreover, Chavez questioned the P3.5-billion allocation for a program of the Philippine Crop Insurance Corp. (PCIC), saying it was based on an erroneous database of supposed farmer-beneficiaries. Chavez also asked for a review of the Agriculture Credit Enhancement Facility’s (Acef) thrusts and priorities, “given the urgent need for the Philippines to be ultra-competitive in the context of the Asean economic integration.” “The entire agenda of attaining national food security and supporting the neglected Filipino farmers and the agriculture sector appear to be nonpriorities in the 2018 DA budget and that would be very tragic
for the entire agriculture sector and its many stakeholders. I appeal to both chambers of Congress to take a second hard look at the DA budget to effect a major overhaul,” she said. According to Chavez, the performance of the Acef has been dismal since it was put in place. She said the Acef law was created to help the sector compete globally after the accession of the country into the liberalized agricultural trading environment. “This did not come to pass. For one, it’s release was delayed for four years due to the absence of clear procedures. In 2011 its loaning operations was suspended because of numerous problems, such as mishandling of funds, and out of the project cost of P9 billion only 316 projects were implemented,” she added. Over the years, Chavez said, Congress has been appropriating funds for the Acef. “Over the years it [Acef] has not served its purpose [since] it has not served its true beneficiaries,“ she added. Chavez said the government must ensure that our farmers are empowered and competitive, “Otherwise, we will be flooded with agricultural products from our Asean neighbors and this would have dire consequences on the general economy and the welfare of our people.” The lawmaker, meanwhile, questioned seed buffer-stock budget, a basic and urgent support system for farmers. She said the DA must ensure proper identification of farmer recipients/beneficiaries, adding cooperatives should be involved to ensure
₧54.2B
The DA’s proposed budget that is under deliberations in the House of Representatives a fool-proof system of distribution of the buffer stock and the productivity desired. Considering that seeds have a limited shelf life, Chavez said, there is a great possibility that these would only go to waste if purchased immediately. The DA has no proper storage facilities. Chavez also questioned the selling of seeds to farmers, “Why sell when it is supposed to be a subsidy?” “If some funds would be unutilized for the seed buffer stock, there is no clear definition in the special provision where the fund will go. This, by itself, is a huge question mark and a black eye on the seed fund,” she said. Chavez said that seed security is vital to food security, and the DA should ensure proper and timed distribution of the buffer stock and for a strategic distribution of the stock. “The DA should make available a credit program and subsidy for rice seed growers as incentive for their contribution to the national food security efforts,” she added. On the P2.6-billion budget allocated for the implementation of small scale irrigation projects, Chavez questioned the technical capability of the local government units (LGUs) to handle irrigation system when they are turned over by the DA. She also asked the DA to report the status of the implementation of small-scale irrigation projects worth P3.2 billion for 2017. “Based on the analysis and recommendation of the Development Academy of the Philippines in the rapid assessment of the Agriculture and Fisheries Modernization Act, the LGUs lack the technical capability to handle irrigation system planning, design and management,” she said.
Newly formed ‘green movement’ vows support to DENR’s Cimatu By Jonathan L. Mayuga @jonlmayuga
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newly formed alliance of environmental groups has expressed support behind Environment Secretary Roy A. Cimatu and his flagship programs and projects in the Department of Environment and Natural Resources (DENR). Cimatu is expected to face members of the powerful Commission on Appointments, which rejected the appointment Cimatu’s predecessor, environmentalist Regina Paz L. Lopez, because of her controversial antimining policies. The movement, called Tayo ang Kalikasan (Tayo), was banded together by a common goal of collaborating with the government and its citizens toward responsible development of the country’s natural resources and to ensure the restoration, rehabilitation and enhancement of the environment. At a news conference in Quezon City on Monday, members of the movement said they have met with Cimatu on September 6 to discuss pressing environmental issues and sought to hear the official’s plans for the environment. The dialogue was attended by non-governmental organizations (NGOs), scientists, geologists,
ecologists, urban planners and indigenous peoples (IPs). The issues and advocacies brought to the table include water, solid waste, management, restoration of mining sites, forest management and land titling. They said Cimatu welcomed their initiative and lamented that the position of the DENR secretary is challenging and that overseeing a big department needs help from both the government and the public. “I appreciate the efforts you have made so that environmental concerns are communicated, not just to the DENR, but specifically to the secretary directly. It is my duty to listen and act on these concerns,” Cimatu was quoted by the group as saying. He also vowed to support the group’s agenda and promote the protection and responsible exploitation of natural resources toward inclusive growth espoused by President Duterte. Rodolfo B. Javellana Jr. of Luntiang Pangarap (Green Dream), an attendee of the dialogue, said there are numerous environmental laws that are lacking enforcement. He added his group will closely monitor the implementation and enforcement of such laws. Scientist Egay Maranan, for his part, said the solutions
are already there, and that the government should tap private individuals to solve environmental problems. A biotechnologist, Maranan advocates bioremediation, a waste-management technique that involves the use of organisms to neutralize pollutants from a contaminated site. He proposed collaboration with the DENR to use his research and knowledge to enhance rehabilitation efforts for the country’s bodies of water, including the Pasig River and Manila Bay. IP leaders also requested that Cimatu include the concerns of the indigenous peoples when deciding on programs and projects. Other groups, such as Green Convergence, a coalition of environmentalists from related interests and advocacies, was also present during the dialogue and said they want to highlight solutions and positive news about the environment. The group is expected to rally behind Cimatu, giving the former military chief of staff a chance to apply his “disciplinarian and no-fuss approach” in running the affairs of the DENR. The group vows to closely watch Cimatu’s performance, especially in the implementation of his flagship programs and projects.
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Editor: Jennifer A. Ng • Tuesday, September 12, 2017
A5
Tokyo, Manila to scrutinize free-trade agreement
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By Catherine N. Pillas @c_pillas29
anila and Tokyo are expected to begin the general review of the Philippine-Japan Economic Partnership Agreement (PJEPA) before the end of the year, according to an official of the Department of Trade and Industry (DTI).
Trade Undersecretary Ceferino S. Rodolfo said the Philippines made the request to conduct the review of the PJEPA at the sidelines of the Asean Economic Ministers’ Meeting (AEM) held in Manila.
“For the PJEPA, [Tokyo] confirmed the dates for the Sixth PJEPA Joint Committee meeting and this will be an opportunity for us to move forward on the general review of it,” Rodolfo, who is also the Philippines’s lead
for the AEM, told reporters in a news briefing. “[Trade] Secretary Ramon M. Lopez already flagged to Japan our products of interest, which are bananas, mangoes and pineapples,” he added. The DTI official, however, did not reveal the exact date of the meeting. Rodolfo noted that Japan has recently forged free-trade agreements (FTA s) w ith Mexico and Peru.“Mexico and Peru can supply the same [farm] products the Philippines exports and by virtue of them having concluded FTAs, they may have gotten good tariff preferences. We want to correct that.” Under the PJEPA, Japan slaps seasonal tariffs on bananas imported from the Philippines—2 percent from April to September and 18 percent starting October. The government wants these seasonal tariffs scrapped. The Philippines has also been b r e a c h i n g t h e e x p o r t v o lu m e quotes prescribed for agricultural
products under the PJEPA. The country’s market share for bananas and pineapples in Japan has been going down in recent years. The Philippines used to account for nearly 90 percent of bananas and pineapples imported by Japan. Japan is expected to push for zero-percent duty on vehicles with an engine displacement of below 3,000 cubic meters (3-liter engine). Manila slaps a tariff of 20 percent on this type of vehicles. Vehicles with an engine displacement of 3 liters and above may be exported by Japan to the Philippines at zero-percent duty. Tokyo may also seek concessions for its petrochemical and steel products. Rodolfo noted that the PJEPA has allowed the Philippines to record a trade surplus of $1 billion in 2009. This ballooned to $7 billion in 2015. The PJEPA was forged in 2006 but came into force in 2009. It is supposed to be rev iewed ever y five years.
PHL may regain bird flu-free status by year-end By Jasper Emmanuel Y. Arcalas @jearcalas
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he Philippines may regain its bird flu-free status in December, after all the necessary measures to manage the virus in affected areas have been undertaken by the government and poultry growers. The Bureau of Animal Industry (BAI) said it would take at least 75 days to implement all the measures prescribed in the government’s manual for managing bird-f lu outbreaks before affected areas in Pampanga and Nueva Ecija can be considered bird flu-free. “[The Philippines] is not yet bird flu-free. So far, there has been no report of new cases, which is a good sign. And we are hoping that we are already getting there [becoming bird flu-free],” Vytiaco told the BusinessMirror. One of the protocols prescribed in the government’s manual is the collection of swabs from fowls in the 7-kilometer radius from ground zero. The samples should test negative for avian influenza (AI), according to Vytiaco. “The 7-kilometer control area serves as buffer zone between the infected and the AI-free areas. We are not sure if the virus did not spread to the buffer zone,” she said. “We can only be sure if the laboratory tests of the collected samples in the 7-km area is negative for AI. If all the samples tested negative for the virus, then we can
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say we have contained the AI within ground zero,” Vytiaco added. She disclosed that the BAI has collected at least 800 swabs from the 7-km radius of the ground zero in San Luis, Pampanga, Samples from the 7-km radius of the ground zeroes in Jaen and San Isidro, Nueva Ecija, are still being gathered. Aside from the laboratory tests, the sentinel birds that will be grown and observed for 35 days in depopulated farms should also test negative for bird flu. The government will conduct five laboratory tests on samples from sentinel birds. The government, however, could only release sentinel birds once the
poultry growers have completed the cleaning and disinfection process in their farms and have observed the prescribed rest period. Vytiaco said the cleaning and disinfection process in all the AIaffected farms are still ongoing as of press time. “It was agreed upon that once the cleaning and disinfection process has been completed, the owner will write a letter to the BAI, to be endorsed by either the municipal agricultural office or the provincial veterinary office,” she said. “So far, since we had a meeting last week, no one has written to the BAI, yet,” Vytiaco added.
She said the cleaning and disinfection process could be completed in five days. The guidelines of the World Organisation for Animal Health (OIE) include a 90-day waiting period after the last infected farm has been cleaned and disinfected before a country can be regarded as bird flu-free. “If there’s no new reported cases within 90 days after the point of reference, which is after the disinfection, then the OIE will recognize the Philippines as bird flu-free,” she said. “But at this point, we still do not have a point of reference because the cleaning and disinfection process is not yet finished.”
China sends one of the West’s most critical materials soaring
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he price of one of the most critical materials for the Western world’s economy and defenses is spiking faster than any major commodity. Tungsten, used to harden steel in ballistic missiles and in drill bits, has surged more than 50 percent in the last two months, amid growing concern about supply cutbacks in China, where about 80 percent of the metal comes from. The country is clamping down on polluting mines and enforcing production quotas. “The Chinese have been trying to impose control over the production in tungsten,” said Mark Seddon, senior manager at Argus Consulting (Metals). “They’ve used environmental policy to clamp down on nonquota production.” The price of tungsten in Europe has jumped 52 percent since early-July, according to Metal Bulletin Ltd. The advance has beaten all 22 major materials in the Bloomberg Commodities Index. The European Union classes tungsten as a “critical” commodity and the British Geological Survey places it at the top of its supply-risk list of materials needed to maintain the UK’s economy and lifestyle. In 2012 it became a flash point when then-US President Barack Obama filed a complaint to the World Trade Organization against Chinese supply curbs.
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China limits supply to about 91,300 metric tons a year, but routinely breaks its quota by as much as 50 percent, partly because a lot comes as a byproduct from mines that produce other metals, such as molybdenum, Seddon said.
China’s impact
It seems that tolerance has gone, at least for now. China’s Ministry of Industry and Information Technology issued an edict on June 6, saying producers should stick to output quotas and
that those without quotas, or which exceed the quotas, should halt production. Quotas also shouldn’t be granted to firms that infringe safety or environmental rules. “The government wants to have control,” said Seddon, who has covered the industry for at least 15 years. “Whether this carries on into next year is more difficult to predict.” It’s also been a wild year for many other lessertraded metals. Prices for “light” rare earths, including neodymium and praseodymium, have also shot up as part of China’s mining cleanup. Battery materials, such as cobalt and steel-hardener vanadium, have surged, while minor precious metals, like ruthenium, rallied, too. Tungsten, also know as wolfram, gets its name from the Swedish words for heavy stone and was first discovered in 1783. The light gray or whitish metal can be alloyed with steel to form materials that are stable at high temperatures. At more than 3,400 degrees Celsius (6,150 Fahrenheit), it has the highest melting point of any metal on Earth. The biggest consumer is the auto industry, with about 25 percent of supply predominately used in cutting and machining tools. It’s also used in lighting, steelmaking and mining. Tungsten’s high density means it’s also used in missiles to help them penetrate defenses. Bloomberg News
Asia’s agri firms told to adopt Spain’s cooperative model
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By Cai U. Ordinario
@cuo_bm
he Asian Development Bank (ADB) said agribusinesses in developing member-countries (DMCs), including the Philippines, can thrive if they will adopt Spain’s cooperative model. In an Asian Development Blog, titled “Asian agribusiness has much to learn from Spain’s cooperative model”, ADB Agriculture Specialist Md. Abul Basher said the expansion of agribusinesses in the region is hampered by poor transport connectivity and access to markets. “The absence of well-developed wholesale markets, coupled with poor transport connectivity, makes it very difficult for farmers to sell their products at a fair price in Asia. This problem equally affects the marketing activities of cooperatives,” Basher said. Basher said these can be addressed if governments will support wholesale markets for agribusiness cooperatives and link them up with institutional buyers. ADB’s agriculture expert said setting up large modern marketing hubs will help cooperatives sell their goods to wholesale buyers. This will also allow their members to access buyers who need large quantities of produce at good prices. Basher said the government can consider linking cooperatives with institutional buyers, like public hospitals, hotels, schools and universities, hotels, and supermarket chains, which buy products in large quantities. He added that it would also be advantageous to agribusinesses if microfinance institutions and nongovernmental organizations organize groups to give them greater access to credit and other forms of financing. “Whether Asian agricultural cooperatives learn how to think like corporations will define the future of agribusiness in the region, as it did in Spain, which is now Europe’s breadbasket,” Basher said. These recommendations were based on Basher’s observations of the activities of a Spain-based local agricultural cooperative, Cosanse. The cooperative is owned by around 800 farmers and run by 75 full-time paid employees, including agricultural engineers and marketing experts. Cosanse offers its members large meeting rooms, state-of-the-art cold chain and storage facilities and delivery trucks. It also offers facilities for sorting, grading and packaging products. “The Spanish cooperative pools the products from all members and sells them on their behalf, following certain terms and conditions. Members, thus, benefit from economies of scale on marketing expertise—a very interesting approach for developing countries in our region,” Basher said. By helping cooperatives and small-scale food producers, DMCs will have a greater chance of achieving the Sustainable Development Goals (SDGs), particularly Goal 2 on ending hunger and achieving food security. One of the targets of the goal aim to double the agricultural productivity and incomes of small-scale producers, particularly marginalized groups, such as women, indigenous peoples and family farmers and fishers. The SDGs or Global Goals is a set of socioeconomic goals that 193 United Nation member-countries, like the Philippines, committed to meet by 2030. The goals are composed of around 169 targets and over 300 global indicators. The SDGs were adopted in September 2015.
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Banking&Finance
Tuesday, September 12, 2017 • Editor: Jun B. Vallecera
BusinessMirror
news@businessmirror.com.ph
Maverick legislator proposes lifting deposit secrecy cloak
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By Jovee Marie N. dela Cruz
@joveemarie
ne of the more audacious legislators proposed on Monday a measure exempting government officials and employees from the cloak of secrecy granted on deposits in any banking institution. In House Bill 3155, Party-list Rep. Gary C. Alejano said the Bank Secrecy Act, or Republic Act 1405, was enacted in 1955 to encourage people to deposit their money in banking institutions so that these may be properly managed and utilized by the financial sector for greater economic growth and development. Under the law, all deposits are absolutely confidential and may not be inquired or looked into except upon permission of the depositor, in cases of impeachment, upon order of a competent court in cases of bribery or dereliction of duty, and in cases
where the money deposited or invested is the subject of litigation. “However, this provision prohibiting the disclosure of or inquiry to bank deposits had been exploited time and again to hamper and stall the investigation of government officials and employees suspected of enriching themselves while in public office,” he said. The measure seeks to exclude government officials and employees, whether elected or appointed, from the secrecy provisions so that law-enforcement au-
thorities will be equipped with the tools needed to go after crooks in government. ‘When the depositor is an elective or appointive official or employee of the Republic of the Philippines, including the officers and members of the Armed Forces of the Philippines and all members of the uniformed services, and officers and employees of government-owned and -controlled corporations and their subsidiaries [are covered in this act],” it said. Under existing legislation, deposits of whatever nature with banks or banking institutions in the Philippines, including investment in bonds issued by the government of the Philippines, its political subdivisions and its instrumentalities, are absolutely confidential in nature and may not be examined, inquired or looked into by any person, government, official, bureau or office except upon written permission of the depositor, or in cases of impeachment or upon order of a competent court in cases of bribery or dereliction of duty of public officials or in cases where the money deposited or invested is the subject matter of the litigation.
Malaysian credit watcher ups PHL outlook from ‘stable’ to ‘positive’
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uala Lumpur-based RAM Ratings on Monday cited the country’s sustained growth momentum despite the change in administration, a development that, likewise, prompted the Fitch affiliate also to raise the country’s credit outlook from “stable” to “positive”. RAM Ratings said the improved outlook in the Philippines’s credit standing reflects the stronger-than-expected GDP expansion last year and the continued influx of investments “despite a change in administration”. A positive outlook on credit indicates a likely upgrade over the next 12 to 18 months. At present, RAM Ratings rates the Philippines as a “triple B” or “BBB” economy on a global scale and “A” on a regional scale. “BBB” reflects the threshold or minimum grade considered appropriate for investment. An “A” grade is four notches shy of the highest rating possible at “triple A” or “AAA”. According to RAM Ratings, the global rating is a reflection of perceived creditworthiness on a global scale while its regional rating compares economies with its Southeast Asian peers. The Philippines posted growth averaging 6.9 percent in 2016 but managed only 6.4 percent in the first half this year. The credit-rating agency also lauded
the country’s continued effort to cut bureaucratic red tape, simplify regulations and streamline business processes, saying these developments are positive for investment purposes. RAM Ratings also said improved competitiveness and ease of doing business, as well as the anticipated approval of a tax-reform package helped influence the credit outlook. However, the ratings agency elevated underemployment and poverty are structural issues seen as long-term constraints on growth. The ongoing infrastructure buildup also merited positive comments from RAM Ratings, which nevertheless warned of downside risks arising from delays in implementation or cost overruns. “The Philippines’s ratings could be upgraded if current improvements are maintained and the country’s growth momentum continues with an increased share of domestic investments and foreign direct investments. The successful implementation of tax reforms and coordinated rollout of the government’s ambitious infrastructure projects will also be positive rating triggers,” RAM Ratings said. “Conversely, the weakening of government finances and the country’s external position beyond our expectations, deterioration in domestic financial stability, and the reversal of investment initiatives
Repurposed bank funds invested in Treasury bills
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ome of the funds effectively excluded from the special deposit mechanisms created by the Bangko Sentral ng Pilipinas (BSP) found their way to the Bureau of the Treasury (BTr), allowing officials to award in full P15 billion worth of Treasury bills, or T-bills, on Monday. The repurposed funds pertain to those locked out of the BSP’s 28-day term deposit window whose volume was cut to only P110 billion, from P140 billion originally. According to National Treasurer Rosalia V. de Leon, the auction committee enjoyed the obviously enhanced liquid tone of the investing market as a result of the reduction of the 28-day term deposit facility of the BSP. “We see the very liquid tone of the market given that first, the BSP reduced the 28-day facility offer from P140 billion to P110 billion so that’s P30 billion released [as additional] liquidity,” de Leon told financial reporters. The 91-day tenor was almost three times oversubscribed, with tenders reaching P29.429 billion. The BTr committee sold the full P6 billion on offer and rejected P23.429 billion. The three-month tenor posted an average rate of 2.088 percent, which was 5.5 basis points lower than the 2.143 percent set at the previous auction.
“Then at the same time, we’ve seen that for all three bucket tenors the rates have gone down, given that first, we have very soft data coming out of the US so [that] expectations have been muted in terms of another rate hike in December,” de Leon said. The 182-day tenor was similarly sold in full at P5 billion, with tenders reaching P11.035 billion. The auction committee rejected P6.035 billion. Six-month T-bills now average 2.564 percent, or a decline by 2.8 basis points compared to 2.592 percent at the previous auction. “Then, of course, the impact of hurricane Irma, [US] growth prospects have slightly moderated. We hear a lot of talk coming out of the Federal Reserve about how they have to be cautious [on] inflation. Again the necessity of another rate hike may not be there,” she said. The 364-day tenor bucket was similarly sold in full at P4 billion, with tenders reaching P11.790 billion. The committee rejected P7.790 billion and one-year T-bills now average 2.920 percent, or lower by 1.5 basis points from 2.935 percent set at the previous auction. “We see also that inflation in the domestic market is still within the central bank [target] of 2 percent to 4 percent. I think it’s really liquidity being released from the TDF,” she said. Rea Cu
and growth-enhancing strategies, though unlikely, could exert downward pressure on the ratings,” it added. The economic managers welcomed the ratings agency’s optimistic view of the economy. “The positive outlook from RAM Ratings is another confidence vote in the Duterte administration’s resolve to grow the Philippine economy and achieve financial inclusion through the ‘Build, Build, Build’ program while maintaining fiscal discipline and ensuring this infra buildup’s sustainability via a Comprehensive Tax Reform Program,” Finance Secretary Carlos Dominguez III said. BSP Governor Nestor A. Espenilla, Jr. said the country’s strong external payments position, as recognized by RAM, will remain robust over the medium term. “The country’s external payments position, which lends strong support to the country’s investment grade credit ratings, is expected to remain strong in the years ahead on account of significantly rising FDI, underpinned by sustained inflows in remittances and growing tourism receipts,” Espenilla said. “The country’s enabling environment, highlighted by the full liberalization of the banking sector, is encouraging more foreign banks to operate in the Philippines and, therefore, help bring in more job-generating investments,” Espenilla added.
Fortune Life launches 7th year of Values Advocacy Program with DepEd
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he Values Advocacy Program (VAP) of Fortune Life Insurance Co. celebrates its seventh year of promoting “The Values of Hard Work and Discipline” among Filipino teachers and students. Fortune Life, together with the Department of Education (DepEd) and Marylindbert International, launched on Monday the program’s seventh year at the Bulwagan ng Karunungan, Department of Education Central Office in Pasig City. Along with the launching, the Sixth Ambassador Antonio L. Cabangon Chua Gintong Parangal Para sa Edukasyon will award teachers who have worked diligently in promoting the program’s advocacy. Nominees are chosen from teachers, principals and supervisors who showed and exemplified commitment and dedication to the values of hard work and discipline. Five winners and three honorable mention awardees from various parts of the country will be recognized and awarded with trophies and special prizes. The winners are Aileen Royo-Apostol of Santo Niño SPED Center in Tacloban City; Allan M. de los Reyes of District ALS Center in Minalin, Pampanga; Ma. Regaele A. Olarte of Muntinlupa National High School of Muntinlupa; Vladimir B. Paraiso of F. Benitez Elementary School in Manila; and Ma. Lourdes C. Valondo of Dr. Felipe De Jesus National High School in Bulacan.
The honorable mentions include Dr. Jesus C. Insilada of Alcarde Gustilo Memorial National High School in Iloilo; Rene Rose M. Labasan, PhD, San Juan Elementary School in Nueva Ecija; and Mr. Roderick L. Labay of Apnagan Elementary School in Oriental Mindoro. This year’s program also commences the search for Gintong Parangal Para sa Edukasyon Pamumuno awardees to acknowledge the achievements of schools division superintendents, assistant school division superintendents and administrative officers in the DepEd in areas of positive leadership, hard work and discipline. The awardees are Mina Gracia L. Acosta from division of Bulacan; Dr. Leila P. Areola, CESO VI, from division of Ilocos Norte; Dr. Wilfredo L. Cabral, Ceso V, from division of Manila; and Dr. Roberto Santos Jr., Ceso VI from division of Tarlac. The honorable mentions include Dr. Christopher Diaz from division of Rizal, Rhina L. Silva from division of Batangas City and Dr. Leonardo Zapanta, CesoVI from division of Pampanga. Education Secretary Leonor M. Briones is guest of honor and keynote speaker. Top officials from the DepEd and the ALC Group of Companies will join the teacher-awardees and the rest of the VAP supporters in an afternoon of awards and recognition.
Case clippings
By Justice S J Ranada Jr.
FORECLOSURES–duty of purchasers Prospective bidders dealing with registered lands are normally not required by law to inquire further than what appears on the face of the TCTs on file with Register of Deeds, but purchasers cannot close their eyes to known facts that should put a reasonable person on guard, as when the purchaser has actual notice of public highway built on the RROW portion of a property, and fails to make further inquiries. Hi-lon v. Commission GR 210669 01 Aug 2017 Peralta, J
Budgeting for the self-employed
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n June I celebrated my 11th year as a self-employed. Frankly, I still cannot quite fathom the ohs and ahs from people when they learn I work on flexible hours. It is fun, no doubt about it. I get to wake up later than usual, and can go on vacation whenever I feel like it. But it is not an enviable position when income gets tight. Yes, being self-employed can be rewarding. But it is not fun when your income does not allow you to pay your bills on time. Worse if the income does not arrive at all! If the receivable is past your payables, what do you do? That is why mastering the art and science of budgeting is more important for the selfemployed than it is for employees. Unlike employees who can budget with ease, the former does not have that luxury. How do you budget then? Here are some of steps you could apply: Fixed expenses come first and above all else. Fixed expenses are constant. These include your rent or mortgage. Although you have rights as a tenant, you don’t want to go through all that hassle just to uphold it. The same applies to your monthly amortization. Utility bills also go under this category. It can be demoralizing to have power and water cut off because of unpaid dues. Variable expenses come next. These are expenses that are important for your survival but can be compromised. Food is one example. You need to eat but you have control over what you eat. Fast-food outlets offer meals that are well within the budget. Although not pleasant, eating
Kendrick Chua
personal finance less is also an option. Skipping deserts and coffee breaks can help save hundreds, if not thousands of pesos. Grocery bills are also variable. You can cut cost by buying cheaper substitutes. You can skip luxury items for months when income is lean. Forget brand loyalty for the moment, too. Discretionary expenses come last. These are neither urgent nor important. Expenses like watching movies, dining out and shopping are expenses we can live without. A word of warning, though. Do not use your credit card to make the purchases even if you expect income prior to paying the bill. As a self-employed, nothing is certain. Receivables are just receivables until they become cash. Don’t worsen the situation by buying things on credit. Budget expenses based on income. Plan your expenses on the income you expect, prioritizing the fixed and urgent variables. Additional income may be budgeted as discretionary expense or savings. Apply a conservative budgeting scheme. Estimate your expenses high and your income, low.
Borrow from your own savings. There will be instances when you are forced to dip into your savings just to tide things over. Treat yourself like a bank where you borrow from yourself but never default by not paying yourself. Add some interest if possible. Save as much as possible during thriving months. When business is good, try to save as much as possible. Forget about saving only 10 percent to 20 percent of your income. That only works when you’re employed. Your cash reserves should be as high as possible so that you can turn to it when business drops. Building contingencies should be a priority as a self-employed. Create multiple income streams. Not just actively but passively, as well. Your income should be diverse. When one line of business or work fails, you can turn to other sources. Invest your savings to generate passive income. These may be in the form of interest income, rental, or even capital appreciation. Although being self-employed is not as easy as most people think, it is, nonetheless, rewarding. Once you become adept in the art of budgeting, you can address the downside of having irregular income, and pretty much enjoy the status of being one. Kendrick Chua is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 65th RFP program this October 2017. To inquire, e-mail info@rfp. ph or text <name><e-mail> <RFP> at 0917-9689774.
www.businessmirror.com.ph
The World BusinessMirror
Tuesday, September 12, 2017
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Entire Florida shudders as Irma roars
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IAMI—Ready or not, Florida found itself face to face with Hurricane Irma’s galloping winds and rains last Sunday, as evacuees and holdouts alike marked uneasy time in homes and shelters from the Keys to the Panhandle, tap-tapping their nearly dead cell phones for news they were frantic to hear but helpless to change.
The hurricane rammed ashore at Cudjoe Key before whirling on the state’s southwest and west coast on the first day of its sodden chug north, buckling two giant construction cranes in Miami and rotating others, like clock hands, snacking on trees and power lines, and interrupting millions of lives. An apocalyptic forecast had already forced one of the largest evacuations in United States history. Now it was time to find out what the storm would do—and whether the heavily populated cities of Naples, Fort Myers, Saint Petersburg and Tampa were prepared. “Everybody has a plan until they get punched in the face,” Mayor Bob Buckhorn of Tampa said at a Sunday news conference, paraphrasing the boxer, Mike Tyson. “Well, we’re about to get punched in the face.” Having f lattened a string of Caribbean islands and strafed Puerto Rico and Cuba over the last week as a dangerous Category 4 and 5 storm, Irma was downgraded last Sunday afternoon to Category 2, according to the National Hurricane Center. The center said that, while the storm was weakening, it was “expected to remain a powerful hurricane,” with maximum sustained
3M
The estimated number of people in Florida who were without power
winds about 100 miles per hour (mph), down from 130 mph. On Monday it was set to spin over northern Florida, with Georgia next in line. The sea was Irma’s ally in destruction. In Key Largo it annexed backyard pools. In Miami it poured a salt river down Biscayne Boulevard, the city’s main artery. In Naples and Tampa Bay it pulled back from the shoreline, leaving waters so shallow that unwary dogs could splash around what remained. But that was only a prelude to a violent return: When the wind changed, scientists warned, the water would hurl itself right back to where it was, and then some. At least four deaths were reported in Florida after the storm’s
The metal canopy at a gasoline station is shown after it was overturned by high winds brought on by Hurricane Irma on September 10, in North Miami, Florida. AP/Wilfredo Lee
arrival last Sunday, adding to a death toll of at least 27 from its Caribbean rampage. More than 3 million people in Florida were without power, officials said last Sunday night. Officials along the Gulf Coast had believed they would be spared the worst of the assault until the storm’s trajectory took an unfavorable westward bounce late in the week. After a Saturday spent hastily converting fortified buildings into shelters, they were hurrying the final preparations into place last Sunday. Curfews were declared in Collier County, which includes Naples; Lee County, which includes Fort Myers; and in Tampa, and officials said they would not be lifted until the storm cleared. Shortly before 5 p.m. last Sunday, the Tampa police called officers off the streets as the city
confronted consistent wind gusts of more than 40 mph. The westbound lanes on two of the three bridges connecting Tampa with Saint Petersburg were closed. Lest any humans decide to take the weather into their own hands, the sheriff’s office in Pasco County, north of Tampa Bay, was telling local residents not to shoot weapons at the hurricane. “ Yo u w o n’t m a k e it t u r n a rou nd ,” t he sher i f f ’s of f ice tweeted, “& it will have ver y dangerous side effects.” Midafternoon in Fort Myers, it was hard to tell which was worse, the wind or the rain. The wind whipped the tops of palm trees around like pom-poms in the hands of a cheerleader. At one Fort Myers hotel, the rain pelted the building with such force that it came into rooms around window frames, stains
Mexico grieves for its dead as toll climbs to 90, aftershocks continue
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SUNCIÓN IXTALTEPEC, Mexico—The death toll from Mexico’s strongest earthquake in living memory rose to 90 last Sunday, as the people of southern Oaxaca state mourned their dead and rescue workers began assessing the damage in small towns where dust still hung in the air. The state of Oaxaca was hit the hardest, with 71 dead, said Águeda Robles, a spokesman for the state civil protection agency. Another 15 were reported to have died in Chiapas, the state to Oaxaca’s southeast, with four fatalities in neighboring Tabasco state. More than two days after the quake struck late last Thursday, violent aftershocks continued to jolt the largest city in the region, Juchitán de Zaragoza, and the surrounding towns last Sunday. In Asunción Ixtaltepec about 5 miles away, search dogs clambered over rubble with their handlers last Sunday, looking for signs of life. For those whose worst fears were confirmed, there were funerals, with processions haltingly making their way to cemeteries to the traditional sounds of Oaxaca’s drums and trumpets. Last Sunday morning Lourdes Pérez buried the son she had frantically tried to save when the top floor of his house collapsed before her eyes. As she stood before the ruin of his house in the afternoon, the destruction mirrored her own devastation. Pérez had been outside her own home, opposite the two-story house where her son, Eduardo Peralta, 33, lived with his young family, when the earthquake shook the ground beneath her. The Peralta family was asleep upstairs when the quake struck. Eduardo grabbed his 6-year-old son, Esteban, and ran down. His wife, Sunihey Antonio, followed, clutching the couple’s 1-year-old daughter.
Victor Sanchez stands in the remains of his family home, destroyed by an 8.2-magnitude earthquake in Juchitan de Zaragoza, Mexico, on September 9. This city of 100,000 people in Oaxaca State counted at least 36 dead and more than 300 wounded in the largest earthquake to hit Mexico in a century; across southern Mexico, at least 61 people were killed. Brett Gundlock/The New York Times
With the house rocking and pitching, Eduardo Peralta reached the front door when a cement beam fell on his back, crushing his spine and neck, his mother said. Pérez scrambled over the pieces of concrete, begging for help. “I cried like La Llorona: ‘Oh, my children!’” she said, referring to the Mexican folk tale of a woman who loses her children. “Please somebody give me a flashlight, a shovel, anything—I need to pull them out,” she cried out. Antonio answered from the rubble, her baby daughter still in her arms. “We are here, we are alive!” she shouted. Neither was hurt. “Are my children OK?” cried Peralta, trapped kneeling in the debris, his arms around Esteban. Those would be his last words. Neighbors converged on the house to help Pérez free the family, but Peralta died a couple of hours later at the town’s clinic, which operated that night with no electricity. Esteban, who was injured, was taken with his mother to the state capital, Oaxaca, where last Sunday he was operated on for a fractured hip. He had yet to be told that he has lost his father.
Like Pérez, the residents of Ixtaltepec, where 10 people died, had to manage on their own for the first day after the earthquake. Help was initially concentrated in Juchitán, a city of 100,000, because the need there was so great. But every street of Ixtaltepec bore the mark of the quake’s destruction. And for those who had been spared the loss of loved ones, there was a scramble for food and water. Hundreds crowded at a makeshift shelter set up on an outdoor dance floor covered by a roof of galvanized steel, grateful for the tamales, rice and beans that volunteers handed out. Elsewhere in the town, people served food from the back of cars and trucks. “We have no idea how we are going to rebuild the entire town,” said María Luisa Matus, a state official coordinating efforts at the shelter, where rice, bottled water and toilet paper were stacked in piles. “But that is just very low on our list of priorities right now,” she added. She needed packages of food and other necessities for 3,000 families in Ixtaltepec. And she had another worry as nightfall approached. Residents had spent two nights outside, on the crumpled sidewalks
outside their houses and in their backyard patios, or clustering in basketball courts and parking lots. “It’s going to rain tonight, so we need mattresses” for people to sleep in shelters, she said. Even in Juchitán, officials had to improvise. Doctors and nurses made do in a small gymnasium as families of the injured pleaded for help. The main regional hospital in Juchitán was destroyed in the earthquake, and the injured were slowly being transferred to other cities. For those who had not been moved, help was rudimentary. There were shortages of antibiotics, anesthetics and sterilized medical equipment, said María Teresa Salas, a medical technician. She was waiting for a water truck and despaired that without electricity there was no way to take x-rays. More than 30 brigades of local and state police and other officials were scheduled to fan out across Juchitán on Monday to begin clearing the wreckage of fallen buildings, said Oscar Cruz, the city’s municipal secretary. Many families are seeking help to tear down their uninhabitable houses. “Rebuilding the city is going to take a very long time due to the magnitude and impact” of the quake, Cruz said in a telephone interview. Referring to Mexico’s last giant earthquake, he added, “Let’s just hope this won’t take 30 years, as it did back in 1985.” As the terror of Thursday’s earthquake turned into the long ache of families that may never again feel whole, one funeral last Sunday stood out as an emblem of the city’s loss. Municipal police officers mounted an honor guard for the funeral of Juan Jiménez, a policeman who was buried when a portion of City Hall collapsed. The city had seemed to hold its collective breath as rescue workers combed through the debris throughout last Friday, only to pull out his body last Saturday. New York Times News Service
spread ing ever w ider on t he carpet. The Keys, a collection of islands off Florida’s southern tip, met Irma first. Images showed entire houses under water. T he f looding in Key Largo had sma l l boats bobbing in the streets next to f u r n it u r e a n d r e f r i g e r at o r s like r ubber toys in a bathtub. Shingles were k idnapped from ro of s; s w i m m i n g p o ol s d i s solved into the ocean. “Still whiteout,” John Huston, a resident who had stayed, wrote in a text message to The Associated Press around lunchtime last Sunday. “Send cold beer.” Local authorities were still waiting out the storm before determining the extent of the flooding and damage. But one of Irma’s casualties was indisputable: The roof of the Key Largo building that local emergency operations
officials were using after they fled their headquarters in Marathon had blown off. On Key West, by contrast, one resident who was able to speak to a reporter by landline described streets pocked with shutters, windows and branches, but no flooding or ravaged houses. The resident, an 81-year-old artist named Richard Peter Matson who has lived in an old town house there since 1980, had decided to shelter in his home against all advice. “If anything was going to happen,” Matson said, “I wanted to be here to take care of it.” Those who did evacuate should not come back until local officials had a chance to inspect the 42 bridges that connect the Keys to each other and to the mainland, said Cammy Clark, a county spokesman. As a precaution, officials were asking residents to boil water. Irma was capricious. The residents of the Miami area, once projected to bear the worst of it, seemed at some points Sunday to be suffering more from the fidgets than anything else. As power vanished, their cell phones became their only tether to news, family and friends. W hen their cellphone batteries died, they dashed out to their cars to recharge. Yamile Castella and her husband, R amon, both Miami natives, spent last Sunday reading, listening to Hamilton and watching Wonder Woman until the wind gusts intensified enough to throw half an avocado tree at their house. All the while, Yamile Castel la was jug gling fou r c h at s on W h at s A pp — a rowing group, a running group and two family groups, ever yone trading stories about the highest gusts, who was eating what, who was doing what. “We feel like we’re not alone,” she said. New York Times News Service
Violence on Caribbean: ‘All the food is gone’
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ARIGOT, S aint M ar tin— At dawn, people began to gather, quietly planning for survival after Hurricane Irma. They started with the grocery stores, scavenging what they needed for sustenance: water, crackers, fruit. But by nightfall last Thursday, what had been a search for food took a more menacing turn, as groups of looters, some of them armed, swooped in and took whatever of value was left: electronics, appliances and vehicles. “All the food is gone now,” Jacques Charbonnier, a 63-year-old resident of Saint Martin, said in an interview last Sunday. “People are fighting in the streets for what is left.” In the few, long days since the storm Irma pummeled the northeast Caribbean, killing more than two dozen people and leveling 90 percent of the buildings on some islands, the social fabric has begun to fray in some of the hardest-hit communities. Residents of Saint Martin, and elsewhere in the region, spoke about a general disintegration of law and order as survivors struggled in the face of severe food and water shortages, and the absence of electricity and phone service. As reports of increasing desperation continued to emerge from the region over the weekend, governments in Britain, France and the Netherlands, which oversee territories in the region, stepped up their response. They defended themselves against criticism that their reaction had been too slow, and insufficient. Both the French and Dutch governments said they were sending in extra troops to restore order, along with the aid that was being airlifted into the region. After an emergency meeting with his government last Sunday, President Emmanuel Macron of France said he would travel on Tuesday to Saint Martin, an overseas French territory. M acron also announced late last Saturday that he would double France’s troop deployment to the re-
gion, to 2,200, from 1,100; officials say the increase is in part a response to the mayhem on Saint Martin. Saint Maarten, the Dutch territorial side of the island, has also experienced widespread looting of shops, though the problem was reported to have subsided by Sunday, though not completely. “There was some looting in the first few days, but the Dutch marines and the police are on the street to prevent it,” Paul De Windt, publisher of The Daily Herald, a newspaper in Saint Maarten, said last Sunday. “Some people steal luxury things and booze, but a lot of people are stealing water and biscuits.” More than 265 Dutch military personnel have been deployed to Saint Maarten, and another 250 are expected to be sent to the region in the next few days to help maintain order and assist with relief efforts, the Dutch government said. In addition, 90 police officers have been flown in from Curaçao, another Dutch territory. The storm delivered a direct hit on the region starting last Wednesday, destroying airports and ports, knocking out power and potable water systems, and leaving many tens of thousands of residents and tourists isolated and increasingly desperate, unable to go anywhere. The crisis worsened last Saturday as Hurricane Jose rumbled through the region. Though the islands hit by Irma avoided a direct blow from the second hurricane, its arrival forced the suspension of relief and rescue operations, prolonging the agony for many. Last Sunday officials announced that two more bodies had been discovered in Saint Maarten, increasing the death toll in the Caribbean attributable to Hurricane Irma to at least 27. So far, about a dozen deaths on both sides of the island have been attributed to the storm, according to The Associated Press. People here, however, insist that the death toll is much higher.
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Editor: Lyn Resurreccion • www.businessmirror.com.ph
N. Korea warns US of ‘greatest pain’ if sanctions pass
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orth Korea warned of retaliation if the United Nations Security Council approves a US proposal for harsher sanctions after Pyongyang conducted its sixth and most powerful nuclear test.
Kim Jong Un’s regime “is closely following the moves of the US with vigilance,” its state-run Korean Central News Agency (KCNA) said on Monday, citing a statement by the Ministry of Foreign Affairs. “In case the US eventually does rig up the illegal and unlawful ‘resolution’ on harsher sanctions, the DPRK [Democratic People’s Republic of Korea] shall make absolutely sure that the US pays a due price,” it said, using its formal country name. “The forthcoming measures to be taken by the DPRK will cause the US the greatest pain and suffering it had ever gone through in its entire history,” KCNA reported. The warning came as the US called for a vote on Monday on a
Oil gains as Irma weakens while US refining returns
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il rose as Hurricane Irma weakened after hitting the Florida coast and as Gulf Coast refining continued to recover following storm Harvey. Futures added 0.9 percent in New York after falling 3.3 percent last Friday. The intensity of Irma’s top winds have dropped to 105 miles (169 kilometers) per hour after making landfall last Sunday as a Category 4. About 6 percent of US refining capacity remains shut after almost a quarter of the nation’s capacity was halted following Hurricane Harvey more than two weeks ago. Oil slipped last Friday by the most in more than two months amid speculation that Irma may crimp demand for gasoline and other transportation fuels. W hile Gulf Coast cr ude imports fell to the lowest in records going back to 1990 after Harvey, refineries, pipelines and offshore platforms are resuming operations. “One of the reasons we’re seeing support is because of that dramatic fall we saw [last] Friday,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “Prices still remain in the middle of the range. We’re looking for the market to move back into balance and oil will probably break through the $50 mark, but that doesn’t seem likely in the short term.” West Texas Intermediate (WTI) for October delivery was at $47.89 a barrel on the New York Mercantile Exchange, up 41 cents, at 7:50 a.m. in London. Total volume traded was about 11 percent below the 100-day average. Prices slid $1.61 to close at $47.48 last Friday, the most since July 5. Brent for November settlement gained 33 cents, or 0.6 percent, to $54.11 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.64 to November W T I. Ir m a h a s k noc ked out power to 4.5 million customers, paralyzed tanker traffic and shut about 6,000 gasoline stations. As the storm heads up Florida’s west coast, it’s also threatening more than $1 billion worth of crops. Saudi A rabian Oil Co. will provide the full contracted crude supply for October to at least five north Asian refiners and one customer in the southeast, according to people with knowledge of the matter. Bloomberg News
draft resolution to tighten sanctions on North Korea, which has repeatedly tested bombs and missiles as it seeks the ability to target the US with a nuclear weapon. Kim threw a banquet over the weekend to reward the scientists and engineers behind the September 3 test, which North Korea said was a hydrogen bomb. In response, the US, South Korea and Japan want the Security Council to implement stronger measures against North Korea, including bans on oil imports, exports of textiles and employment of its guest workers by other countries. They also want to freeze Kim’s assets. The US is willing to risk a veto of its proposal rather than see it watered down, according to a
In this August 10 photo, a man watches a television screen showing US President Donald J. Trump and North Korean leader Kim Jong Un during a news program at the Seoul Train Station in Seoul, South Korea. AP/Ahn Young-joon
Security Council diplomat who asked not to be identified while negotiations were ongoing. The US has circulated a draft, Agence France-Presse reported, citing unidentified diplomats.
China, Russia
It’s unclear whether the proposal will pass. China and Russia, which can veto any UN measures, have expressed skepticism that tough sanctions will stop North Korea’s nuclear push and have pushed for peace talks. Russian President V ladimir
Putin has said more sanctions wouldn’t work, while China is wary about cutting off Kim’s economic lifeline to the point it risks collapsing his regime. China is North Korea’s main ally and by far its biggest trading partner, including for oil shipments. China would support further UN action if it helped restart dialogue with North Korea, Foreign Minister Wang Yi said last week. Observers have said Beijing might agree to just a partial, or temporary, oil-exports ban. C h i nese st ate ba n k s h ave
started suspending transactions through accounts held by North Koreans, Kyodo News reported last Sunday, citing unidentified people. Branches near North Korea of at least three state banks have also banned North Koreans from opening accounts, according to the Japanese news agency. Heightened tension over North Korea’s nuclear weapons program could have a substantial impact on South Korea’s economy and cause broader effects if it disrupts trade relations, most notably between China and the US, Fitch Ratings said in a statement on Monday.
Missile defense
The US and its allies in Asia are bolstering their missile interception capabilities. South Korea last week installed the full battery for
its Terminal High Altitude Area Defense system while Japan is planning to introduce the Aegis Ashore shield. Opposition lawmakers in South Korea have called for discussion over the introduction of US tactical nuclear weapons, but the government has reiterated in recent weeks its stance against bringing them into the country. A senior lawmaker in Japan’s ruling party last week called for debate on allowing American atomic devices on Japanese soil. O n t he d iplom at ic f ront , North Korean foreign ministry officials are likely to hold informal talks with former US officials in Switzerland on Monday, Japan’s Nippon Television reported, without saying where it got the information. Bloomberg News
In case the US eventually does rig up the illegal and unlawful ‘resolution’ on harsher sanctions, the DPRK shall make absolutely sure that the US pays a due price.”—DPRK
Ex-UK leader: Immigration curbs instead of Brexit L
ONDON—For mer Pr ime Minister Tony Blair is not giving up his campaign to prevent Britain from leaving the European Union, using a Sunday Times article to propose that Britain instead toughen its rules on European Union immigration. The outspoken Brexit opponent says reducing immigration from EU countries into Britain would satisfy many who voted in favor of Brexit in the June 2016 referendum without subjecting the country to the economic havoc it would face if it leaves the 28-nation bloc. Blair, who led the Labour Party to three consecutive electoral victories, admits his government okayed the open-door policy that brought many eastern Europeans to Britain after their countries joined the EU in 2004. He said times—and economic conditions—have changed, making it mandatory for stiff new controls to be put in place. “There can be no change to Brexit unless we confront the underlying causes of it,” Blair said, conceding that the referendum vote showed a widespread feeling that unchecked immigration was forcing wages down, straining public services, and—particularly when it involves conservative Muslims—raising questions of cultural integration. Blair’s intervention comes as Parliament prepares to vote on Monday on a Brexit bill that would eventually convert large swaths of EU law into British law once Brexit is finalized, which is expected early in 2019. His predecessor, former Prime Minister John Major of the Conservative Party, has also warned about the negative consequences of Brexit. Blair said many senior politicians know that leaving the EU is a grave error that will cause deep economic hardship but feel “trapped ” by the referendum vote and as a result are supporting Brexit even though they don’t believe in it. His proposal is based on the concept that the will of the people can be respected if EU immigration is substantially cut both by a series of new rules and by negotiations with EU leaders. Blair’s proposal would require EU immigrants to register upon arrival in Britain so officials can find out whether they find jobs or study. It would also require EU nationals to prove they have
four-year high seen in May, it’s still outpacing wages, which are projected to have risen a little more than 2 percent in July in a report due out on Wednesday. Faster inflation is especially painful for public-sector workers, laboring under a 1-percent cap on salary increases imposed as part of stringent austerity measures since 2010. Members of the Royal College of Nursing (RCN) union descended on the British parliament in London last week, arguing their salaries have dropped 14 percent in real terms in the past seven years.
Worse off
Demonstrators gather on Parliament Square in London on September 9 protesting Britain’s plans to withdraw from the European Union. The marchers plan to converge on Parliament Square to challenge the government’s plan to implement Brexit by 2019. John Stillwell/PA via AP
a confirmed job offer before they can settle in Britain, and ban those without permission from renting property, opening a bank account, or claiming benefits. In addition, it would make it harder for immigrants to qualify for the National Health Service and allow universities to charge EU nationals higher tuition rates.
Squeeze on workers’ earnings
You don’t need to tell UK nurses what this week’s inflation and wage data will show. They say
their living standards have been squeezed for seven years, and now it’s reached crisis point. With reports from the Office for National Statistics set to show pay continuing to lag price growth in Britain, nurses are just the latest group of workers to protest. Employees at the Bank of England (BOE) last week reached an agreement following a three-day walkout, while employees of some McDonald’s restaurants went on strike demanding higher pay. Sluggish consumer spending
growth is one reason the central bank will probably keep its benchmark rate at a record-low 0.25 percent on September 14, according to a Bloomberg survey of economists. Yet, because the pound’s depreciation since the Brexit vote is also driving up import costs, two policy makers are expected to push for a rate increase to keep prices in check. Consumer-price inflation accelerated to 2.8 percent last month, economists forecast before data on Tuesday. While that’s below the
While employees of the government earn more than their peers in the private sector overall, nurses are among the lower paid with an average income of £23,500 ($31,000) a year, according to the RCN. It reckons its members are about 3,000 pounds worse off in real terms than when the cap was imposed. “They tell us it’s all about the economy,” Maria Trewern, an RCN representative, said, nodding at the Parliament buildings behind her as she waited for the protest to start. The union has seen a huge increase in requests for hardship loans, many from nurses in fulltime employment, she said. “This is not for anything frivolous—it’s to put food on the table.” At the far side of the square, Tracey Young, a community nurse from Ayreshire, Scotland, sat under a statue of Mahatma Gandhi to color in her handmade “Scrap the Cap” sign as she explained that a quarter of her own team have now left the industry, found work in other countries or retired earlier than planned. “It’s getting tough,” she said. Demands to end the publicsector pay cap will be a key theme when the Trades Union Congress meets for its annual conference in Brighton, UK this week. The Telegraph newspaper reported on Monday that the government is about to announce it’s dropping the cap for police and price officers, with other sectors to follow. The BOE is facing a trade-off between supporting economic growth with record-low interest rates and heading off inflation w ith higher borrow ing costs. Governor Mark Carney has said he’s watching pay developments closely. AP and Bloomberg News
Editor: Lyn Resurreccion • www.businessmirror.com.ph
The World BusinessMirror
Tuesday, September 12, 2017
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Bannon unsparing in criticism of GOP
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ASHINGTON—In his first extended interview since he left the White House last month, Stephen K. Bannon was unsparing in his criticism: calling out top Republicans, West Wing staff, the “pearlclutching mainstream media,” special counsel investigators and the Roman Catholic Church. He even singled out President Donald J. Trump, labeling his firing of James B. Comey, the former Federal Bureau of Investigation director, the biggest mistake in “modern political history.” Pressed by the interviewer, Charlie Rose, Bannon said that had Comey not been fired, the Justice Department investigation into possible links between the Trump campaign and Russia’s election interference would not have been handed over to the special counsel, Robert S. Mueller III. “ We w o u l d n o t h a v e t h e Mueller investigation and the breadth that clearly Mr. Mueller is going for,” Bannon said. Mueller is said to be investigating whether Trump obstructed justice in firing Comey. The assertion, made in an online-only segment of a wideranging 60 Minutes inter view that aired last Sunday night, was, perhaps, the most extraordinary of many criticisms made by Bannon as he sets out to reclaim his mantle as Trump’s most prominent outside supporter from his perch as the head of Breitbart News, the far-right web site. Despite his complaint about Comey’s firing, Bannon said he planned to be the president’s “wingman outside for the entire time” he is in office. “Our purpose is to support Donald Trump,” he said. “I cannot take the fight to who we have to take the fight to when I’m an adviser to the president as a federal government employee.” Bannon left the White House on August 18 after a year first as Trump’s campaign chief and then as his chief strategist in the West Wing. He returned the same day to his previous role as chairman of Breitbart. Among those Bannon plans to take on? House Speaker Paul D. Ryan of Wisconsin and Sen. Mitch McConnell of Kentucky, the majority leader, two Republicans Bannon accused of “trying to nullify the 2016 election.” “ They do not want Donald Trump’s populist, economic nationalist agenda to be implemented,” Bannon said. “It’s obvious as night follows day.” He cited as an example a request that McConnell once made of Trump to stop talking about “draining the swamp.” Bannon predicted deep division within the Republican Party over Trump’s recent move to end the program that provided temporary relief from deportation for hundreds of thousands of young people in the US illegally. The president set a March end date for the program and asked Congress to come up with a solution in the meantime, a task that Bannon said could split Republicans and cost them their House majority in the 2018 midterm elections. “If this goes all the way down to its logical conclusion, in February and March it will be a civil war inside the Republican Party,” he said. W hen Rose asked whether Bannon’s opposition to the immigration program was true to his Catholic faith, Bannon took aim at church leaders and claimed they relied on illegal immigration to fill pews. “The bishops have been terrible about this,” he said. “You know why? Because unable to really to come to grips with the problems in the church, they need illegal
aliens. They need illegal aliens to fill the churches.” Cardinal Timothy M. Dolan, the archbishop of New York, called Bannon’s comments “preposterous and rather insulting.” In t he inter v iew f rom his Washington home, Bannon reacted defensively when asked whether his clout in the White House had diminished by the time he left. “I had the same inf luence on the president I had on Day 1,” he said. His departure was hastened by Trump’s growing weariness with the image Bannon cultivated as the architect of the president’s populist agenda. Bannon, who is often critical of those he sees as Washington careerists hostile to Trump, has become famous for his polemics that critics see as reflections of the president’s impulses. “The media image, I think, is pretty accurate,” he said. “I’m a street fighter. That’s what I am.” Bannon also condemned top officials in the George W. Bush administration, ca l ling them “ id iots” f r iend ly to wh at he termed China’s anti-American economic agenda. He singled out Condoleezza Rice and Colin L. Powell, former secretaries of state, and Brent Scowcroft, an adviser to Bush and his father, as those most worthy of his scorn, criticizing them for China’s 2001 entry into the World Trade Organization. “They’ve gotten us in this situation, and they question a good man like Donald Trump,” he said. “I hold these people in contempt, total and complete contempt.” He also called the special counsel a “waste of time.” “It’s a total and complete farce,” he said. “Russian collusion is a farce.” But he declined to answer when Rose asked whether Jared Kushner, Trump’s son-in-law and a White House senior adviser, was responsible for the dismissal of Comey. Bannon seemed eager to pursue anyone who has crossed Tr u mp. He s a id he w a s t he president’s only defender after the racially tinged violence in Charlottesville, Virginia, last month, when Trump was widely condemned for statements that likened white supremacists to people protesting them. “I was the only guy that said, ‘He’s talking about something, taking it up to a higher level,’” Bannon said, then echoed Trump’s language in the days after the Charlottesville violence. “Where does this end? Does it end—does it end in taking down the Washington Monument?” Yet, Bannon accused neo-Nazis of “getting a free ride off Donald Trump” for their role in white supremacist rallies. “The left-wing media makes them up as some huge part of Donald Trump’s coalition,” he said. “It’s a small group. It’s a vicious group. They add no value. And all they do is show up.” Bannon told Rose that he did not “need the affirmation of the mainstream media.” Neither does Trump, Bannon said. “I don’t think he needs The Washington Post, The New York Times and CBS News,” he said. “And I don’t believe he thinks that they’re looking out what’s in his best interest, OK?” Bannon also attacked Gar y D. Cohn, Trump’s top economic adviser, who publicly criticized the president’s comments about Charlottesv ille. “If you don’t like what he’s doing and you don’t agree w ith it, you have an obligation to resign,” Bannon said. “ You can tel l him, ‘Hey, maybe you can do it a better way.’ But if you’re going to break, then resign.” New York Times News Service
An injured elderly woman and her relatives rush to a hospital on an autorickshaw, near the border town of Kutupalong, Bangladesh, on September 4. The Rohingya woman encountered a land mine that blew off her right leg while trying to cross into Bangladesh. AP/Bernat Armangue
Myanmar accused of laying mines, causing Rohingya injuries
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OX’S BAZAR, Bangladesh— Myanmar’s military has been accused of planting land mines in the path of Rohingya Muslims fleeing violence in its western Rakhine state, with Amnesty International reporting two people wounded last Sunday.
Refugee accounts of the latest spasm of violence in Rakhine h ave t y pic a l ly descr ibed shootings by soldiers and arson attacks on villages. But there several cases that point to antipersonnel land mines or other explosives as the cause of injuries on the border with Bangladesh, where 300,000 Rohingya have f led in the past two weeks. The Associated Press reporters on the Bangladesh side of the border on Monday saw an elderly woman with devastating leg wounds: one leg with the calf apparently blown off and the other also badly injured. Relatives said she had stepped on a land mine. Myanmar has one of the few militaries, along with North Korea and Syria, which has openly used anti-personnel land mines in recent years, according to Amnesty.
300K
The number of Rohingya who have fled Myanmar in the past two weeks
An international treaty in 1997 outlawed the use of the weapons; Bangladesh signed it but Myanmar has not. Lt. Col. S.M. A riful Islam, commanding officer of the Bangladesh border guard in Teknaf, said on Friday he was aware of at least three Rohingya injured in explosions. Bangladeshi officials and Amnesty researchers believe new ex-
plosives have been recently planted, including one that the rights group said blew off a Bangladeshi farmer’s leg and another that wounded a Rohingya man. Both incidents occurred last Sunday. It said at least three people, including two children, were injured in the past week. “It may not be land mines, but I know there have been isolated cases of Myanmar soldiers planting explosives three to four days ago,” Ariful said on Friday. Myanmar Presidential Spokesman Zaw Htay did not a n s we r phone c a l l s s e e k i n g comment last Sunday. Military spokesman Myat Min Oo said he couldn’t comment without talking to his superiors. A major at the Border Guard Police headquarters in northern Maungdaw near the Bangladesh border also refused to comment. Amnesty said that, based on interviews with eyewitnesses and analysis by its own weapons experts, it believes there is “targeted use of land mines” along a narrow stretch of the northwestern border of Rakhine state that is a crossing point for fleeing Rohingya. “All indications point to the Myanmar security forces deliberately targeting locations that Rohingya refugees use as crossing points,” Amnesty official Tirana
Hassan said in a statement last Sunday. She called it “a cruel and callous way of adding to the misery of people fleeing a systematic campaign of persecution.” The violence and exodus began on August 25 when Rohingya 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, the military unleashed what it called “clearance operations” to root out the insurgents. Accounts from refugees show the Myanmar military is also targeting civilians with shootings and wholesale burning of Rohingya villages in an apparent attempt to purge Rakhine state of Muslims. Bloody anti-Muslim rioting that erupted in 2012 in Rakhine state forced more than 100,000 R oh i ng y a i nto d i s pl acement camps in Bangladesh, where many still live today. Rohingya have faced decades of discrimination and persecution in Myanmar and are denied citizenship despite centuries-olds roots in the Rakhine region. Myanmar denies Rohingya exist as an ethnic group and says those living in Rakhine are illegal migrants from Bangladesh. AP
Malaysian leader, under corruption cloud, will meet with Trump at WH
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UALA LUMPUR, Malaysia—For more than a year, Prime Minister Najib Razak of Malaysia has been under the cloud of a corruption investigation by the US Department of Justice. On Tuesday his scheduled visit to see President Donald J. Trump at the White House may give him a chance to offset the political damage. The Justice Department had concentrated for more than a year on seizing $1.7 billion in assets, including jewelry, real estate and Hollywood movie rights, that it says Najib’s family members and associates acquired with money diverted from a Malaysian government fund that he headed. But in August the department indicated it would shift its focus to a criminal investigation into the missing money, which is estimated to total more than $3.5 billion. Officials say much of it was laundered through US financial institutions. Now, Trump’s invitation to visit the White House comes at a perfect time for Najib and could give him a much-needed dose of legitimacy at home as a general election nears. “It’s a big gift for him to have the White House invite him,” said Cynthia Gabriel, executive director of the Center to Combat Corruption and Cronyism in Kuala Lumpur,
adding that she was “really flabbergasted” by the visit. The two leaders played golf together a few years ago at Trump’s golf club in Bedminster, New Jersey. Trump signed a photo of the two of them together, “To my favorite prime minister.” When they meet at the White House, they are expected to discuss the nuclear threat posed by North Korea’s ruler, Kim Jong Un, as well as China’s growing influence in Southeast Asia. Trump sorely needs an Asian ally who can help on both fronts. For Najib, a White House handshake will show voters back home that he can set foot on US soil without being jailed, analysts and opposition members said. “He can say, ‘I am not wanted in the United States and I can go there without being arrested,’” said Tony Pua, a member of parliament and a critic of Najib. Simply avoiding arrest on a US visit might seem a low bar for a world leader. But in Malaysia the Justice Department investigation has undermined Najib’s assertions that nearly $681 million deposited in his personal bank accounts was a gift from an unnamed Saudi donor. The Justice Department said last year that
the source of $731 million in Najib’s accounts was actually the Malaysian government fund. Najib has said he committed no wrongdoing. His office declined to comment for this article. “From a pure public relations point of view, it’s a meeting the White House should avoid,” said Donald Greenlees, an authority on Southeast Asia with Australian National University. “Even a photo op with Kim Jong Un would be better.” Among those highlighted in the assets seizure cases are Najib, who is identified in court documents as “Malaysian Official 1”; his wife, Rosmah Mansor, who is renowned for her foreign shopping excursions; and his stepson, Riza Aziz, whose company, Red Granite Pictures, produced The Wolf of Wall Street and other films. In the United States Mansor may find it best not to wear jewelry that the Justice Department wants to seize, including her $27.3-million necklace with a 22-carat, pink diamond pendant, or the 27 gold necklaces and bracelets that she acquired in Los Angeles for $1.3 million. Also caught up in the scandal are actor Leonardo DiCaprio, who received more than $12 million in art work, and model Miranda Kerr, who received more than $8 million in
diamond jewelry. They received the items as gifts from Jho Low, a friend of Aziz who played a key role in establishing the Malaysian fund. The depar tment says the money used to acquire the property and luxury goods was diverted from One Malaysia Development Berhad, the investment fund that Najib headed. Last month the Justice Department filed a motion to stay the forfeiture cases so that they would not have “an adverse effect on the government’s ability to conduct the related criminal investigation.” A hearing is scheduled for September 18 in Los Angeles. While Najib might wish for Trump to halt the Justice Department investigation, that would seem unlikely given the department’s independence. After all, Trump has been unable to stop an investigation into Russian election meddling that is headed by Robert S. Mueller III. “This is a meeting of two leaders who both have legal problems, so it is bound to raise eyebrows,” said Wan Saiful Wan Jan, chief executive of the Institute for Democracy and Economic Affairs in Kuala Lumpur. “If they have a one-on-one meeting, no one really knows what transpires in that session.” New York Times News Service
A10 Tuesday, September 12, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
Too well paid
W
ho says government jobs don’t pay well? Stories about extrajudicial killings have managed to bump off the news headlines about the scandalous revelation on the excessive pay and perks of some consultants of certain government agencies, which President Duterte himself exposed in a recent Malacañang event.
During a recent oath-taking of new government officials in Malacañang, the President told government agencies to “go slow” in hiring consultants, after discovering one office has hired four consultants who are paid P200,000 each. They have bigger salaries than me, the President said, adding in jest that he should not have run for President but, instead, become a consultant. Our sources say the lavish consultancy fees the President was referring to belong to the Sugar Regulatory Administration (SRA). The President reportedly discovered that SRA Administrator Anna Rosario Paner had hired several consultants, one of whom showed an hourly pay of P20,000 for a total of 60 hours. Indeed, a few days after the President’s speech, the SRA administrator resigned. Our own research revealed equally astonishing consultancies. One SRA project, for instance, called “Gender and Development Mainstreaming Action Plan” had a lead expert who is paid P300,000, an expert assistant who is paid P200,000 and another assistant with a salary of P125,000. Another project, called “Development of Strategies and Policies on the Functional transition of SRA Pursuant to the Mandates of Sida”, had a lead expert who is paid P360,000, an expert assistant with a P240,000 salary and two more assistants who are paid P180,000 each. No wonder the President was pissed. “We have experts in the government whom you can consult when [the] need arises. Avail yourself of their expertise, seek their assistance,” he told government officials. If the agency cannot avoid hiring consultants, he said they should “moderate” their salaries. “Excessive fees cut into the budget. Be careful with public funds. It is not money that you are at liberty to spend at the people’s expense,” the President said. We certainly hope these excessive consultancies could be looked into in a future congressional inquiry. Indeed, Congress ought to pass a law that limits what these government agencies and their officials could give themselves, their employees and consultants in terms of compensation and perks. The President can also stop the practice. He can suspend the excessive and unwarranted pay and perks received by state-owned and -controlled entities, like the SRA. In fact, didn’t former President Benigno S. Aquino III already issued an executive order (EO) to that effect? EO 24, which President Aquino signed in February 2011, is supposed to “address deep concerns on the excessive and unreasonable pay and perks received by board members and trustees of government-owned and -controlled corporations [GOCCs] and government financial institutions [GFIs].” Are consultants not covered by this EO? At a time when the Duterte administration will not be giving any substantial salary increases for government employees in the 2018 national budget and is, in fact, in the process of trimming the bureaucracy through the proposed Rightsizing the National Government Act, these overpaid consultants are unjustifiable. What they get is more than 10 or 20 or even 50 times the average government worker’s wage. And for doing what work exactly? Can it be compared, for instance, to that of a public-school teacher who has to teach two shifts a day, and who practically works from daybreak to sundown? No public-school teacher has ever been paid P20,000 per hour. Exactly what kind of formula is used to arrive at these consultants’ salaries and benefits? They could argue that they are not covered by the salary standardization law like other public servants. But what kind of standards do they adhere to? These consultants do not work for top corporations that earn billions in profits. They are on the government payroll, working for government companies, getting paid people’s money. They must be held accountable for whatever compensation they get, every peso tied to individual levels of performance measurement. Indeed, we would like to see the same accountability applied to government workers at every level, be they tenured civil servants or consultants, and even if they work for supposedly autonomous GFIs and GOCCs who tend to abuse their autonomy. There are many government workers, like teachers and health-care professionals, who are competent and dedicated and are doing actual “in the trenches” work, not just “consulting”. They are the ones who truly deserve to be paid much higher salaries.
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Economy sustains strength, stable growth Manny B. Villar
THE Entrepreneur Continued from A1
A
ll three major economic sectors contributed to GDP growth in the second quarter: industry grew by 7.3 percent, services by 6.1 percent and agriculture by 6.3 percent, a rebound from its 2.0-percent decline in the same period last year. Among the major economic sectors, Industry recorded the fastest growth at 7.3 percent. Services slowed down to 6.1 percent against its 8.2-percent growth posted in the same quarter of the previous year. Meanwhile, Agriculture recovered with 6.3-percent growth from 2.0percent decline in the previous year. Note that this growth rate, which was the fastest in Asia after China, was achieved without the benefit of election spending, which was partly behind the 6.8-percent growth in 2016. Based on the economy’s quarterly performance, the benefits from election spending waned in the fourth quarter of 2016, which grew by only 6.6 percent, compared to 7.0 percent and 7.1 percent, respec-
tively, in the second and third quarters, preventing the economy from breaching the 7.0-percent mark. With no extraordinary boost from noneconomic factors, the economy is showing stable and robust growth. The second-quarter performance marked the eighth consecutive quarterly growth of higher than 6.0 percent. Both the World Bank and the International Monetary Fund (IMF) expect the Philippines to continue its robust growth this year. The World Bank is projecting GDP growth at 6.8 percent for 2017. Following its latest review of the economy, the IMF Mission to the Philippines said it was “very optimistic” about the country’s growth prospects. Its latest forecast placed
With no extraordinary boost from noneconomic factors, the economy is showing stable and robust growth. The secondquarter performance marked the eighth consecutive quarterly growth of higher than 6 percent. Both the World Bank and the International Monetary Fund expect the Philippines to continue its robust growth this year.
GDP growth for 2017 at 6.6 percent. The IMF also notes that the economic performance of the Philippines continues to be very strong, featuring robust growth combined with low inflation. The latest growth reading for GDP—the value of all finished goods and services produced in the country—marked the eighth consecutive quarter that the pace exceeded 6.0 percent. Socioeconomic Planning Secretary Ernesto M. Pernia estimates that, based on the results for the first half of the year, the economy needs only to grow by 6.5 percent in the second half to reach the lower end of the government’s target range of 6.5-percent to 7.5-percent growth for 2017. Government spending on infrastructure, which had been blamed
Proverbs and The Art of War John Mangun
OUTSIDE THE BOX
I
F you want to give your children—and yourself for that matter —a leap over most of the other 7 billion people on Earth, two works of literature are mandatory reading. These are the biblical book of Proverbs and The Art of War.
Both books offer a wealth of wisdom—knowledge combined with practical experience. Proverbs is usually thought of as a guide to life and The Art of War to military action. Close examination and study show that these two offer many of the same ideas but with a different thrust. The vast majority of people with access to these two books are too lazy to actually read them. There prefer to read a quote or two from each and think they are wiser. That is like getting your news from Twitter and your learning from Facebook. In the West, government leaders are not inclined to read Proverbs, but in China, The Art of War is taken seriously. You can see that in the continuing actions of the
Chinese government. While a complete reading is necessary to fully understand the concepts, two particular quotes from The Art of War are important. “Hence, that general is skillful in attack whose opponent does not know what to defend; and he is skillful in defense whose opponent does not know what to attack.” The United States is demanding, challenging and shaming China into taking stronger action against North Korea over its missile and nuclear weapons program. But at the same time, the US is fighting with China over trade and currency. If you want someone to do something about a particular problem, it is probably not a good idea to antagonize him
In the West, government leaders are not inclined to read Proverbs, but in China, The Art of War is taken seriously. The vast majority of people with access to these two books are too lazy to actually read them. They prefer to read a quote or two from each and think they are wiser.
on another issue. So, now, here is the Chinese “general” that has the US “opponent” trying to figure out whether to attack on trade and risk losing China’s assistance on North Korea. As the US ratchets up the pressure on trade, China lessens the pressure on North Korea. Donald J. Trump’s book The Art of the Deal may be no match for Sun Tzu’s The Art of War. “Mystify, mislead and surprise the enemy”. That is not from The Art of the Deal. Here is the latest example of China taking that concept to heart. For years, the Chinese have claimed that the government has not manipulated the currency to an artificial level, giving an unfair trade advantage. For the past three years, the government has taken strong action to prevent outflows of capital from China. At the same
for the economy’s slow growth in the previous administration, particularly during its first year, has already become a major growth driver under the Duterte administration. During the second quarter of 2017, government spending expanded by 7.1 percent, a significant increase from 0.1 percent in the first quarter. According to Pernia, this shows a marked improvement in the absorptive capacity of government agencies. I join the consensus for a continuing strong performance of the economy. Unlike in the past, when the economy accelerates in a quarter and then slows down in the next, the official GDP numbers are showing stable growth. We’re also seeing the government ramping up infrastructure spending under its “Build, Build, Build” program. Together with private sectorinitiated projects, infrastructure will continue to expand its role as growth driver, as well as job generator this year. This is what we need: stable growth, manageable inflation and job-generating activities to boost the economy and increase employment at the same time, in order to achieve the ultimate goal—a better life for Filipinos.
For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.
time, there has been a strong push to make the Chinese yuan a major global currency for trade. Last week the game changed. The People’s Bank of China (PBOC) made a complete U-turn in policy. The details are that the PBOC reduced the reserve requirement for financial institutions trading in foreign exchange forwards by cutting it to zero from 20 percent. This makes it easier—and gives approval—for currency traders to lower the value of the yuan, which is exactly what the US is complaining about. However, now China can blame the currency market for doing exactly what the government has been doing for years—devaluing the yuan. Outflows of the Chinese yuan will continue but the Chinese who want to get their money out of the country will pay a higher currency exchange-rate penalty. China gets its weak yuan and will penalize capital outflows. The Chinese government motto should probably be, “Know thy self, know thy enemy. A thousand battles, a thousand victories”. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.
Opinion BusinessMirror
opinion@businessmirror.com.ph
The Reform the Armed Forces Movement
History will be the final judge Ernesto M. Hilario
Cecilio T. Arillo
database Conclusion
Treachery of the highest order
B
ARELY a few days after the Edsa revolution, President Corazon C. Aquino, without prior consultation with Vice President Salvador H. Laurel, Defense Minister Juan Ponce Enrile, the Reform the Armed Forces Movement and other key participants of the Edsa revolution, created a Special Cabinet Committee composed of Minister of Justice Neptali Gonzales as chairman and Members of Parliament Luis Villafuerte and Antonio Cuenco, Executive Secretary Joker Arroyo and Laurel himself, as members, to decide whether the new government would operate outside the 1973 Constitution.
The prime objective was to determine whether the 1973 Constitution would be abolished or not. Gonzales proposed the abolition of the Constitution and the proclamation of a revolutionary government under a Freedom Constitution. Enrile strongly opposed the idea and argued that preserving the existing Constitution would ensure political stability. Laurel, likewise, objected to the abolition, as he pointed out that the Gonzales proposal would result in a dictatorial government and would exist beyond the ambit of judicial review. United Nationalist Democratic Organization (Unido) members of Parliament supported Laurel’s and Enrile’s observations and told Aquino that there was no need to abolish the Parliament because there was a new majority, which was ready to support the new administration. Based on the minutes of a meeting recorded by lawyers Avelino V. Cruz and Minerva Reyes, the clear consensus was that the Parliament would give the President emergency powers through a proclamation so that she could move on to discharge her mandate effectively along the lines enunciated in Gonzales’s draft of a Freedom Constitution. As planned, the Parliament stays and reconvenes on May 12, 1986, to adopt the proclamation of emergency powers. At the same time, it would annul the proclamation of President Ferdinand E. Marcos and Vice President Arturo Tolentino and declare Aquino and Laurel as the duly elected president and vice president, respectively. The new government would be properly inaugurated and begin to operate under the existing legal framework, subject to the provisions of the emergency-powers proclamation under the Freedom Constitution. The emergency-powers proclamation would include a complete timetable for full transition to normalcy, including the adoption of a new Constitution and the holding of elections under it. Accordingly, lawyer Avelino Cruz, representing Arroyo, lawyer Minerva Reyes and Deputy Justice Minister Renato Puno, representing Gonzales, drafted the fast-track plan. The plan, however, failed to materialize and was never heard of again. Malacañang hatched another plan and suddenly executed it without the knowledge of Laurel, Enrile, the rebel officers, as well as the majority of the Parliament. “It was political treachery of the highest order,” Laurel said, adding that a new power group had quietly taken over Malacañang. Earlier, Laurel and Enrile, with the full knowledge of Aquino, had been meeting with the Parliament members, with the help of former Prime Minister Cesar Virata, former Parliament Speaker Nicanor Yniguez, Minority Floor Leader Jose B. Laurel Jr., and all the Unido members of Parliament. They were able to obtain the commitment of 132 members, a clear majority in the Parliament, with
more members willing to join the bandwagon. Laurel said: “We had agreed that the new majority would annul the proclamation of Marcos and Tolentino, that Cory and myself would instead be proclaimed, after which I would be formally installed as prime minister. The new majority, likewise, assured me that they would support the entire legislative program to be presented by the Aquino administration.” Meantime, outgoing Prime Minister Virata, obviously oblivious of what was happening in Malacañang, formally turned over the Office of the Prime Minister to Laurel in a simple ceremony at the Executive House at 1 p.m. on March 25, 1986. Two hours after the symbolic turnover, Aquino invited Laurel, Enrile and other Cabinet members to attend a news conference in Malacañang. Suddenly, Aquino proceeded to read Proclamation 3, abolishing the 1973 Constitution, the Parliament, the Supreme Court, the Office of the Prime Minister and all national and local positions. Laurel, Enrile and the rest of the officials present could not believe their ears. Aquino and her advisers had unilaterally set up a revolutionary government. Furious and feeling betrayed, Laurel recalled later: “It was not only politically reckless but economically disastrous as the country would be pushed back to the martial-law years.” Enrile, Laurel, the rebel officers, as well as the Unido leaders had played a very important role in the ouster of Marcos. They gambled with their lives and gave up so much of their time to bring the new government to power. Any decision involving no less than the abolition of the Constitution should have at least been discussed and debated with them. Yet, they were not even consulted. They felt betrayed and it was too late to complain. “History,” Laurel said later, “might have taken a different course if President Aquino had not abolished the 1973 Constitution, and if her avowed objective was to achieve political stability at the earliest possible date, she should have repealed only the highly objectionable Marcos amendments, particularly Amendment 6, which had clothed himself with legislative powers and perpetuated military rule. “It was like burning a whole house just to kill a rat!” Laurel was right because when she demolished the infrastructure of dictatorship, she wrecked the entire political structure and, thus, derailed the application of much-needed solutions to the country’s worsening political, social and economic problems. Besides, there would have been no need to debate up to now the wisdom or the thoughtlessness of going back to a parliamentary form of government. Or, of wasting time and taxpayers’ money arguing whether to amend or revise the flawed Constitution. To reach the writer, e-mail cecilio.arillo@ gmail.com.
Tuesday, September 12, 2017 A11
ABOUT TOWN
P
resident Duterte declared on Monday, September 11, as a holiday in Ilocos Norte to allow the province to commemorate the 100th birth anniversary of former President Ferdinand E. Marcos, despite howls of protest from those who said they suffered human-rights violations during the period of martial law. The Marcos family chose to mark the centennial with a series of events, ranging from a literature and art festival to forums on nationalism and foreign policy. According to Gov. Imee Marcos, the family kept the activities more on the cerebral side rather than focusing on ceremonies. Except for a quiet and private wreathlaying at his tomb in Libingan ng mga Bayani, no parties, parades, programs or shows were scheduled. The central theme of their commemoration was to recall the former president’s vision for the country. During his first State of the Nation Address, Marcos bared plans for the country’s economic development, including an aggressive infrastructure program encompassing a nationwide network of roads and bridges, dams and power plants,
hospitals and institutions, among others—infrastructure that still stand today. These include the Maharlika Highway connecting Luzon to the Visayas and Mindanao, North Luzon Expressway, South Luzon Expressway and Circumferential Roads 1-10, as well as medical institutions, like the Philippine Heart Center, National Kidney and Transplant Institute and Lung Center of the Philippines; state colleges and universities, such as Don Mariano Marcos Memorial State University, Bicol University and Cagayan State University; San Juanico Bridge, Mactan-Mandaue Bridge, Tiwi Geothermal Power Plant, Pantabangan Hydro Electric Power Plant and the BLISS housing projects. The Marcos administration also promoted Filipino culture and put
up sites showcasing the rich Filipino heritage, including the Philippine International Convention Center, Cultural Center of the Philippines, Folk Arts Theater, Film Center of the Philippines, National Arts Center in Makiling, Nayong Pilipino and People’s Park in the Sky in Tagaytay. Free concerts were held at parks for the public to enjoy classical music, such as “Concert at the Park”, “Paco Park Presents” and “Puerto Real Evenings”. The National Manpower and Youth Council was founded in 1976 and is now the Technical Education and Skills Development Authority. The Marcos family also cites Presidential Decree 27, which called for the “emancipation of tenants from the bondage of the soil”, as among his notable contributions to social justice. In the field of diplomacy, Marcos initiated the formation of Asean in 1966—together with the heads of state of Indonesia, Malaysia, Thailand and Singapore—that has since grown to 10 member-states. The country also hosted a summit of seven countries—the US, South Korea, South Vietnam, Thailand, Australia, New Zealand and the Philippines—to discuss the worsening conflict in Vietnam and the containment of communism in Southeast Asia. Marcos declared martial law in
1972 to contain the growing communist insurgency and to usher in a “New Society” founded on his vision of a new social order marked by economic, political and social reforms. In his book, Notes on the New Society, he referred to it as a movement aimed at liberating the Filipino people from poverty. The Philippines actually attained self-sufficiency in rice in 1968 by promoting the cultivation of hybrid rice. And one of the most important economic programs in the 1980s was the Kilusang Kabuhayan at Kaunlaran, which encouraged barangay residents to engage in livelihood projects. All this, of course, are cited by the Marcos family to perpetuate what they describe as the late president’s legacy to the nation. Critics of the Marcos administration would almost certainly take a dim view of such an assessment of this period in our contemporary history. While it is true that, in the period from 1965 to 1985, there were accomplishments that staunch Marcos loyalists and followers want the nation to remember, it is also true that emergency rule failed to stop the problems of poverty and corruption that we still grapple with to this day. In the end, history will be the judge of the Marcos years.
E-mail: ernhil@yahoo.com.
After Marawi, where will Islamic State strike? Ricardo Saludo
DIPLOMASIA
W
ith the Marawi conflict in southern Philippines coming to an end, what next for Islam-driven extremists in Southeast Asia?
One easy answer: more Marawi. Not another attack on the devastated city in central Mindanao. Rather, turning the mammoth propaganda value of the extremist siege, with cell-phone videos, TV news clips and war stories galore, to extol IS-driven bravery, ferocity and sacrifice, to raise funds and fighters for the caliphate. Each and every one of the 653 terrorists killed in Marawi as of last Thursday, and dozens more to die in the final assault by the Armed Forces of the Philippines (AFP), will be extolled as martyrs in the eyes of kin, kith and community. And it would be no surprise if every dead terrorist spurs two youths to join the IS-driven Maute, Abu Sayyaf Group (ASG), and Bangsamoro Islamic Freedom Fighters (BIFF). IS financiers, as well as potential recruits would be shown battle footage, especially AFP troopers pinned down or picked off by terrorist snipers, Catholic churches demolished and burned, Christian images desecrated and destroyed, and money and valuables looted in Marawi. Of course, the almost four-month siege
shows the potency of the terrorist force. So, funders get immense bang for their buck, and vice versa for fighters. Already, IS-driven groups have staged sporadic attacks, killings and kidnappings in the Autonomous Region in Muslim Mindanao, which encompasses Muslim-majority provinces and cities from Lanao del Sur, whose capital is Marawi, all the way to Sulu and Tawi-tawi islands in the far west. The AFP is mounting offensives in selected terrorist lairs, and giving artillery and other support to the Moro Islamic Liberation Force (MILF), the Philippines’s largest rebel group. The MILF has attacked the BIFF, which splintered from it when it signed a peace agreement with the government in 2014, giving up its secessionist goal. In sum, the IS-driven terrorist rebellion in Mindanao continues, with the Marawi siege used for propaganda to recruit fighters and raise funds.
Now, the Buddhist front
Looking elsewhere in Southeast Asia for Muslim grievances to fuel
caliphate aspirations, the IS eye will likely turn to the decades-long persecution and violence inflicted on Rohingya Muslims by Myanmar’s Buddhist Burmese majority in its northwestern Rakhine State, bordering Bangladesh. A remnant of British colonial rule over the Indian subcontinent, the Rohingya are denied Myanmar citizenship, but barred from going back to their ancestral homeland in Bangladesh. The animosity of Burmese toward the Rohingya is so entrenched that even State Counselor Aung San Suu Kyi, for all her Nobel-awarded rights advocacy, did not denounce the communal conflict, which have led to countless deaths and driven thousands of Rohingya to brave sea journeys in rickety boats in search of peace. That sounds like a cause Muslim fighters can’t refuse, and indeed, since October, the Arakan Rohingya Salvation Army (Arsa) has launched attacks against police and army units. Arsa assaults intensified late last month, with an estimated 1,000 killed, 30,000 people displaced and 300,000 Rohingya driven to Bangladesh by the army counteroffensive. Going further south, another conflict surely on IS radar festers along the Thai-Malaysian border. “The Malay-Muslim separatist insurgency in Thailand’s south has little in common with jihadism, but persistent instability could provide openings for foreign jihadists who thrive on disorder,” the International Crisis Group think tank warned. Some 7,000 have been killed in fighting since 2004. With Malaysia brokering, Thailand’s ruling junta
has held talks with a coalition of militant groups. But there are doubts if the insurgent leaders in dialogue control the fighters on the ground. And with no junta concessions on the cards so far, there are no great hopes for peace anytime soon. As for Malaysia and Indonesia, these Sunni-majority, Muslim-ruled nations continue to be rich recruiting grounds for IS fighters, and possibly, some fund-raising among Islamist quarters. IS would probably avoid mounting attacks, and not only to avoid crackdowns under stringent colonial-era internal security laws. The bigger strategic reason is to avoid turning Malaysians and Indonesians against their Islamist parties, which actually wield decent political power and could win more. The 72-year-old Malaysian Islamic Party (PAS, by its Bahasa initials) has 14 seats in Parliament. It rules Kelantan State in the north, has 14 of 32 seats in Terengganu, just three short of the country’s ruling Barisan Nasional coalition; and is part of the opposition Pakatan Rakyat coalition ruling two more states. In Jakarta, meanwhile, conservative Islam scored a double victory, with the blasphemy conviction of its erstwhile governor Basuki Tjahaja Purnama, the first Christian chief of the 10-million-strong capital city in half a century; and the victory of Anies Baswedan, backed by the hardline Islamic Defenders Front (FPI, by its Bahasa initials). The party has also boosted its nationwide clout at the expense of the moderate Muslim group, Nahdlatul Ulama. Plainly, there is much to lure IS to Southeast Asia.
What the world can learn from India’s cash experiment
A
lmost a year on, India’s ban on large-denomination bills has been deemed a “total failure”. That’s not quite fair. True, the primary goal of flushing out tax cheats has been a flop. But a secondary goal— “to move toward the cashless society”, as India’s finance minister put it—still has real promise. The rest of the world, in fact, could learn a lot from this botched experiment. A report last month showed that 99 percent of invalidated bills have now made their way back to banks, suggesting the government’s plan to extinguish illicit cash has foundered. At the same time, though, currency in circulation is down by about 25 percent from where it would otherwise have been, according to Bloomberg Intelligence, while electronic transactions are up.
If that trend continued, it could be a big deal. India has inefficient banks and lots of corruption. Its cost of cash—in access fees, maintenance expenses and so on—is among the highest in the world. Eventually going cashless would slash such costs, while also impeding crime and corruption. It would be a big help to the poor, who could borrow and send money more cheaply. More powerfully, it would give central banks a new tool for boosting aggregate demand when conventional measures won’t work—significantly negative interest rates. It’s no wonder that so many governments are now thinking through the concept, and its attendant problems. But an essential precondition for doing away with cash is trust. And on that score, India’s experiment provides an example of what not to do.
For one thing, the note swap was undertaken rashly. The public was given a mere 50 days to exchange their big bills for smaller ones, and the central bank couldn’t print enough new notes to meet demand. Lines lengthened at bank branches, small businesses folded for lack of capital, supply chains collapsed, and agricultural prices plummeted. Growth and investment stalled. Perhaps 5 million jobs were lost. For other countries, a better approach would be to phase out big bills over a period of years, making it easy to swap them at first, then progressively more difficult—say, by exchanging them at fewer locations. That would allow time to publicize the plan, fix inevitable flaws and help the public adjust. Meanwhile, electronic alternatives would have an incentive to evolve. In
time, bills of all denominations would dwindle of their own accord. Which suggests a second problem for India. After invalidating 86 percent of the currency in circulation, the government was left scrambling to encourage digital payments, using subsidies and other gimmicks. Only about half of Indian adults have bank accounts, and only about a quarter have Internet access. Mobile payments remain relatively rare. Even if everyone had wanted to go digital, they couldn’t have. The takeaway for other countries is to ensure reliable alternatives are available first, along with legal protections and privacy safeguards. One promising approach is digital legal tender, which might combine the advantages of electronic currencies with the stability of a central bank. Bloomberg View
Global Eye
A12 Tuesday, September 12, 2017 • Editor: Angel Calso
BusinessMirror
Electric cars reach a tipping point
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By David Fickling | Bloomberg
is roughly a billion-strong. At the same time, the direction of travel is unambiguous. China’s auto industry plan released in April envisages new energy vehicles—including electric and hybrids—making up all the future sales growth in the country. With conventional cars plateauing at current levels, new-energy vehicle sales will reach 7 million annually in 2025. As many as 800,000 charging stations will be built this year alone, according to the official China Daily. Government mandates will require manufacturers to sell 8 percent of their vehicles with electric or hybrid powertrains from next year, or purchase credits to make up the difference, rising to 20 percent by 2025. India, due to overtake Germany and then Japan as the world’s thirdbiggest auto market by 2020, is on a similar path. Prime Minister Narendra Modi’s think tank Niti Aayog aims to get electric vehicles to 44 percent of the fleet by 2030, and is aggressively favoring them with tax rates 31 percentage points below those on hybrids and internal-combustion-engine cars under its new harmonized GST sales tax. France and the UK, the world’s sixth- and seventh-biggest markets, are planning to phase out sales of
Bloomberg
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The conventional car isn’t quite dead yet—but its years are numbered. NONOY LACZA
nonelectric cars by 2040, while tiny Norway aims to reach that line 10 years earlier. Neither of those targets looks especially ambitious, given the rapid drop in battery costs: In the US and EU, electric cars will reach price parity with conventional vehicles in terms of purchase and running costs around the mid-2020s, according to BNEF. The International Energy Agency believes the use of oil in passenger cars has already more or less peaked, with just 7 percent of demand growth by 2040 coming from the sector. The pattern will accelerate as
major automakers dedicate more of their research and development budgets—and, subsequently, lobbying funds—to the EV transition. Until the first Tesla Inc. Roadster went on sale just nine years ago, Mitsubishi Motors Corp. was the only major car company to take the prospect of fully electric vehicles seriously. Now, every large automaker is working on battery-powered cars, with even long-standing skeptics like Fiat Chrysler Automobiles NV’s Sergio Marchionne and Maruti Suzuki India Ltd.’s R.C. Bhargava announcing plans in recent weeks.
For all the eye-catching symbolism of a ban, it’s unlikely that fossil fuel will soon be illegal on the roads. Gasoline and diesel cars will still be sold in 2040, and probably 2050 and 2100, as well. But with an increasing cost disadvantage and growing infrastructure issues, as gas stations close or go electric, internal-combustion engines will be sold only to enthusiasts—like high-performance sports cars, kit cars and vintage cars are today. T he conventional car isn’t quite dead yet—but its years are numbered.
‘Land mafias’ and the battle for Pakistan’s real-estate boom By Chris Kay & Faseeh Mangi Bloomberg
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erween Rahman was returning home one evening in March 2013 from her job as head of the Orangi Pilot Project (OPP), which for years has pushed land-title claims for Karachi’s poor, when she was shot three times by a gunman on a motorcycle. Rahman died as she was rushed to hospital by her friend and colleague Anwar Rashid. “He was a sharpshooter,” said Rashid, now 71 years old and white-haired, but still a director of the OPP, pointing to his throat and chest to indicate where Rahman was hit. “This is because of the land—the police, the mafia, all involved.” Her death exposed the dark underbelly of real-estate development in one of the world’s fastest-growing megacities. Karachi is home to about 15 million people, two large seaports and Pakistan’s financial infrastructure, making it the country’s economic powerhouse. Its appeal is only set to rise as China pumps in more than $50 billion to boost infrastructure and transport links across the nation, spurring Pakistanis abroad to invest in their home market. “Public land has commonly been illegally regularized and sold,” Brussels-based conflict watchdog International Crisis Group said in a February report. “It has become the city’s most prized and contested commodity, with federal, provincial and local land-owning agencies, military cantonments, corporate entities and formal and informal developers competing to extract as much value as possible. Given the fiscal stakes, disputes are settled by bribery and political, bureaucratic and police patronage, and even deadly force.”
Tapping into the boom
House prices in Pakistan have more than doubled since 2011, according to Zameen.com, a listings web site. Karachi values have jumped 23 percent since 2016 to a record high, outpacing other large cities and the national average of 6.3 percent— though some of that cooled when
Orangi Pilot Project BLOOMBERG
the government started taxing real estate transactions last year. Some 13 different government agencies are tasked with regulating laws and coordinating development, but slums have sprung up across the city with little regard for any of these. Ethnic clashes and gang wars festered since 1947, when the first wave of migrants poured into the city of 450,000 following Pakistan’s violent partition from India. A military cleanup in 2013 has to some extent pushed out political militias and insurgent groups and, on his first visit to the city as prime minister, Shahid Khaqan Abbasi, last month vowed to continue action “against terrorists belonging to banned organizations, target killers, extortionists, street criminals and land mafia”. Karachi’s real estate in recent years has offered better returns than Dubai and London, according to tycoon Arif Habib, who is building a $2-billion gated estate in the Naya Nazimbad district, neighboring an area that used to be controlled by Taliban militants. Habib also pioneered and listed Pakistan’s only real-estate investment trust in 2015, offering a stake in one of Karachi’s most prominent malls and office towers. Developers including Habib and rival
How investors are dealing with uncertainty By Mohamed A. El-Erian
ay good-bye to gasoline. The world’s slow drift toward electric cars is about to enter full flood.
China, one-third of the world’s car market, is working on a timetable to end sales of fossil fuel-based vehicles, the country’s vice minister of industry and information technology, Xin Guobin, told an industry forum in Tianjin last Saturday. That would probably see the country join Norway, France and the UK in switching to a wholly electric fleet within the lifetime of most current drivers. The announcement is important because the most influential players in the global auto market have always been not companies, but governments. Diesel cars make up about half of the market in the European Union and less than a percentage point in the US, largely because of different fuel-taxation and emissions regimes. Carburetors have been regulated out of most developed markets because fuel injection—originally a more costly technology—results in less tailpipe pollution. Moves toward electrification of the world’s cars have been tentative. Just 695,000 electric vehicles (EV) were sold in 2016, according to Bloomberg New Energy Finance, equivalent to about three days of sales in an 84 million-strong market. Including those already on the roads, the global car fleet
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builders, such as real estate baron Malik Riaz Hussain and the military’s property arms, are tapping into the price boom. However, most of the development is coming at the higher end of the market, crowding out middleclass families. The Karachi-based Urban Resource Centre estimates that more than 100,000 houses are required in the city every year to stem the shortage, yet less than 40,000 are being built by the formal sector. “Pakistan is short of housing and that shortage is increasing day-byday,” Habib said. “Land-grabbers also make problems for developers.”
Land-grabbers
Rahman’s family and associates suspect her work mapping Karachi’s poor districts and helping residents gain land titles put her in conflict with powerful criminal networks. The OPP mapped more than 1,000 settlements between 2006 and 2013, though that stopped after Rahman’s death and subsequent threats and attacks on the group’s staff. Helping Karachi’s residents gain legal title means that developers “need to pay them about six times as much before you can get rid of them,” Sahar Ismail, Rahman’s niece and a trained economist, said at the OPP’s
office, which is decorated with murals and portraits of her murdered aunt. The Supreme Court in 2014 ordered Rahman’s murder case to be placed in an antiterrorism court with a judicial commission rejecting the early closure of the investigation after the police said they had already killed the perpetrator. Three people have since been arrested. “It was probably the land issue,” said Jamil Ahmed, the deputy inspector general of the crime investigation agency in the Sindh police department. It was difficult for the police to investigate at the time as the “Taliban were in full control of that area and it was easy for criminals to hide and land mafias to brow-beat people.” Some in the police have been involved in real estate-related corruption, but they have to be smarter now and fly under the radar because of closer media scrutiny and the judicial investigation, he said.
Closer scrutiny
One example of heightened scrutiny is property mogul Hussain’s vast city-sized Bahria Town development about an hour’s drive from Karachi. Construction began in 2014 and, when completed, the enclave will boast a 36-hole golf course, theme parks, five-lane highways, Dubai-
style fountains, and what it says will be the world’s third-largest mosque. A 125-square-yard house in Bahria Town that initially sold for 1.73 million rupees ($16,000) is now between 2.4 million rupees and 3.5 million rupees, said M. Akmal Khan Khattak, a marketing manager at real-estate agent Athar Associates. He’s been recommending the purchase to his clients. Pakistan’s top anticorruption agency is still investigating allegations that Bahria Town acquired land from a local authority illegally. The company denies the allegations and the disputed land is around 7,000 acres, Gohar Ali Khan, Bahria Town’s attorney, said by phone in July. The National Accountability Bureau handed over a sealed interim report to the court in October 2016, but there’s no clarity when the final investigation will be submitted. Bahria Town has already agreed to a third-party audit to determine the land’s market value and will pay any difference, Khan said. Hussain also denied any wrongdoing and said last year the claims were just “twisted facts”. Hussain declined an interview request from Bloomberg News and Bahria Town spokeswoman Nida Zahoor didn’t respond to e-mailed questions and declined to comment on the phone.
‘Important positions’
IN a country with a dire need for housing, large, secure and modern developments are needed, said Shamoon Tariq, the vice chief investment officer at Stockholm-based Tundra Fonder AB, who owns a plot of land in Bahria Town. “They have provided security, they have provided electricity,” Tariq said, referring to Bahria Town. “People see their success and they will follow.” Sindh province, of which Karachi is the capital, is now looking to computerize land records which may help curb corruption, Mohammad Zubair, governor of the province and a member of the federal ruling party, said in an interview in March. This was earlier done in Punjab, Pakistan’s most populous region that’s also governed by the same party.
ast week’s stock-market action will come as no surprise to people who closely follow investor behavior, particularly those who are students of behavioral finance. It will also reconfirm already entrenched adaptive expectations that have conditioned investors to buy the dip—a behavior that has clipped considerably both the duration and extent of market sell-offs. In a week of notable moves in the fixed-income and currency markets, including the 10-year US Treasury’s decline to a 2017 low and the dollar’s weakening to levels not seen for almost three years, US stock indices recovered impressively from a rough first day of trading. By the end of the week, the Dow Jones Industrial Average was essentially unchanged, while the S&P slipped just 0.6 percent and the VIX edged up to only 12.1. In the process, stock investors again put behind them big unresolved issues regarding North Korea’s nuclear threats, significant actual and projected damage from two monster hurricanes, added uncertainties about the future leadership of the Federal Reserve (the Fed), and a significant downward revision in Japanese growth. Admittedly, there was also favorable news last week for markets. The European Central Bank (ECB) revised upward its growth projections, while a surprise deal between President Donald J. Trump and congressional Democrats removed the specter of an October breach of the debt ceiling and the government running out of funds. At the same time, remarks from Fed officials pushed back investors’ timing of the next interest rate increase, reducing the implied market probability of a December hike to just under 30 percent. Assessed on their merits, the net impact of these developments is to cast some doubt about the world’s economic, policy, political and geopolitical outlook. Indeed, even the favorable events came with qualifiers. For example, the ECB also revised down its inflation forecast, highlighting that all is not well on Europe’s cyclical economic horizon. And there is a considerable difference of view among political commentators as to whether the deal on the debt ceiling enhances or undermines the probability of subsequent timely congressional approval of pro-growth tax reforms and infrastructure. What last week’s market action demonstrated, once again, was investors’ willingness to set aside considerable unusual uncertainty. They remain deeply comforted by the notion that central banks continue to cover their backs, that corporate cash will continue to be ploughed into the markets via dividends and share buybacks, and, to a lesser extent, that the global economy is in the midst of a synchronized upswing. Indeed, in recent years such faith has richly rewarded investors who have been conditioned to buy the dip, regardless of its causes. As valid as these factors may be (and there is room for debate about all three) they do not directly reduce the uncertainties posed by geopolitics and national politics. In effect, rather than try to internalize them, stock markets are essentially ignoring them—because they are intrinsically difficult to price and because so far they have tended to have limited lasting impact historically. This market attitude is familiar to students of behavioral finance. It speaks to elements of neuroscience and psychology that affect investor behavior and, in a desire to return to a comfort zone, can lead to overly optimistic assessments of risks. But it is also an attitude that is vulnerable to sudden large tipping points, particularly if one or more of the uncertainties evolve in a significant unfavorable fashion.
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Global Eye BusinessMirror
Catalan separatists plot show of force in battle with Madrid
Tuesday, September 12, 2017 A13
China thinks the US holds key to solve North Korea crisis
Supporters of Catalan independence wave flags during a demonstration called by the Catalan National Assembly outside the Catalan high court in Barcelona, Spain, on February 6. Bloomberg
By Esteban Duarte Bloomberg
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atalonia’s separatist leaders are seeking a show of strength from their supporters on Monday as they advance toward an illegal referendum on independence. The movement will stage its annual demonstrations on Catalan National Day, a holiday in the region, with parades along four of the main avenues in Barcelona, as well as speeches and concerts. More than 390,000 people had registered to take part as of Sunday. Separatist leaders are trying to show Prime Minister Mariano Rajoy the scale of the backlash he risks if he uses force to shut down their preparations for an October 1 ballot. Faced with the biggest constitutional crisis since the 1981 coup, Rajoy is hesitating to use the most drastic tools at his disposal, wary of the reaction on the streets. “They haven’t been realistic about what we can do here,” Jordi Sanchez, head of the Catalan National Assembly, a civic group that leads the campaign for secession, said in an interview. “We have a very good feeling about National Day.” In a spectacle choreographed for the media, demonstrators will be asked to change into yellow shirts as they pass under campaign banners. There will also be recognition of those killed in two terrorist attacks in the region last month. Still, outside of the vocal minority, support for independence in Catalonia has declined over the past four years as the economic recovery drains away moderates. Just 35 percent said Catalonia should be independent in a July survey by the Catalan government’s polling agency. “Even if they go ahead with the referendum, it’s still hard to see how Catalonia can really take its independence project forward,” said Caroline Gray, a lecturer in politics and Spanish at Aston University. “There’s a real disconnect between how they see themselves and how this all looks to the outside world.” Chancellor Angela Merkel’s spokesman, Steffen Seibert, said last Friday that the separatists’ demands were an internal matter and that Germany has a strong interest in maintaining stability in Spain.
Turning up the heat
The separatist leadership won’t consider more disruptive action
while they believe it’s still possible to stage the October 1 referendum, said Sanchez, who is running the separatist campaign in coordination with political and civic leaders, including Catalan President Carles Puigdemont and Oriol Junqueras, the regional vice president. If it becomes clear that the vote can’t happen—if, for example, the police seize the 6,400 ballot boxes hidden across the region—then they have plans for protests blocking the main avenues in Barcelona, and might even consider action to obstruct exporters, Sanchez said. “They have been calling for a few days to take control of the streets, in line with the populist origins of the movement,” Enric Millo, the Spanish government’s representative in Catalonia, said in an interview with Cope radio on Monday. “Their goal is to project a false impression that Catalonia is for independence.” Sanchez said he wouldn’t be comfortable in claiming victory in the referendum unless support for independence reaches a threshold of about 1.8 million votes, which equates to roughly a 55-percent support based on historical turnout in Catalan elections. The Spanish government has been encouraging people not to participate in the ballot.
Criminal prosecutions
Spain’s chief prosecutor last week warned that anyone helping to organize the referendum will risk criminal charges. He’s already preparing action against senior officials, including Puigdemont, and last Friday Spanish police raided a printing works suspected of helping to prepare ballot papers. In a setback for the secession campaign, Barcelona Mayor Ada Colau said on September 8 she wouldn’t for now allow use of the city’s voting centers unless public employees get assurances they’re protected from any legal consequences of working on the referendum. Colau is in favor of the ballot, so long as her officials aren’t put at risk. Rajoy is coming under pressure to take even stronger measures after the Catalan assembly last week approved the legal framework for the referendum and the new institutions of an independent state. Spain’s constitutional court suspended the referendum law last Thursday and is due to consider similar measures against the so-called transition law this week, following a request.
Unlike Trump, Beijing’s leaders fundamentally oppose a war to resolve the situation. Bloomberg
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By David Tweed | Bloomberg
NITED States President Donald J. Trump has regularly called on China to stop North Korea’s nuclear advancement, even saying in July it could “easily” end the crisis. In Beijing, however, leaders think the opposite. While the US and China agree the Korean Peninsula should be rid of nuclear weapons, they differ on how best to achieve that. The sense of urgency is heightened in Washington, as the US suddenly finds itself potentially in range of Kim Jong Un’s nuclear weapons, whereas China and North Korea’s other neighbors have lived with the threat for years. Trump has said China should use its economic leverage as North Korea’s top trading partner to quickly end Kim’s nuclear ambitions. China, however, sees no need to trigger a potential catastrophe on its border over what it regards as fundamentally a dispute between the US and North Korea. Indeed, Beijing has warned that rhetoric from both sides—the US has threatened military action against North Korea—is making things worse. In China’s eyes, Kim won’t give up his nuclear arsenal even if Beijing shuts off its oil supply—despite the economic pain that could cause. That’s because his weapons program gives him a deterrent against the US, which North Korea frequently says wants to attack it. It also is central to his ability to hold onto power at home by presenting an image of ultimate strength and control to North Koreans,
including his generals. The only way Kim may stop, the thinking goes, is for the US to offer him a security guarantee, such as signing a legally binding nonaggression treaty. But former US negotiator Christopher Hill said the US is concerned that, even with a treaty, the regime can’t be trusted not to use its weapons to attack a US ally such as South Korea. “Without holding the key to the DPRK’s security concerns, China has no leverage to convince this foreign nation to stop its nuclear program,” Fu Ying, chairman of the Foreign Affairs Committee of China’s legislature, wrote in a May paper for the Brookings Institution, using the initials for North Korea’s formal name. “The US, which the DPRK sees as the source of threats to its security, has been neither interested nor willing to consider responding to the DPRK’s security concerns,” Fu said. China’s logic extends to the current debate at the United Nations Security Council, where the US has called for a vote on Monday on a draft resolution to cut off North Korea’s oil supply after it conducted its sixth and most powerful nuclear test. North Korea has threatened that if harsher sanctions are approved, the US will pay “a due price”.
China has repeatedly said it will support further UN action if it helps restart talks with North Korea. Unlike Trump, Beijing’s leaders fundamentally oppose a war to resolve the situation. “China has reiterated many times that military force cannot be an option for the settlement of the Korean Peninsula nuclear issue,” Foreign Ministry Spokesman Geng Shuang said the day after North Korea detonated what it called a hydrogen bomb. A “peaceful solution will be the only correct way”. North Korea’s state-run Korean Central News Agency accused the US of having carried out tests of nuclear bombs and missiles while decrying similar actions by Pyongyang. “It is the gangster-like logic that cannot convince anyone,” KCNA said in a Saturday commentary. “Its talking about war and threat of harsh sanctions will enhance only the Korean people’s revolutionary consciousness and add justification to the DPRK’s access to nukes.” China has backed North Korea since the Korean War, in part to have a buffer state that keeps US military forces from sitting on its border. While Mao Zedong once described ties as being as “close as lips and teeth,” the relationship has become strained since Kim and Xi Jinping came to power, and some China observers say Trump is overstating Xi’s ability to influence what the regime does. Kim’s antics have also started to affect China’s strategic interests. A proliferation of missile defense systems by the US and its allies could thwart China’s own military capabilities. There’s environmental risks if radiation spills across its northeastern border. And Kim might do something that triggers an actual war. “China does not have the power to dictate to the DPRK,” said Victor
Gao, who was a translator for late leader Deng Xiaoping. “And now that the DPRK is in possession of nuclear weapons, the likelihood that the Chinese could dictate any terms is even more remote.” China has sought to play a mediating role, backing progressively tougher sanctions like a ban on coal exports while proposing that both sides freeze hostilities and return to talks. Those actions, regularly dismissed as insufficient by Trump’s administration, have led to public spats with Pyongyang. North Korea’s state media said in February that China was “dancing to the tune of the US”. The Communist Party-affiliated Global Times said in an August editorial that China should stay neutral if North Korea starts a war with a missile attack, but intervene if the US and South Korea seek to topple Kim’s regime. “China opposes both nuclear proliferation and war in the Korean Peninsula,” the paper said. “It will not encourage any side to stir up military conflict, and will firmly resist any side which wants to change the status quo of the areas where China’s interests are concerned.” Since coming to power in late2011, Kim has detonated four nuclear devices, test fired some 90 missiles including two intercontinental ballistic missiles, executed his uncle and murdered his brother, both of whom were seen as close to Beijing. Some China-based academics say Beijing’s policy has enabled North Korea’s nuclear buildup. Zhu Feng, a professor of international relations at Nanjing University, wrote in Foreign Affairs in July that China should abandon support for North Korea because its nuclear program threatens regional stability. Beijing could cut off oil supplies or halt all trade with North Korea to show its readiness to abandon Kim if needed, Zhu said separately in an e-mail on September 8. “Then it might leave Pyongyang to reconsider if their WMD risk could last,” he said, a reference to weapons of mass destruction. “It seems that Pyongyang is betting on impossibility of China’s full abandonment of it.” The publication of dissenting views has given rise to a school of thought that a policy change on North Korea is under discussion. Still, a day after Zhu’s article was published, Geng from the foreign ministry blasted “certain people” who have played up “the so-called China-responsibility theory.” One common view in Beijing is that Trump’s war rhetoric has only made Kim more insecure, prompting him to accelerate his weapons program. “Achieving the denuclearization goal on the Korean Peninsula is a complicated tango dance,” said Gao, who is director of the China National Association of International Studies in Beijing. “Everyone needs to tango in sync, first and foremost the US and China.”
A new culture of cruelty cuts across ideological and national borders By Pankaj Mishra Bloomberg View
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culture of cruelty is sweeping the world and it cuts across ideological as well as national borders. In India last week the murder of Gauri Lankesh, a prominent journalist and critic of Narendra Modi’s government, was met with euphoria by his online supporters. One of Modi’s own ministerial colleagues felt compelled to “strongly condemn & deplore”, as he wrote on Twitter, “the messages on social media expressing happiness on the dastardly murder.” The left-leaning French satirical magazine Charlie Hebdo responded to the catastrophic Hurricane Harvey with a cover cartoon that showed
swastika flags and Nazi salutes poking out above floodwaters. The caption read, “God exists! He drowned all the neo-Nazis of Texas.” Aung San Suu Kyi, the Nobel peace laureate who is Myanmar’s de facto civilian leader, not only remains unconscionably silent about an official and intensifying campaign of murder and persecution against her country’s 1.3 million-strong Rohingya minority. She won’t lift the severe restrictions on humanitarian access to the victims. Myanmar’s neighbors show a no less brutal face to the victims of what many observers are calling a genocide. Though Bangladesh has helped distribute aid to the Rohingya in recent days, it’s previously re-
fused to recognize many of them as refugees. Modi, visiting Myanmar last week, failed even to mention them. An official in India’s Home Ministry claimed that the few thousand Rohingyas in India were “illegal immigrants” and “as per law, they stand to be deported”. Meanwhile, President Donald J. Trump scrapped a policy that allowed immigrants who had arrived in the US illegally as children to remain in the country. Each one of these cruelties can be, and are, rationalized with reference to a high-minded abstraction. Denying hundreds of thousands of young people their right to a stable existence, Trump claims that “America is a land of laws”. Suu Kyi and her neighbors also invoke the rule of law and na-
tional sovereignty. Charlie Hebdo upholds free speech as an unimpeachable principle. The murdered Indian journalist, according to right-wing trolls, was asking for it with her persistent critiques of India’s present government. As Modi himself put it in 2002, when Hindu fanatics, provoked by an alleged Muslim attack on a train carrying pilgrims, massacred hundreds of Muslims, “every action has an equal and opposite reaction”. The logic in these arguments, whether derived from Newtonian physics or the national interest, is always as impeccable as it is morally numb. This is why around the world we confront a bigger crisis than the one commonly linked to political and
economic dysfunction. Demagogues are mere symptoms of an ethical breakdown. The more disturbing pathology is of people entrenched in different value systems, viciously hostile to each other. These many different extremists all insist on their superior rationality and virtue. Thus, claiming free speech as an absolute value, and their leftism as a badge of pride, Charlie Hebdo can mock the victims of a natural disaster. Faith in Modi’s ability to make India great again makes it alright to dance on the funeral pyres of his critics. “Everything really is permitted,” in the caustic words of Raskolnikov, the murderer-protagonist of Dostoevsky’s novel Crime and Punishment. It is also possible to rationalize and
justify anything, as the global explosion of data-based whataboutery confirms. Whataboutery, in this sense, represents the apotheosis of reason and logic at the expense of ordinary decency. A democracy more representative, or a market economy more inclusive, won’t be enough to liberate us from such moral mayhem. As it is, we have credited too much wisdom to the supposed rationality of market mechanisms and democratic choice despite their manifestly harsh outcomes: extreme inequality and brutal majoritarianism. Today, we are called upon, amid a worldwide fanaticism of speech and act, to recover nothing less than the basic building blocks of human society.
2nd Front Page BusinessMirror
A14 Tuesday, September 12, 2017
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Strong recovery in June FDI shows continued bullish outlook $3.6B F By Bianca Cuaresma
@BcuaresmaBM
oreign investors’ long-term investments to the country almost tripled in June, but the month’s surge was not enough to lift the total foreign direct investments (FDI) in the first semester to its level in the same period last year. Data from the Bangko Sentral ng Pilipinas (BSP) showed FDI surged to $674 million in June this year,
up from the $238 million in the same month in 2016. The BSP said the 183-percent leap in long-term
The total foreign direct investments in January to June, down 14 percent
foreign investments is indicative of “continued bullish outlook on the Philippine, economy”. The June FDI was also higher than the previous month ’s $568 million. The BSP said the increase in FDI inflows in June was due largely to
the expansion of debt instruments, or the so-called intercompany borrowings from foreign direct investors by their subsidiaries or affiliates in the Philippines during the month. Data show these debt instruments hit $674 million in June, up from the $454 million in the previous month. Meanwhile, inflow from reinvestments of earnings, which barely rose from $71 million in May to $72 million in June, was canceled out by the net withdrawals in equity capital investments, which was also at $72 million. The outflow of FDI in the equity capital market during the month
was due to the larger total withdrawals of $185 million, as compared to the total actual placements in June at $113 million. These placements can be tracked mostly from investors from the United States, Japan, Taiwan, Singapore and India. Their investments were mainly channeled to real estate, electricity, gas, steam and air-conditioning supply, financial and insurance, manufacturing and professional, scientific and technical activities. A month’s worth of stellar performance for the country’s FDI, however, was not enough to push the overall numbers of the country in the first half of the year.
Total FDI in January to June this year hit $3.6 billion, still 14 percent lower than the $4.2-billion FDI in the same six-month period last year. All subindices of the country’s FDI in the first half of the year were lower than the previous year’s, except reinvestment of earnings, which grew 9 percent, and debt instruments, which grew 29.2 percent. Earlier this year, the BSP said its expectations for FDIs turned more optimistic for 2017, as it now projects long-term foreign investment to hit $8 billion for the year, up from the $7-billion projection in its December assessment.
Thrift banks seek lower tax rate for deposits INDONESIA, LONG ON SIDELINES, Continued from A1
“We will be considering the tax on savings under the fourth package of the tax reform. Among the Asean region, the Philippines has one of the highest taxes on savings, and, based on our research, the financial taxes is the most disorganized class in the current tax structure,” said DOF Director for Research and Information Office Juvy C. Danofrata, who was CTB’s guest speaker at the group’s general membership meeting in Shangri-La Hotel in Makati City last Friday. In Thailand such tax averaged 2 percent and climbed to only 13 percent once, while Cambodia and Vietnam impose 5 percent. On the other hand, Indonesia also requires a 20-percent tax on savings. Such doubled-digit tax rate in the Philippines negates the returns on time deposit to savers that reached only 3 percent in the last week of August, according to the data of the Bangko Sentral ng Pilipinas (BSP). The BSP has argued that the low rate of return enable banks to also offer low interest rates on loans. However, Anonas sees the additional gains from lower tax on interest-earning deposits to further enable bank clients to apply for more loans that fulfill their needs, such as home and automobile. He said their increased earning from savings will also help fill the losses from proposed higher value-added tax (VAT) on consumer goods, especially on oil and petroleum products, that is seen to affect the majority of the population who ride pubic transport. “I like the VAT or consumption tax. It’s not what kind you consume, but also how much you consume. I support the VAT on consumer goods, like sweetened beverages, and lowering of personal income tax because we have to consider the effects of higher taxes on other needs and obligations of the people,” Anonas said. The DOF aims to impose additional P10 per liter on sweetened drinks to protect public health and raise government funds to support long-term socioeconomic growth.
However, Anonas disagrees with proponents who aim to impose excessive tax on automobile to ease congestion in Metro Manila. “It’s very bad to solve the traffic problem because of the auto industry. You don’t want to kill another industry to address it. They’re looking at the problem in a wrong way. The solution is an efficient mass transit as in abroad,” Anonas said. The thrift banks, he added, continue to balance and diversify their loan portfolio beyond home and automobile in case demand for either weakens due to the anticipated price hikes. The DOF also shared it is looking into subsidizing interest for Pag-IBIG, the fund
for home development that is owned and controlled by the government. “The problem is, if you will the give interest as subsidy to Pag-ibig, it will hurt the industry because people will then go to Pag-ibig. But I don’t think it has the resources to facilitate the subsidy in time because the bureaucracy is there,” Anonas said. At present the CTB is positive the private thrift banks will remain attractive to borrowers, as the conditions of the market for processing efficiency and fair rates are being satisfied by the sector. “Right now our interest rates are competitive, but if they pursue it, the rates will be lowered. But the question is, does Pag-ibig have the funds? Right now the
difference in rates is very small. Now we offer 5 percent to 6 percent. Also, we can process faster than Pag-ibig, so people will still go to us, and whenever you are subsidizing, there is an artificial component that is lower than what the market actually demands,” Anonas said. The CTB said it will continue to push for financial measures to continue helping people cope with economic and fiscal challenges. “We seek to lower the taxes on interest-earning deposits to encourage saving, help Filipinos pay their taxes and, most important, help Filipinos live better. As bankers, we want to improve the quality of the lives of our customers and, so, we offer savings, deposits and other financial services.”
PANAhon tv marks fifth year Donna May Lina (from left), executive producer of Panahon TV; Vicente B. Malano, Pagasa administrator; Alberto Lina, chairman of the Lina Group of Cos.; and Sylvia Lina lead the ceremonial toast at the fifth anniversary celebration of Panahon TV held at the Pagasa Science Garden in Quezon City on Monday. NONOY LACZA
STARTS TO CONFRONT BEIJING’S SOUTH CHINA SEA CLAIMS
W
hen Indonesia recently —and quite publicly— renamed the northernmost waters of its exclusive economic zone (EEZ) in the South China Sea despite China’s claims to the area, Beijing quickly dismissed the move as “meaningless”. It is proving to be anything but. Indonesia’s increasingly aggressive posture in the region—including a military buildup in its nearby Natuna Islands and the planned deployment of naval warships— comes as other nations are being more accommodating to China’s broad territorial claims in the South China Sea. The two countries had three maritime skirmishes in 2016 involving warning shots, including one in which Indonesian warships seized a Chinese fishing boat and its crew. Indonesia is challenging China, one of its biggest investors and trading partners, as it seeks to assert control over a waterway that has abundant resources, particularly oil and natural-gas reserves and fish stocks. The pushback from Indonesia takes direct aim at Beijing’s claims within the “nine-dash line”, which on Chinese maps delineates the vast area that China claims in the South China Sea. It also adds a new player to the volatile situation, in which the United States Navy has been challenging China’s claims with naval maneuvers through waters claimed by Beijing. Indonesia “is already a party to the disputes—and the sooner it
acknowledges this reality the better”, said Ian J. Storey, a senior fellow at the Institute of Southeast Asian Studies in Singapore, where he researches South China Sea issues. The dispute largely centers on the Natuna Sea, a resource-rich waterway north of Indonesia that also lies close to Vietnam’s EEZ. Before naming part of the contested waterway the North Natuna Sea “to make it sound more Indonesian”, Storey said, Indonesia last year began beefing up its military presence in the Natunas. T h at i nc lude d e x pa nd i ng its naval port on the main island to handle bigger ships and lengthening the runway at its air force base there to accommodate larger aircraft. For decades, Indonesia’s official policy has been that it is not a party to any territorial disputes with China in the South China Sea, unlike its regional neighbors Brunei, Malaysia, the Philippines and Vietnam. Last year, however, Indonesia and China had the three maritime skirmishes within Indonesia’s 200-nautical-mile EEZ off its Natuna Islands, which lie northwest of Borneo. A fter the third sk ir mish, in June 2016, China’s Ministr y of Foreign A ffairs issued a statement in which it claimed for the first time that its controversial nine-dash line included “traditiona l fishing grounds” w ithin Indonesia’s EEZ. See “South China sea,” A2
Risk assessments needed in anticorruption and data-privacy protection Continued from A1
In order to protect us from loss of reputation, high fines and criminal charges, astute risk and gap assessments are imperative, following an efficient methodology, and embracing flexibility to meet whatever new risk is barreling up the audit committee’s agenda. Areas to focus on in risk assessment: To assess the risks around proper due diligence of third parties, the compliance function may need to enlist the procurement or accounting departments; they would have a list of all parties that received payments from the company. In a decentralized enterprise, the IT department may need to help “normalize” data that different divisions collect in different formats. The risks associated with your
company’s personnel require special attention: if corporate bribery is going to take place, the human element will necessarily be involved. When assessing risks your personnel might pose, you will need, again, to ask the right questions: Who interacts with government officials? Who sells products or gets business? Who controls funds leaving the company? Who is operating in the most corrupt environment? Who is in the best position to detect problems? Who is collecting, maintaining, distributing and storing personal data? Grouping the organization’s personnel as such will allow you to better identify which groups are most exposed, and to what levels of risk. Agents in frequent contact with government officials must be given extra care, as they can receive bribe requests in return for winning business
opportunities. Personnel under pressure to make large sales may succumb and cut corners on compliance. Linelevel accounting personnel, on the other hand, may be aware of improper payments. The HR staff has access to data-privacy information which needs to be protected. Identifying such weaknesses will help put in place a more accurate risk assessment, as well as more efficient remedial mechanisms. If you have not signed the Integrity Pledge of the Integrity Initiative yet and had access to our self-assessment tool, it is high time you do this now. Evaluating geographical risk implies understanding where you operate, how much business you do in each area, the type of business you conduct in each area, how much data your import and export, and the level of corruption in
that particular area. How aware are you about cross-border privacy rules? Knowing your customer is key to mapping out your risk matrix. If you are delivering services or goods to a public entity, you are dealing with a high-risk customer that could potentially bring your business under the scrutiny of anticorruption laws with global jurisdiction, such as the US FCPA or the UK Bribery Act, which prohibit offering and giving bribes to foreign government officials. The coverage of applicable persons is broad and includes government officers and employees, consultants and agents acting on behalf of foreign governments, employees of public international organizations (like the World Bank, ADB or UN), and officials and employees of state-owned enterprises. If your customer does not fall under the defi-
nition of foreign officials, you must still consider whether your customer would present any risk, as “private-to-private” bribery is also punishable under certain legislation with global jurisdiction, such as the UK Bribery Act, and may also be punishable under local law in the country where the crime was committed. For instance, in a given tender or project, you should ask whether a potential customer may operate corruptly, whether there is anything suspicious about the tender or project, etc. In addition, more and more countries and regions are implementing dataprivacy protection laws and regulations, which means that the protection of data in the interaction with clients becomes very important.
In conclusion, risk assessments
present compliance professionals/ data-protection officers with the complicated task of tailoring the assessment of every risk to its specific details. If you need assistance, contact us at the Integrity Initiative Inc. Contact Schumacher@integrityinitiative.com or Schumacher@eitsc.com. Flashback: On July 11 I wrote about “Open Government Partnership—Part of Fighting Corruption” and made extensive reference to reports prepared by the Independent Reporting Mechanism (IRM) of the local Open Government Partnership (OGP) implementation group. The reason I used the IRM source is that the Integrity Initiative is part of the civil-society groups supporting the OGP Program and the reporting of the IRM. In fact, the Integrity Initiative has added progress information to the latest IRM report.