Issuu

“It seems that the North has decided to play an ‘end game’ where they push things to see how far they can go.”—Koh Yu-hwan, a North Korean expert at Seoul’s Dongguk University, on Pyongyang’s fifth nuclear test. AP

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

“These are kids that basically have been hungry all their lives, and some are so far gone that they die here in the first 24 hours.”—Jean Stowell, head of the Doctors Without Borders emergency feeding center in Maiduguri, Nigeria, on the children dying of starvation because of Boko Haram’s insurgency. AP

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

Tuesday, September 13, 2016 Vol. 11 No. 339

Despite rift, China keen on reviving ODAs to PHL By Cai U. Ordinario

@cuo_bm

ven with the South China Sea dispute and the botched National Broadband Network (NBN) and NorthRail projects, Beijing has indicated that it is ready to resume official development assistance (ODA) loans to Manila— and probably on better terms at that. INSIDE

BusinessMirror

analysis, ideas and commentary from

E1 Tuesday, September 13, 2016

www.businessmirror.com.ph

In Politics, Workers Follow Boss’s Lead

In an interview with the BusinessMirror, National Economic and Development Authority (Neda) Deputy Director General for Investment Programming Rolando G. Tungpalan said the Philippines See “ODAs,” A2

By Andrew Ross Sorkin

While Cook’s role was as a private citizen—it was not an Apple event— the message to employees about whom he is supporting for president is clear. The influence of chief executives like Cook over employees’ political leanings and donations, intentional or not, is substantial: It may not be an overstatement to suggest that a chief executive’s politics may be one of the most significant factors in swaying how employees think about elections. The results of a new academic study looking at the power of chief executives over the politics of their employees is stunning and perhaps unsettling. Three business professors set out to examine “how the political preferences of CEOs affect their employees’ campaign contributions and electoral choices.” The results of the study, which looked at eight federal election cycles from 1999 to 2014 and more than 2,000 companies, showed a statistically significant correlation among campaign contributions made by the chief and his or her employees as well as voter turnout. The study found that “employees direct approximately three times more

of their campaign contributions to political candidates supported by their firm’s CEO than to otherwise similar candidates.” If you’re thinking, “Well, CEOs and employees donate along similar party lines because they share common values and interest,” think again. The study uncovered patterns that show a chief executive’s influence is profound: “When a new CEO contributes to different political candidates from the ones supported by the prior CEO, employees tend to follow his/her lead and redirect their donations as well,” wrote the professors, Ilona Babenko of Arizona State University, Viktar Fedaseyeu of Bocconi University in Italy and Song Zhang of the University of Lugano in Switzerland. There is nothing inherently wrong, in most cases, with a chief executive or employee raising money for a particular candidate or party. Cook, it is worth noting, gives to both sides of the aisle, having just hosted a separate fundraiser for House Speaker Paul Ryan in June. But the influence of a boss’s political leanings should not be under-

InTel Corp. CeO Brian Krzanich displays the Intel smart headset and earbud designs, providing full stereo audio, heart-rate monitor and pulse check, during his keynote address at the 2014 International CeS at The Venetian hotel, January 6, 2014, in las Vegas, nevada. In June Krzanich canceled an event at his home for Donald Trump, after it was reported to be causing a firestorm among Intel employees and peers in Silicon Valley that felt Trump’s policies were damaging to the industry. robYn beck/Agence FrAnce-Presse/geTTY imAges estimated. “Our evidence indicates that CEOs are a political force, with potentially important implications for firms they manage and for the nature of democracy,” the authors wrote. “The welfare implications depend both on whether CEOs promote their own political agenda or act in the interests of their firms, and on whether the interests of the firm coincide with the interests of its employees.” Some CEOs don’t just lead by example; they actively solicit donations from their own employees for candidates and company-sponsored political action committees, which can create its own thicket of ethical questions. The Federal Election Commission, for

example, investigated the way Robert Murray, chief executive of Murray Energy, had solicited political donations from his employees through emails and internal videos. Some employees told The New Republic that they felt pressured to donate, fearing that not to do so might risk their jobs. The Federal Election Commission, ultimately, found Murray hadn’t broken any laws. Still, the risks—and complex set of election laws—make political fundraising a complicated endeavor for those in the corner office. “The potentially coercive effect of an employer’s solicitation counsels in favor of avoiding the situation altogether,” said Harvey Pitt, a former chairman of the Securi-

ties and Exchange Commission and the chief of Kalorama Partners, a Washington consulting firm. “The logical alternative—having a very strong and clear disclaimer—doesn’t really work, since many employees might not believe the disclaimer, no matter how strongly it is worded.” Tony Fratto, a former deputy assistant to President George W. Bush who now operates a consulting firm, Hamilton Place, took issue with the idea that CEOs should remain outside the political campaign arena. “I don’t doubt that some employees feel pressure to align with the CEO politically, but my experience is that in most cases, both CEOs and employees are overwhelmingly influenced by a candidate’s views or voting record on industry issues,” he said. “I encourage firms to do more to inform their employees at all levels about what political leaders’ records are on their key policies. I actually think that doesn’t happen enough.” Alexander Hertel-Fernandez, a professor at Columbia University, found in his own survey that “a quarter of employees reported that their bosses have tried to engage them in politics,” but reported that “about 7 percent of employees reported clearly coercive kinds of political contact at work—messages that made workers uncomfortable or included threats of plant closures, cuts in hours or layoffs.” This election cycle, it seems that many CEOs, especially on Wall Street, have chosen to be less public about whom they are supporting in the presidential race. Perhaps because of the lingering negative memories of the financial crisis or perhaps because this presidential election has turned so decidedly nasty, many executives have stayed on the sideline. In June, Brian

Krzanich, chief executive of Intel, canceled an event at his home for Donald Trump after it was reported to be causing a firestorm among Intel employees and peers in Silicon Valley that felt Trump’s policies were damaging to the industry. Krzanich later said he canceled the event because it had turned into a fundraiser without his approval. “I do not intend to endorse any presidential candidate. We are interested in engaging both campaigns in open dialogue on issues in technology,” he wrote on Twitter. When it comes to presidential politics, some executives privately say they worry they could see reprisals against their business or industry if they were to actively campaign for one candidate or another. “The risk of being on the record publicly against a politician is high, particularly if that politician may take retaliatory action,” said Brian Richter, an assistant professor at the University of Texas at Austin. That didn’t stop 150 technology executives from writing an open letter in July opposing Trump’s policies. The list of signatories included the leaders of Silicon Valley darlings like Slack and Box but notably was not signed by the current leaders of Google, Apple or Facebook, which typically face the most regulatory scrutiny. Clearly the influence of CEOs and other senior executives’ political preferences on the people working for them deserves more scrutiny. In the meantime, while it is hard to know how individuals will ultimately vote when they pull the lever in November, perhaps a new election polling data point should be the preferences of their bosses.

www.businessmirror.com.ph

The National Artist on Rosales, Reforms and the Duterte ‘Revolution’ By Joel Pablo Salud editor in Chief, Philippines Graphic magazine

T the heart of every nation is memory. And there’s no better way to be reminded of it than through the eyes and words of National Artist for Literature Francisco Sionil José.

Manila at the tail end of the Second World War. So it came to pass when as a young man, Frankie journeyed on foot to his hometown in Rosales, Pangasinan from Manila to flee a city in the throes of hunger. The Americans had returned under the command of Gen. Douglas McArthur and the bombardment commenced, sending the Japanese invaders in a scuffle for their lives. Manila, caught in the crossfire of one of the fiercest battles for dominion and survival, bled for many days. Food was scarce. Scarcer still were the places of refuge. Manila, once known as the Pearl of the Orient, was in shambles, its once exquisite landmarks reduced to rubble. The death toll on both sides had been staggering, to say nothing of the stench of death all around. With nothing but the clothes on their back and meagre provisions, Frankie and the other boys walked the close to 200 kilometers of paved and rough roads for a full seven days, stopping over rows of abandoned houses where they spent the night. The aging rail system had long been abandoned, forcing people to take the old trail as an alternative route. Today, a trip to Rosales stretches for only about two and a half hours via the North Expressway R8. On a good day, a traveler would be treated to acres of fertile green rice paddies, a host of river systems, lush foliage, rows of mango trees and houses built of stone. Frankie reminisced how nipa huts once studded the Pangasinan countryside, where the occasional wooden houses of the rich and famous towered above the other homes. We were to learn later on that the once majestic houses still stood, rousing Frankie to recall how he had depicted them during the writing of his novels: The Rosales Saga. Some of these houses, Frankie affirmed, offered protection to Apolinario Mabini, who, after fleeing from a horde of American troops in a chase for Filipino insurgents, sought sanctuary in Rosales. Frankie was born Francisco Sionil José weeks before Christmas of 1924 to Antonio José, an Aglipayan minister and Sofia Sionil. Our trip brought us to where he was born. It was a humble patch of land where his former home had now disappeared. He told the story of how

this house, which had long been the quiet harbor of the José family, burned down decades ago. Today, only loose grass remains and a couple of trees. Frankie mentioned how Rosales had brought him face to face with the realities of life, how poverty and wealth, family and friendships, war and peace had shaped his own views and prompted him to write his novels. A lot of what he had seen and heard formed the crux of the stories he told. As a child, Frankie combed the Rosales countryside for places to see and visit. Gripped by a profound curiosity rarely seen in boys his age, he walked for miles if only to climb a mountain and spend the cold night there. When occasions allowed, he’d take a dip at the Agno River or watch the comings and goings of buses that ply the highway. Often in these excursions, he went barefoot or used only tattered slippers, hardly minding where his feet would take him. Life was all but brusque and impatient in Rosales during Frankie’s childhood. The municipality was said to have been named in honor of Don Antonio Rosales Liberal, the former Consejero de Filipinas en el Ministro de Ultramar or the country’s foreign minister. It was created via a royal decree in 1852. It began as a humble town of a few thousand families, mostly émigrés from the Ilocos region, Frankie told the Graphic. Rosales grew before the two world wars from these settlements. A thriving railroad system—the ManilaDagupan Railway Co. Ltd.—brought along with these families much of the Ilocano mores and ethos in Pangasinan. History tells us that the same railway system, on Dec. 27, 1897, brought Gen. Emilio Aguinaldo and Spanish governor Gen. Primo de Rivera to Sual. There they boarded the ship S.S. Uranus to Hongkong where Aguinaldo lived a life of exile as a result of the Pact of Biak-na-Bato. “In my novel, Poon,” the National Artist said, “I mentioned the fall of the Malolos Republic and how Gen. Antonio Luna and Bishop Aglipay proceeded to the north and planned their escape. The idea was to wage a guerilla war and, at the same time, establish a revolutionary government in Northern Luzon. They will be based in the Cordilleras where it would be difficult to get to them. They will be sustained by the Cagayan Valley and the Ilocos Region.

‘T

he real question we must ask is: Do we trust ourselves? That’s why it’s important to build a sense of nation. Without it, we’re done for.” “What happened was, the Americans knew of the plan. So they landed a party in San Fabian, Pangasinan, somewhere along the coast, and marched across the central plains. They shut off the gateway into the Cagayan Valley. “There are several ways across the Caraballo to the Cagayan Valley. But they were very narrow and very steep. The Santa Fe trail is the best way to the Cagayan Valley. There was also the Villaverde trail in Tayug, Besang Pass in Ilocos Sur and Tirad Pass further north. So Filipinos had to go north, with the Americans only hours behind them. They chose Tirad Pass.” The first hour or so on the road with Frankie opened a discussion on a number of topics, power being the most enthralling. At 92, it is safe to say that he had seen it all, felt it all. And while he can be quite outspoken on subjects that are way too controversial, mostly those pertaining to politics, what is noticeable was Frankie’s continuing empathy with the human condition. As with the idea of power, Frankie insists that here, the human condition also applies, especially in relation to political power.

“I look at power first,” he said, “Who wields it, how it’s wielded. By this you can explain many things. Only then can you understand it, where it succeeds and where it fails. Also, relationships, as one person from Ateneo described as our penchant for “pakikisama.” I always look at relationships wherever it can be found. In this relationships, loyalties included, reside power. Which is why President Duterte should look for loyalties in the military and the other agencies of government, because without it, he is powerless. He should establish these coalitions.” Frankie is no stranger to controversy, for sure. His recent blog, “The Duterte Revolution” has had its share of critics from a number of netizens. Some have called his attention on what seemed like Frankie’s “approval” of the killings, to which he answered: “If they will judge my stand on the basis of one piece I wrote, disregarding the rest that I have written all these years, then they are mistaken.” And so I asked him point blank on his thoughts on the new President, ever mindful that the National Artist

had written a body of work that would be sufficient for a Nobel. “Yes, I am for Duterte now, because makatao siya,” he said. “He is for the people. He’s not only introducing an efficient government but a caring government. When he said people should not anymore fall in line and waste another hour to get government services, that’s what I mean by caring. Things like this matter to people. The important thing is that Duterte is the first president who is non-oligarchic in background. Of course, there are rich people who supported him. But the oligarchy, as such, supported the other candidates. “However, the President is moving too fast. The important thing is that the machinery for revolution has been set up. The changes must and should continue. If he is smart, then he should see this through. The idea is to institutionalize all these reforms. We have to wait and see.” For Frankie, Duterte embodies the sort of change that, if institutionalized, might give this country the chance at long-term reforms. The challenge, of course, is close to being insurmountable had the President taken a softer route. Duterte’s dealings with the Left had proven that it was possible to take a leap of faith even in the day and age of technology. “Immediately the President took the high moral ground by offering the Left peace. He puts them on the defensive immediately. We are here given a glimpse of how Duterte thinks.

All we have to do is look back at Davao itself. Remember, 20 years ago, Davao was called Nicaragdao (a pun on the violence and disorder that once struck Nicaragua). What did he do? Cleaned it up. There are things he does that shock people. It’s psychological warfare. Except that I don’t like what he’s doing to Leila de Lima.” On the issue of Federalism, the National Artist aired his doubts: “Federalism, to me, is a big question mark,” he said. “I am not convinced for the simple reason that we are not politically ready. They will only be giving the local warlords more power. It really depends on the style and systems that will be adopted. However, I am for emasculating Congress. I am for strengthening the judicial system. For example, if we are 48 provinces, then let’s have only 48 lawmakers. Streamline the whole system. Sessions should only be four months out of the year. They’re not doing anything anyway. The President or the Prime Minister can call for a session anytime or if there is an emergency. We abolish the party-lists. I hope we adopt the system in Britain where a candidate, who may not be as rich, can still run for office.” As for the previous administration, here’s what Frankie told the Graphic: “In the first two years I liked him, then afterwards... You know I once sat with Lacierda. I introduced myself. He never once talked with me (laughs). If he was the spokesman for the President, he should’ve at least talked with me. And here comes Zubiri, whom I didn’t know from Adam, and he held and kissed my hands. nagmano sa akin. I mean, as a writer, he knows I can be of good use to him. And so I thought, Lacierda is lost somewhere.” National unity and diversity, subjects that intrigued this novelist for some time, had kept him occupied. As a student of language and its varying demands on a society nearly crushed by overwhelming differences, Frankie saw to it to build bridges than obstructions: “The real question we must ask is: do we trust ourselves? That’s why it’s important to build a sense of nation. Without it, we’re done for. See, we don’t have emblems to inspire unity and identity, like the kings of old. To make diversity, especially in our languages, not as obstructions but bridges. Hindi is the national language of India, but it is not forced upon the people. They cannot force it because the other languages are just as strong. And most of these languages carry a classical tradition. This is also the reason why in the translation of my novels into Filipino, I asked Lualhati Bautista to translate ‘Mass’ in the Tagalog of the marketplace, so I will be understood everywhere in the country. I grew up in Manila, here in 1938 when I was 13. “History should unite us,” he stressed. “But the best reason to bond for all of us is love for country. Nationalism. Problem with that is that everyone can call himself a nationalist. As it was once said, the last refuge of the scoundrel is nationalism. Maybe the better word is patriotism. “I also believe that the real national language will develop in Mindanao. I believe that. Because right now, Filipino is actually Tagalog. I would like to see the day when Balay is used simultaneously with the other languages. Some are stuck in a time freeze as regards indigenous culture. You cannot do that. They should bring them up to the 21st century, teach them to use computers. Or else they will be stuck. We are all tribes, if you think about it. But we should transcend this and be Filipinos. To have a sense of nation.”

nick.

here has been no dearth of measures that were or are being implemented or planned to solve the trafficcongestion problem in Metro Manila. These include the number-coding scheme, the ban on trucks during certain hours of the day; the drive against colorum public-utility vehicles; and the proposed ban on provincial buses in the metropolis.

Frankie SPeakinG A

Manny B. Villar

China, Russia launch South China Sea naval war games

the national artist on rosales, reforms and the duterte ‘revolution’ F4 Tuesday, September 13, 2016

the entrepreneur

The government also established three elevated rail systems and is planning to build, through partnerships with private investors, other rail systems in the northern and southern part of Metro Manila. Continued on A10

Apple CeO Tim Cook talks about the new Apple Watch during an Apple event on March 9, 2015, in San Francisco. Jim Wilson/The neW York Times

Creative approach to PHL traffic crisis

The cost of the failed National Broadband Network project that Beijing was supposed to finance

Alcohol sector drinks in impact of ‘sin’ tax law

BusinessSense

P25.00 nationwide | 6 sections 38 pages | 7 days a week

$329M

BMReports

in politics, workers follow boss’s lead

ATE last month, Tim Cook, Apple’s chief executive, hosted a private fundraiser for Hillary Clinton in Los Altos, California, along with his colleague Lisa Jackson, vice president of Apple’s environmental, policy and social initiatives. The private, off-the-record event required a donation of $2,700 to $50,000.

“The scene was much like a slaughterhouse where sacrificed animals are dumped on one another. People were screaming for help, but there was no one to listen. Police officers seemed confused and looked like they were not trained to handle this kind of situation.”—Dawood Raza, a 51-year-old businessman from Peshawar, Pakistan, who recounted his experience during a deadly stampede at last year’s annual hajj in Saudi Arabia. AP

This September 11 photo shows a worker arranging bottles of alcohol in a store in Buendia, Pasay City. According to reports, alcoholic-beverage consumption was affected by the hike in taxes during the first year of the enactment of a new “sin” tax law in 2013. Two years later, total excise-tax collections from fermented liquors reached P28.26 billion, higher by 14 percent from the P24.74 billion collected in 2014. ALYSA SALEN By Rea Cu

@ReaCuBM

Part Two

HE pronouncements of Finance Secretary Carlos G. Dominguez III on seeking other revenue sources to further fund the spending of the current government on infrastructure

PESO exchange rates n US 46.8370

development and social services are said to fall under the revision of a number of tax regimes, one of which is the increase in excise tax imposed on “sin” products, like alcohol and tobacco. The plan for tapping more revenue streams by the government to fund its projects for the betterment of the Philippine

economy is in line with President Duterte’s 10-point socioeconomic agenda. The agenda includes lowering personal- and cor porate -t a x rates. T he decrease, in turn, is noted to be offset by implementing more tax revenue-collection schemes to sustain government revenues. Continued on A2

LIANG: “It will also improve coordination between the two navies on joint defense operations at sea.”

and advance the Sino-Russian comprehensive strategic partnership of coordination, and deepen friendly and practical cooperation between the two militaries,” Chinese navy spokesman Liang Yang was quoted as saying. “It will also improve coordination between the two navies on joint defense operations at sea,” Liang said. Continued on A12

n japan 0.4570 n UK 62.2792 n HK 6.0384 n CHINA 7.0273 n singapore 34.6581 n australia 35.7835 n EU 52.7572 n SAUDI arabia 12.4905

Source: BSP (9 September 2016 )

A2 Tuesday, September 13, 2016

BMReports BusinessMirror

www.businessmirror.com.ph

Alcohol sector drinks in impact of ‘sin’ tax law Continued from A1

“I think this is the time to further look into the ‘sin tax’ cited by the finance secretary [Dominguez],” Albert E. Domingo, World Health Organization (WHO) regional office consultant, said in a forum on alcoholism.

More studies

DOMINGO’S view is supported by nongovernmental organization Action for Economic Reform (AER). AER is calling for a study and implementation of reform on the country’s sin-tax scheme. In a recent event, the AER explained the excise tax imposed on alcohol products is not being fully maximized by the government as opposed to excise taxes on tobacco products. A statement by the AER noted that the excise tax on alcohol and tobacco products are potential revenues sources because of its high sales volume. With few producers in the industry also makes collection simple, the AER said. Tax-policy reforms through the

ODAs. . .

Continued from A1

may strike a multiyear bilateral engagement with the Chinese government soon. Tungpalan explained that due to the NBN-ZTE fiasco 10 years ago and the aborted NorthRail project, the country’s ODA cooperation with China has been “stalled.” “China wants to revive the partnership that was stalled in the previous administration when they aborted the NorthRail and the NBN. Now, they said they’re offering a new approach, including more competi-

imposition of higher excise taxes on tobacco and alcohol can complement tax administration reforms on increasing revenues while moderating tax rates, the group said. “We need to have more studies, especially [since] we are starting at a very low tax for alcohol,” AER Senior Economist Jo Ann L. Diosana said in a forum late August. “We really need to have more data on it [tax on alcohol] because [the law] has been there for quite some time but [revenue from excise tax on alcohol] hasn’t been increasing that high.” Diosana said the first significant increase was in 2013.

Tiered

IN 2011, under Republic Act (RA) 9334, or the sin-tax law, it was noted that taxes on alcohol and tobacco products have remained low, which failed to generate significant revenue for the government. This caused the share of so-called sin products to decline in terms of share in the economy’s GDP.

tive selection of contractors. But we are still in the early stages of discussion,” Tungpalan said. Tungpalan added that since the cooperation agreement will be done bilaterally—between the Philippine and Chinese governments only—the ODA loans may be extended through the China Eximbank. It can be noted that the China Eximbank is the same institution that was supposed to finance the NorthRail project. However, Tungpalan said the Chinese government has other financial instruments that can be used to extend ODA loans and grants to the country.

20-percent tax of its NRP in 2015 and 15 percent in 2013. For fermented liquor, products that are priced at P50.60 and below are given a tax of P23.50 for 2017, P21 currently, P19 in 2015, P17 in 2014 and P15 for the year 2013, with an increase of 4 percent every year starting 2018. Products priced above P50.60 are imposed a tax rate of P23.50 in 2017, P23 in 2016, P22 for 2015, P21 for 2014 and P20 for 2013.

WITH the introduction of RA 10351, or

the new sin-tax law, in 2013, revenue levels from excise taxes imposed on sin products increased. The government reported total excise revenue of P103.4 billion in 2013, from the P55.7 billion in 2012. The Bureau of Internal Revenue (BIR) said it was able to collect P91.8 billion from excise taxes in the January-to-November 2013 period. BIR documents said the amount exceeded the bureau’s target of P85.8 billion for the whole year on both alcohol and tobacco products. Under the new sin-tax law, a onetiered taxing scheme is implemented, rather than a multitiered system, for easier administration of the government collecting agencies. The scheme incorporates increases in tax rates annually, and then a 4-percent increase yearly when the year 2018 starts. Distilled spirits are either under the ad valorem tax classification and imposed a P20 tax for 2015 and P20 for 2013, with a 4-percent increase annually starting this year. Products classified under specific tax are imposed a

The Neda official, however, said these loans will not go through the China-led Asian Infrastructure Investment Bank (AIIB), since the cooperation with the Chinese government will be undertaken bilaterally. While the AIIB is a China-led development bank, it is deemed a multilateral financial institution similar to the Asian Development Bank and the World Bank. “[We are] discussing what would be the modality, what would be the approach to a bilateral program. But most likely, as we are now having with Japan and Korea and other partners, we want it done on a multiyear basis. [We need to]

clearly align it with our new priorities and our new priorities have yet to come out with the new plan [Philippine Development Plan],” Tungpalan said. The Chinese government is considered one of the Philippines’s affordable sources of sovereign loans and grants. Neda documents stated that concessional loans from China have maturity periods of 20 years and a grace period of five years. Concessional loans from the Chinese government are tied and have an interest rate of 2 percent per annum, while preferential buyer’s credit loan, which are also tied,

have an interest rate of 3 percent per annum. Tied loans refer to financial support for projects whose consultants, contractors and supplies, among others, are sourced from companies chosen by a lending country. In 2015 the Chinese government has extended grants to the Philippines in the order of $1.56 million, or only 0.1 percent of the ODA loans and grants received by the country as of last year. Prior to the cancellation of ODA loans from China, the Philippines was going to receive at least $900 million from the Chinese government for the NorthRail

Under the tax scheme of RA 9334, tax and pricing of tobacco and alcohol products are divided into tiers. Local distilled spirits, regardless of price, are given a tax rate of P14.68 per proof liter. Imported spirits with an NRP of P250 and below are given a tax rate of 158.72 per proof liter. Those with an NRP of P250 but not over P575 are taxed at a rate of P317.45. Products with an NRP of over P575 each are given a tax rate of 634.89 per proof liter. Alcohol products classified as fermented liquor are taxed differently. Products that have an NRP of P14.50 and below are taxed at P10.42 per liter. Fermented liquor with an NRP of P14.50 but not over P22 is given a tax rate of P15.49 per liter. Products priced at P22 and over are taxed at P20.57 per liter. The low taxes imposed on these products made it affordable to Filipino consumers. However, the low taxes increased consumption rates but saw a decrease in tax revenues for the government.

New law

Effects

THE significant tax increase in 2013 was noted to effectively discourage smoking and excessive drinking and simultaneously generated ample revenues for public services. On its first year of implementation, the new sin-tax law generated additional revenues of P33.96 billion, P10.56 billion of which came from excise tax on alcohol products. Hence, Diosana said the government can continue relying on these taxes. She also debunked the view that raising more taxes on alcohol products

would be adversarial to the market. “The companies would still depend on demand. They wouldn’t produce without demand,” she added. “If the market has shrunk, then they [companies] will adjust accordingly because that is added cost to them.” Diosana even downplayed the impact on government revenue in 2013 with the introduction of a new sin-tax law. “The market has adjusted with the increase already and income levels are also increasing, which strengthens the purchasing power of the people,” she explained. “This means that the drop in consumption for 2013 is not enough. It has to be sustained.” Diosana said the unitary taxation system is better as it simplifies the tax administration by imposing a uniform rate and discourages downshifting by reducing the price gap among brands. With the removal of the price classification freeze, all brands will pay taxes based on their current prices, further increasing cigarette and alcohol prices.

To be concluded

Project Phase I Section I and II. The Philippines canceled the $500 million worth of loan for the NorthRail Project Phase I Section II with no commitment fees. However, the country had to pay $180.79 million in commitment fees for the cancellation of the $219.21-million loan for NorthRail Project Phase I Section I. The original loan for that project was $400 million. Apart from the NorthRail, the Chinese government was also supposed to f i n a nce t he $329 -m i l l ion NBN project and $460-million Cyber Education Project through concessional loans.

BMReports BusinessMirror

news@businessmirror.com.ph

Oil-and-gas exploration in Benham ‘premature’

By Jonathan L. Mayuga @jonlmayuga

n oil-and-gas exploration in Benham Rise, a 13 million hectare under plateau and the country’s newest territory 250 kilometers off Aurora province, would be premature, with experts noting that conservation measures should precede any economic activity in the area.

Aside from commercial fishing, the government, through the Department of Energy (DOE), is eyeing Benham Rise as a possible source of oil and gas. At a forum, dubbed Kapihan sa Isla: Benham Rise, held on Saturday, resource persons and guests speakers agreed that more scientific studies geared toward the protection and conservation of the underwater plateau is needed to come up with a sustainable management plan for Benham Rise. They also agreed to push for the development and implementation of a general management plan for Benham Rise, which would take years, considering the vastness of the territory and its natural wealth. Members of the team that recently conducted an exploration in the area believe that they have barely scratched the surface of what “treasures” Benham Rise holds.

13M ha. The size of the Benham Rise

So far a multidisciplinary team, which conducted its second exploration in May 2016 using advance underwater technologies, has covered a small portion of the Benham Rise, its shallowest portion. The first exploration was conducted in May 2014, two years after the country won its claim to the territory through the United Nations Convention on the Law of the Seas. Based on initial findings, the Benham Bank has an excellent coral cover, ranging from 75 percent to 100 percent. Oil-and-gas ex ploration in Benham Rise per se would be destructive to the marine ecosystem in the area, a breeding

ground and spawning ground of commercially viable fish species, including tuna. The Bureau of Fisheries and Aquat ic Resources (BFA R) is eyeing the development of the territory, particularly for handline tuna catchers, while oceanconservation advocates say it is best to conserve the marine ecosystem by declaring portions of it as a marine reserve or sanctuary. Properly protected, experts believe that the abundance of the marine life and ecosystem in Benham Rise can help replenish the country’s fishing grounds with pelagic fish and provide coral larvae recruits that would allow faster natural recovery of damaged coral reefs in other areas. In an interview at the sidelines of the forum, Alma Dickson, former chief of the National Marine Fisheries Development Center of BFAR, who represented Director Eduardo Gongona, said Benham Rise has been in the agency’s radar as early as 2006. “We started surveys in Benham Rise in 2012, even before it became a territory of the Philippines. As early as 2006, we have expeditions in the area. It is a fishing ground for small-scale fishermen. There are tuna in the area and they use hand-line fishing,” she said. She said more scientific studies are needed to come up with a sustainable management plant for Benham Rise, given that the territory is bigger than Luzon, Leyte and Samar provinces combined. Allowing an oil-and-gas exploration, like commercial fishing in

the area, would be premature, considering that very little is known about the ter r itor y’s natura l wealth. “That is the reason why we have to prepare a general management plan,” she added. Jay Batongbacal of the University of the Philippines College of Law-Institute for Maritime Affairs and Law of the Seas said protecting Benham Rise would require the development of a general management plan, which would take years, given the need to do more scientific research and study in the area. Exploration in the area is possible only during the summer, from March to May, as cruising to the territory is highly perilous because of the distance and hazards, such as strong ocean currents, typhoons or strong winds. A lexandra Cousteau, ocean explorer, filmmaker and senior advisor of ocean conser vation advoc ac y g roup Ocea na, u nderscored the need to protect Benham R ise against destructive human activities, including destructive fishing methods. She said the country’s oceans are in trouble, as they have not been spared from destruction that damaged most of the coral reefs around the world over the past decades. Oceana Philippines Vice President Gloria Estenzo-Ramos, an environmental law yer, said it would be prudent to protect and conserve Benham Rise given the coral reefs’ status and its potential to replenish the country’s fish stocks.

Tuesday, September 13, 2016

BUSINESSMEN BACK DUTERTE ADMIN’S WAR ON DRUGS By Jasper Emmanuel Y. Arcalas @jearcalas

ANNING, China—Business leaders are suppor t ive of P resident Duterte’s campaign against illegal drugs and have lauded his political will, according to the chairman emeritus of the Philippine Chamber of Commerce and Industry (PCCI). PCCI Cha ir man Emer itus Francis Chua sa id heads of various chambers of commerce approve of Mr. Duterte’s leadership, particularly his will to curb the country’s drug problem. “ You w il l be sur pr ised that a lot of [ bu s i nes s le ade r s] are say ing this is the k ind of the President that the A sean needs,” Chua told repor ters on the sidelines of the opening of the 13th China-A sean Ex po (Caex po) and the 13th C h i n a - A s e a n B u s i ne s s a nd Invest ment Su mm it (C abis) held here on Sunday. “In some countries in Asia, their leaders are not strong enough. We really pray hard for the success of President Duterte. If he succeeds, then that’s a story that everybody could follow and emulate,” he added. Chua, who is also the president of the newly formed Philippine-Silk Road International Chamber, said business leaders are not worried about the a l leged human-r ights v iolations committed by some officials in their bid to curb the drug menace. “ T here a re people who a re proud of t he President a nd some a re a g a i n st h i m , but I ’m su r pr ised t hat a l l t hose A sean and even Chinese leaders were say ing ‘Guys you a re so luc k y you have t hat k ind of president,’” he sa id. According to Caexpo, of the

2,669 ex hibiting enter pr ises par ticipating this year, 954 hail from the Asean region and w il l showcase their products in 1,460 booths. T here are at least 1,020 inter nationa l exhibitors, including 65 enterpr ises from 18 countr ies outside the China-A sean reg ion, inc lud ing Sr i L a n k a, Ind ia, Pakistan, K azakhstan and the United A rab Emirates.

10 The number of Filipino groups participating in the Caexpo

Only seven Asean membercountries have charter exhibition halls for their commodities. These include Cambodia, Indonesia, Lao PDR, Malaysia, Thailand and Vietnam. The Philippines will share one exhibition hall with Brune i Da r u ss a l a m , Si ng apore and Vietnam. Chua said there are at least 10 Filipino groups from different commerce associations participating in the four-day Caexpo. The 13th Caexpo and Cabis will run from September 11 to 14 with sideline forums and dialogues happening to complement the event. The 13thyear celebration of Caexpo and Cabis coincides with the 25th year anniversar y of the establishment of the China-Asean dialogue relations.

‘U.S. Special Forces must leave Mindanao’ By David Cagahastian @ davecaga

Filipino Muslims gather at the Quirino Grandstand in Manila to celebrate Eid al-Adha, or the Sacrifice Feast, which is one of two Muslim holidays celebrated in the world over every year. ALYSA SALEN

Fines won’t boost Internet speed–expert By Lorenz S. Marasigan @lorenzmarasigan

HILE it is laudable that the National Telecommunications Commission (NTC) wants to increase the penalty for “erring” telcos from a mere P200 to P1 million, it seemed to have contradicted itself when it placed the blame for the sorry state of Internet development on bureaucratic red tape. Mary Grace Mirandilla-Santos, an independent researcher on information and communications technology (ICT) and telecommunications policies, said imposing higher fees won’t solve the slow Internet problem if the root cause of the issue is the red tape in the local government unit (LGU) level. “If the NTC is saying that telcos find it very difficult to roll out infrastructure due to the bureaucratic impositions by the LGUs

and homeowners, then imposing a higher penalty won’t exactly solve the problem,” she said.

₧1M

The daily fine for “erring” telcos being proposed by the NTC Dur ing the appropr iations hearing of the proposed P3.503billion budget of the newly created Department of Information and Communications Technology (DICT) last week, NTC Commissioner Gamaliel A. Cordoba said his agency is proposing to increase the penalty for erring telcos to P1 million. According to Public Service Act, the penalty for such complaint on Internet services is

around P200. The law was promulgated in the 1930s. The National Economic and Development Authority (Neda) estimates that P200, when the law was promulgated, is equivalent to about P1.4 million in present time. At the same time, he cited stringent requirements imposed by LGUs to telcos as one of the gaps that need to be addressed to increases internet quality. “If the government recognizes the problem, it should recommend a solution that can specifically address it,” she said. Data from Akamai Technologies, a Massachusetts-based content delivery network player that measures the quality of the Internet around the globe, showed that the Filipinos enjoyed an average speed of 3.5 millions of bits per second in the first quarter of 2016. This is a 24-percent improvement against its average Internet speed of 2.8 Mbps the year prior.

But despite this development, the Philippines still trailed behind its neighbors in the Asia Pacific. It is tied with India at the 14th place in the region, while ranking 113th globally. Developed countries, such as South Korea, Hong Kong and Japan, claimed the top spot in the Asia-Pacific region. Singapore, on the other hand, claimed the first place in the speed race in the Asean. Telecommunications companies in the Philippines—Smart Communications Inc. and Globe Telecom Inc.—have promised better Internet services toward the end of the year, thanks to their recent acquisition of the telco assets of San Miguel Corp. The transaction freed up the coveted 700 megahertz (MHz) frequency band, which, according to the players, is the key to improve the current state of the Internet in the Philippines.

resident Duterte said on Monday the US Special Forces in Mindanao must leave because they will only worsen the security situation there. “ The US Special Forces, they have to go. They have to leave Mindanao. There are many of them there,” Mr. Duterte said in a speech during a mass oathtaking ceremony in Malacañang on September 12. He said he did not raise the issue of kicking out the US military forces in Mindanao during the Leaders’ Summit of the Association of Southeast A sian Nations (Asean) in Lao PDR last week where US President Barack Obama was one of the participants, because he did not want to cause any more rifts with the US. “I just could not say it at the Asean Summit because I don’t want a rift with America. The situation in Mindanao will be more volatile. If they are seen there, they will really be killed,” he said. However, during the Asean Summit last week, Mr. Duterte and his Cabinet maintained their stand against the “interference” of the US in the government’s war against drugs, and said the US does not have the “moral ascendancy” to ask any country to

observe human rights. During one of the closed-door meetings of heads of state at the said Asean Summit, President Duterte showed photographs of the massacre of the Moro people by US soldiers during the US occupation of the Philippines. Presidential Communications Secretary Martin M. Andanar confirmed that Mr. Duterte, indeed, showed the pictures of the massacre of the Moro people in 1906 during the American occupation of the Philippines when he spoke in a closed-door meeting before his fellow heads of state, including Obama, at the Asean Summit. Andanar said the photos were always carried around by Special Assistant to the President Christopher “Bong” Go. Chief Presidential Legal Counsel Salvador S. Panelo said he approached Obama and United Nations Secretary General Ban Ki-moon during the Asean Summit last week to defend the Philippines’s war against drugs. “I told him what the President had been saying that he did not insult any person, especially the President of the US. But he said that he would pursue an independent foreign policy and that he would find ways to stop all kinds of illegality, criminality, the drug menace and terrorism,” Panelo said.

A rare collection of BusinessMirror

exclusives

When I Was 25, Generations, Executive Views, Model Executive, Envoys & Expats, The Broader Look, BM Reports Extra, etc. The BM Extra Magazine is a must-have publication that youâ€™d surely want to see in your office, library, coffee shop, restaurant, living room, anteroom, etc. Order your copies now.

BusinessMirror www.businessmirror.com.ph

news@businessmirror.com.ph

AseanTuesday BusinessMirror

Editor: Max V. de Leon • Tuesday, September 13, 2016 A5

Thailand confident exports will not contract this year $160B

China-Asean relations fruitful–vice premier

hina and the Asean have developed broad, fruitful and close dialogue relations, Vice Premier Zhang Gaoli said. The dialogue relations, established 25 years ago, have contributed significantly to regional and global peace, stability and prosperity, said Zhang, when addressing the opening ceremony of the 13th ChinaAsean Expo in Nanning, China. “Gratifying progress” has been achieved in China-Asean cooperation in the joint construction of the 21st Century Maritime Silk Road since China proposed the Belt and Road Initiative three years ago, he said. The construction of the 21st Century Maritime Silk Road is a new opportunity, a new driver and a new highlight for mutually beneficial cooperation between China and the Asean, according to Zhang. China is Asean’s largest trading partner and the bloc is China’s thirdlargest trading partner. Two-way investment amounts to more than $160 billion. The two sides have worked on a number of projects, including railways, highways and power plants. People-to-people exchanges are also robust. Last year more than 23 million trips were made between China and the Asean members. Cambodian Prime Minister Samdech Techo Hun Sen said China and Asean have huge potential for cooperation, given the Asean Economic Community’s robust demand.

The value of the China-Asean twoway investment

The Asean Community, a market with more than 600 million people, has strong demand for power, information technology, agriculture and scientific research, Hun Sen said at the opening ceremony of the 13th China-Asean Expo on Sunday. To realize sustainable and inclusive growth, Asean needs the participation of all dialogue partners, especially China, he said. Cambodia values cooperation with countries within and outside the region. It will continue to pursue a diversified economy and open its market wider for further integration with Asean, Hun Sen said. “We care about connectivity in fields, including infrastructure, institutions and people-to-people exchange,” the Cambodian prime minister said. Asean will make it a priority to push construction of cross-border infrastructure, which covers investment in telecommunications, transportation net works and power, he said. AP

Saigon can quench Asahi’s thirst

ho’s in pole position to buy a stake in Vietnam’s biggest brewer? AB InBev and SABMiller, Heineken, Asahi, Kirin, ThaiBev and Singha Asia have all registered to bid for stakes in state-owned Sabeco, maker of Saigon Beer and 333. With a price tag of at least $1.8 billion and a government facing a ballooning budget deficit, interested parties don’t need to beat down the door. “The government wants to sell its stake as soon as possible,” Sabeco CEO Le Hong Xanh told Bloomberg News. “All we care about is who will pay the most.” Vietnam has real attractions for brewers, whose revenue tends to be linked to the size and wealth of a country’s key beer-drinking demographic, its working-age population. The Southeast Asian nation was one of the world’s 10 fastest-growing economies in 2015, and its demographic statistics are even more attractive. By 2030, it’s likely to add about 5 million people between the ages of 15 and 64, giving it a bigger working-age population than Japan.

Japan is the player to watch in this contest. Most brewers based in rich countries with stagnant local demographics have worked hard in recent decades to give themselves global reach, but Japan’s local heroes have fallen behind. Asahi makes 86 percent of its revenue at home, followed by Sapporo at 82 percent and Kirin at 65 percent. It’s Asahi that most needs a deal of this sort. Kirin has already struck alliances with Tsingtao and the Philippines’s San Miguel in Asia, and it owns Brazil’s second-biggest brewer, the former Schincariol. Asahi’s biggest deal to date, an acquisition of AB InBev’s Peroni and Grolsch brands in Europe, makes much less sense. Vietnam’s government doesn’t look to be asking an excessive amount for its 90-percent stake, either. Sabeco has a 40-percent share of the local market, but the $1.8-billion value the state has put on the business is only 11 times forecast 2016 net income of 3.76 trillion dong ($169 million). That’s a steal relative to the median 40 times net income multiple in 17 brewery deals worldwide over the past five years. Bloomberg Views

A man meditates on a bench in front of a lake in Lumphini Park in Bangkok, Thailand. The park is in the heart of the main business district in Thailand’s capital and is frequented by joggers and other city dwellers looking for urban green space. AP

top Thai official said full-year exports may eke out marginal growth of 0.3 percent, boosted by recovering shipments to traditional markets. According to Commerce Minister Apiradi Tantraporn, a recent joint meeting of Thai trade ministers and commercial counselors found agreement that this year’s exports are unlikely to slip into contraction as feared. Shipments to key markets, such as China, the United States, Australia and the Middle East, are expected to fare better in the second half. Trade officials have set export growth targets of 1 percent for China, 1 percent for the US, 5 percent for Australia and 2.4 percent for the Middle East. Export value in 2015

totaled $214 billion, a third straight yearly decline. Shipments fell by 0.3 percent in 2013 and 0.4 percent in 2014 against rises of 2.9 percent in 2012, 15.2 percent in 2011 and 26.8 percent in 2010. Imports totaled $203 billion in 2015, down 11 percent, giving Thailand a trade surplus of $11.7 billion. For the first seven months of the year, customs-cleared exports fell by 2.3 percent to $122.18 billion. Apiradi said exports are expected to grow by 3 percent next year as the global economy recovers.

$122.18B The value of Thailand’s exports in the first seven months of 2016

The Commerce Ministry forecasts export growth for key markets in 2017, such as Asean (2.5 percent), East Asia, including China (3 percent), the US (3 percent), Japan (1 percent), European Union (1 percent), Hong Kong (2 percent) and the Russian Commonwealth (12.4 percent). Apiradi said the ministry is committed next year to ramping up shipments of innovative and high-tech products while promoting services, such as Thai restaurants.

Construction, health and beauty services, digital content and animation, as well as film shoots, are other areas of next year’s focus. More strategic partnerships with trading partners will be underlined to boost trade and investment, while online shopping will be promoted, particularly via the ministry’s online marketplace at Thaitrade.com. Developed f ive years ago, Thaitrade.com was the country’s first official business-to-business e-marketplace. The web site features more than 200,000 products. Late last month the Commerce Ministry launched Thaitrade.com Sook (small order OK), a business-toconsumer extension from Thaitrade. com, which is a business-to-business online platform. The ministry also plans to push for promoting innovation-based and creativity-based startups, Apiradi said. MCT

The China-Russia joint naval exercise and other South China Sea developments

he Chinese and Russian navies launched eight days of war games in the South China Sea on Monday, in a sign of growing cooperation between their armed forces against the backdrop of regional territorial disputes. The “Joint Sea-2016” maneuvers include surface ships, submarines, ship-borne helicopters and fixedwing aircraft, along with marines and amphibious armored vehicles who will conduct live-firing exercises, according to a Defense Ministry statement issued on Sunday. Tasks will include defensive and rescue drills, antisubmarine exercises and the simulated seizure of an enemy island by marines from both sides. The ministry didn’t say exactly where the drills would be held in the South China Sea, home to heated territorial disputes between China and its Southeast Asian neighbors. Joint Chinese-Russian drills have grown increasingly common in recent years—this week’s exercises are the fifth between the two navies since 2012—with the countries joined in their mutual suspicion of

the United States and its allies. Russia has been the only major country to speak out on China’s behalf in its demand that the US and other countries stay out of such arguments. That came as an arbitration panel in The Hague, the Netherlands, issued a ruling invalidating China’s claims to virtually the entire South China Sea, a result that Beijing angrily rejected as null and void. While China says the drills do not envision specific enemies or target any third parties, their location in the tense South China Sea has rawn criticism. During a visit to China last month, the commander of the US Pacific Fleet Adm. Scott Swift said: “There are other places those exercises could have been conducted.” He described them as part of a series of actions “that are not increasing the stability within the region.”

Obama raises sea dispute

President Barack Obama raised the South China Sea dispute at last week’s regional summit of the 10-member Association of Southeast Asian Nations (Asean) in Lao PDR.

seriously concerned over recent and ongoing developments” in the South China Sea, without elaborating. It did not mention China by name and made only a passing reference to Beijing’s program of building manmade islands in the area by piling sand atop coral reefs.

Damage to fisheries In this undated file photo released by Xinhua News Agency, a Chinese H-6K bomber patrols the islands and reefs in the South China Sea. China is pitted against smaller neighbors in multiple disputes over islands, coral reefs and lagoons in waters crucial for global commerce and rich in fish and potential gas-and-oil reserves in the South China Sea. AP

“We will continue to work to ensure that disputes are resolved peacefully, including in the South China Sea,” Obama said at the summit. He said the July 12 ruling by the panel in The Hague was binding and “helped to clarify maritime rights in the region.” China shot back with comments aimed at the US. “A couple of extra-regional countries still wanted to use the occasion of the East Asia Summit to talk about the South China Sea, particularly to

press on the regional countries to abide by the arbitration, which is untimely and inappropriate,” Chinese Vice Foreign Minister Liu Zhenmin told reporters. In a victory for Beijing’s diplomatic, economic and military clout, Asean couldn’t even get all of its 10 members to agree that China was responsible for building islands in the disputed and resource-rich sea. A statement issued at the end of the summit said: “We remain

An oceanologist has warned that China’s creation of artificial islands and overfishing by all countries are severely threatening the South China Seas rich fish stocks. John McManus of the University of Miami told the Philippine newspaper the Inquirer Manila and Beijing should set aside their territorial dispute over Scarborough Shoal and declare it a “peace park” to preserve the marine environment. If China were to create yet another man-made island on Scarborough, it would result in the irreplaceable loss of one of the world’s most beautiful and productive coral reefs, said McManus, a professor of marine biology and fisheries and director of the National Center for Coral Reef Research at Miami’s Rosenstiel School.

“Scarborough reef is in a critical stage. If China builds [an island] there, it’s going to be a horrible waste. This is probably the most beautiful reef in the world,” McManus was quoted as saying. China seized the shoal in 2012 after a two-month standoff with the Philippine Navy and the Philippine Coast Guard, and has prevented Filipino fishermen from reaching their traditional fishery inside the shoal’s lagoon, despite The Hague tribunal’s ruling that the shoal should be a shared fishing ground The Philippine Coast Guard has sighted Chinese barges at Scarborough, which could presage the transformation of the Chinese-held reef into another man-made island. One of the Chinese vessels had what appeared to be a crane, according to a Philippine official who did not want to be identified because he was not authorized to discuss classified intelligence. McManus said the South China Sea marine environment has already deteriorated to an alarming degree, with certain fish species threatened with extinction. AP

The W

Business

A6 Tuesday, September 13, 2016 • Editor: Lyn Resurreccion

Italy to hold a referendum

he last referendum by a European Union (EU) country had, to put it mildly, widespread ramifications. The next one could, too. In late November or early December, Italians will vote on constitutional changes proposed by Prime Minister Matteo Renzi to limit the power of the Senate, the upper house of parliament. At stake is how Italy is run as it endures a banking crisis, economic stagnation and pressures linked to migration flows. Ren zi ’s ow n pol it ica l fate is on t he l ine, as wel l, as he has promised to quit if he loses the vote. T hat wou ld be a boost for t he opposit ion Five St a r Movement, wh ic h wa nts a nat iona l referendu m on whet her Ita ly shou ld aba ndon Europe’s common c u r renc y.

What are Italians voting on?

A proposal to reshape the Senate so that it no longer can block legislation indefinitely gets consulted on fewer matters and loses its power to call a vote of no confidence in the government. Today’s 315 directly elected senators would be replaced by 100 regional councilors and mayors who are indirectly elected or appointed.

President Barack Obama bows as a moment of silence is observed during a memorial ceremony at the Pentagon in Washington to commemorate the 15th anniversary of the 9/11 terrorist attacks on Sunday. AP/Manuel Balce Ceneta

Obama to Americans on 9/11: Embrace diversity

ASHINGTON—President Barack Obama on Sunday marked the 15th anniversary of the September 11 attacks by calling on Americans to embrace the nation’s character as a people drawn from every corner of the world, from every religion and from every background. He said extremist groups would never be able to defeat the United States. Obama spoke to hundreds of service members, and relatives and survivors of the attack that occurred at the Pentagon when American Airlines Flight 77 slammed into the Defense Department’s headquarters, killing 184 people. The youngest victim was only 3 years old. In all, about 3,000 people lost their lives that day as a result of the planes that crashed into New York City’s World Trade Center and in a Pennsylvania field. The president said extremist organizations such as the Islamic State (IS) group and al-Qaeda know they can never drive down the US, so they focus on trying to instill fear in hopes of getting Americans to change how they live. “We know that our diversity, our patchwork heritage is not a weakness, it is still and always will

184 The number of people killed when American Airlines Flight 77 slammed into the Defense Department’s headquarters

be one of our greatest strengths,” Obama said. “This is the America that was attacked that September morning. This is the America that we must remain true to.” Obama spoke on warm, mostly sunny morning, noting that the threat that became so evident on

September 11 has evolved greatly over the past 15 years. Terrorists, he said, often attempt strikes on a smaller, but still deadly, scale. He specifically cited attacks in Boston, San Bernardino and Orlando as examples. In the end, he said, the enduring memorial to those who lost their lives that day is ensuring “that we stay true to ourselves, that we stay true to what’s best in us, that we do not let others divide us.” “How we conduct ourselves as individuals and as a nation, we have the opportunity each and every day to live up to the sacrifice of those heroes that we lost,” Obama said. Obama’s comments also came in the heat of a presidential election in which voters will weigh which candidate would best keep America safe. Republican nominee Donald Trump said he would suspend Muslim immigration into the United States, a policy he later amended by saying he would temporarily ban immigration from “areas of the world where there is a proven history of terrorism against the United States, Europe or our allies, until we fully understand how to end these threats.” Obama’s speech on Sunday reinforced themes he has emphasized in recent months when he has described Trump’s proposals on Muslim immigration as “not the America we want.” Obama also marked his final September 11 observance as president with a moment of silence in-

side the White House to coincide with the time the first plane hit the Twin Towers. Atop the White House, the American flag flew at half-staff. Obama invited governors, interested organizations and individuals to follow suit. Obama said he has been humbled by the people whose 9/11 stories he’s come to learn over the past eight years, from the firefighters who responded to the attacks, to family members of those who died, to the Navy Seals who made sure “justice was finally done” in the killing of al-Qaeda leader Osama bin Laden. He said the nation’s security has been strengthened since 9/11 and that other attacks have been prevented. “We resolve to continue doing everything in our power to protect this country that we love,” he said, facing the benches that are a hallmark of the Pentagon Memorial. Behind the president, a US flag stretching some three stories tall hung on the section of the Pentagon that was struck on September 11. The president said 15 years may seem like a long time, but he imagined that for the families, it could seem like yesterday. He said he has been inspired by their efforts to start scholarship programs and undertake volunteer work in their communities. “In your grief and grace, you have reminded us that, together, there’s nothing we Americans cannot overcome,” Obama said. AP

China says it executes ‘very small number’ of criminals

EIJING—China, which is believed to execute more convicted people than the rest of the world combined, said on Monday that it uses the death penalty only on “a very small number of extremely ser ious criminal offenders.” In a report published on Monday, China’s government says authorities “strictly control the death penalty and employ it with prudence.” Although China no

longer executes people for most nonviolent crimes, its law allows for the death penalty for dozens of offenses, including treason, separatism, spying, arson, murder, rape, robbery and human trafficking. A legal revision last year removed a number of offenses from the list of those punishable by death, included smuggling arms and ammunition, counterfeiting currency, forcing others into prostitution and obstructing military

personnel in the performance of their duties. The number of executions in China is not known because such data is considered a state secret. Amnesty International estimates that it executes more people than the rest of the world’s countries put together, which totaled 1,634 in 2015. Hu m a n - r i g ht s g roup s s ay death sentences are often issued a f ter u nfa i r t r i a l s a nd that too much weight is g iven

to confessions that are often obtained through tor ture. P re s i d e nt X i J i np i n g h a s m ade a pr ior it y of reduc i ng wrongful convictions and reforming the justice system to restore public confidence in the ruling Communist Party. However, the party refuses to consider a Western-style separation of powers that would allow for a completely independent judiciary. AP

What might that accomplish?

Renzi says the changes would reduce the instability that has given Italy 63 governments since the end of World War II, crippling its ability to meet political and economic challenges. Governments would have a longer life because the Senate would no longer be able to bring them down with a no-confidence vote. He also says the changes will save some €500 million ($561 million), and that the money will go to an antipoverty fund.

What’s the opposition view?

That Renzi ’s refor ms would give prime ministers—him, in par ticu lar—too much power. Ex-Premier Si lv io Berlusconi has warned the changes would “lead us straight toward a nondemocracy.” Also, critics say the

financial savings from the change would be less than €60 million.

What might be the consequences of a ‘Yes’ vote?

In the near term, the government would stay in power. In the longer term, a “Yes” vote would—according to Renzi’s supporters—mean a more streamlined legislative process and a chance to tackle structural reforms from the Byzantine state bureaucracy to the delay-plagued judiciary. Renzi has said that whatever the result, the next elections will be when his term ends in early 2018. But he might be tempted by a Yes victory to try to force early elections, in a bid to capitalize on his success.

What might be the consequences of a ‘No’ vote?

Political and economic turmoil, the likes of which haven’t been seen since Renzi took office in early 2014. Renzi has pledged to resign. There would be calls for electoral reform before any new elections are held, potentially paralyzing Italy’s decision-making. T he Five St a r Move me nt , wh ic h is v i r t u a l ly t ied w it h Renzi’s Democratic Party, would press its call for a referendum on continued Italian membership in the euro. Business lobby Confindustria says the economy could fall back into recession. “Any outcome of the referendum that is seen as destabilizing the status quo could add to the headwinds for the Italian economy and the euro,” said Valentin Marinov, a strategist at Credit Agricole SA in London.

What do polls say?

A poll published by the newspaper La Stampa on September 4 credited the No vote with 51 percent, against 49 percent in favor. Its previous poll, in May, had Yes at 56 percent. An Ipsos survey for newspaper Corriere della Sera in July found that 53 percent of voters consider the referendum a vote on Renzi’s performance, while only 27 percent see the content of the reform as the key issue. Bloomberg News

Caribbean is running out of coconuts

t the worst possible time, the Caribbean is running short of one of its most emblematic products. Rich-world consumers have never been keener on the coconut. Starbucks wants the tropical fruit’s milk for lattes, Rihanna promotes its water as a trendy sports drink and the price of coconut oil has jumped more than 50 percent in the past year. The Caribbean is practically synonymous with the coconut, so its farmers should be cashing in. For a bunch of reasons, they aren’t. Storms, droughts and the Lethal Yellowing disease, spread by plant-hopping insects, have wiped out entire farms; growers have failed to invest in new trees, or fertilizers to improve yields. Caribbean plantations have shrunk by about 17 percent since 1994, according to the United Nations Food and Agriculture Organization. “It’s fair to say that at this pace, the Caribbean is running out of coconuts,” said Compton Paul, coordinator of a regional coconut program at the Trinidad-based Caribbean Agricultural Research and Development Institute.

‘Too early’

In Nagua on the Dominican Republic’s north coast, where Dioni Siri has his own trees and also buys from other farmers, production has dropped by about 60 percent in two decades, according to the local association of growers. Siri, who sells to export markets, says that quantity isn’t the only issue: many of the nuts that do get harvested aren’t up to scratch. In his warehouse, he picks through a pile of the fruit, holding each one close to his ear and shaking it to see if it contains milk. When there’s no sound, the coconut is dumped on a growing pile of discards. “It was picked too early,” Siri says. “It’s not good enough. Our biggest problem is that the farmers aren’t growing enough quality coconuts.” It’s a problem that nobody saw coming. Two decades ago, international demand was waning, amid medical warnings that tropical oils could raise levels of artery-clogging cholesterol. Coconuts sold for next to nothing

in the Caribbean, where they’ve grown for five centuries since being introduced by Europeans traveling from the Indian Ocean. Often, they were just left to rot on their trees. Today, coconut milk is being sold as a healthier alternative to cow’s milk, and it’s a staple of recipes in the paleo-friendly cookbooks adored by the CrossFit crowd. Even the fruit’s husks turn out to be useful, filling car-seat cushions.

Celebrity investors

An d most sought-after of all is the coconut’s water, rich in potassium and other electrolytes. It’s on track to become a $4-billion industry by 2019, according to Technavio, a research company. All Market Inc., the industry pioneer which began selling leading brand Vita Coco in 2004, now cracks about 1.6 million nuts a day, and can claim Rihanna and actor Matthew McConaughey among its celebrity investors. The company estimates that the US market alone is already worth $1.2 billion, according to Spokesman Arthur Gallego. “We’re focused on developing new products around the coconut,” he said. “We want to be to the coconut what Dole is to the pineapple.” With buyers so eager, Vilma Da Silva and her husband gave up growing other cash crops on their 35-acre farm in Guyana’s Pomeroon region five years ago, and starting focusing on coconuts-for-water exports. They buy coconuts from about 60 other small farms, bottle the water and export it, receiving about $1.50 per liter. It’s been lucrative—revenue has doubled since they made the switch—but they’re running into supply constraints. “We want to get into more international markets and export more but there aren’t enough farms to buy from,” Da Silva said. Other countries are stepping in to meet demand. Worldwide, farmers have increased the amount of land planted with coconuts by 14 percent since 1994, according to the UN. Indonesia, the Philippines and India are the top producers. Bloomberg News

World

sMirror

www.businessmirror.com.ph | Tuesday, September 13, 2016

Post-Brexit work permits under consideration, UK official says

UK Home Secretary Amber Rudd

Bloomberg News

ome Secretar y Amber Rudd said work permits are under consideration as a way of controlling migration into the United Kingdom after Brexit, and suggested that Britons might have to accept the need for visas for travel to European Union (EU) countries in return.

100K The number of annual net migration Home Secretary Amber Rudd has committed to, from more than 300,000 people

“Whether we look at a workpermit system or another system is something that my department is looking at closely at the moment,” Rudd, who’s responsible for immigration, told BBC Television’s Andrew Marr Show on Sunday. The idea of work permits “certainly has value,” she said, though it’s “too early” to talk about specifics. Asked about the possibility Britons might need to apply online for visas to travel to the EU after Brexit, Rudd said that suggestion is “a reminder that this is a two-way negotiation.” Such a move would “not be particularly desirable, but we don’t rule it out, because we have to be allowed a free hand to get the best negotiation,” she said. Prime Minister Theresa May’s government is seeking to balance the need to keep as full access as possible to the EU’s single market in a post-Brexit deal with moves to curb immigration in response to June’s vote to leave the bloc. Brexit Secretary David Davis, who’s also given little detail of the government’s plans so far, will face further questioning by a committee of Parliament’s unelected upper chamber, the House of Lords, in London on Monday afternoon.

‘A given’

“What I do think that the British public voted for was to make sure that we reduce immigration from the EU, that’s a given; we have to find a way of doing that,” Rudd said. “We have to work out how we

can do that, while promoting and protecting the economy.” The home secretary said she’s committed to the government’s target of reducing annual net migration from more than 300,000 people to less than 100,000. “We will be guided by making sure that we support the people who come to the UK who really add value to the economy,” she told the BBC. “I can’t tell you how that will be implemented, but I can tell you that’s the guiding principle.” Work permits might require migrants to have a job lined up before traveling to Britain. Ministers have already rejected the idea of an Australian-style poi nt s s y stem , u nder wh ic h those meeting certain criteria would be allowed into the UK.

Infrastructure projects

The need to continue building housing and infrastructure will influence the government’s decision-making, Rudd said, adding that she doesn’t expect the government to cancel projects. Rudd dismissed the idea that Foreign Secretary Boris Johnson’s support for a new pro-Brexit group, Change Britain, is a further indication of divisions within the government. The group is pushing for as complete a break with the EU as possible. Johnson said in a video message endorsing Change Britain that Brexit “means restor ing UK control over our laws, borders, money and trade.” “I find actually that the Cabinet’s working pretty united,” Rudd told the BBC. “Boris is not the driver. Theresa May is the driver, and the rest of us are in the car.” Everyone is “focused in the same direction,” she said. May has said she won’t start the two-year process of leaving the EU before early in 2017, and is seeking the “best possible deal” on trade and services. Comments last week by Davis suggested he’s less committed to ensuring continued access to the single market if that means the UK can’t control the flow of migrants. EU governments have said they’re unwilling to compromise on free movement of labor as the price for full access to their market. Bloomberg News

Democratic presidential candidate Hillary Clinton waves as she walks from her daughter’s apartment building on Sunday in New York. Clinton unexpectedly left Sunday’s 9/11 anniversary ceremony in New York after feeling “overheated,” according to her campaign team. AP/Craig Ruttle

Clinton health a land mine for US vulnerable markets

nvestors nursing wounds after the worst selloff in three months for equity and debt markets got another stress to ponder after concerns over Hillary Clinton’s health flared anew.

The 68-year-old Democratic presidential nominee—whose polling edge over Donald Trump has soothed traders who fear ruptures to US policy and see virtue in political gridlock—is suffering from pneumonia and became overheated and dehydrated during a September 11 commemoration on Sunday, forcing her to leave abruptly, her doctor said. Clinton was prescribed antibiotics and advised to modify her schedule so she can rest. Volatility is already resurfacing in markets that had purred along for two months inured to everything from politics to weakening global growth, with the S&P 500 Index getting jarred on Friday, out of its tightest trading range ever in a selloff that erased about $500 billion of share value.While investors and analysts were reluctant to speculate on Clinton’s health, they

said expectations she will prevail in November have been a factor in the calm and predicted the scrutiny will intensify. “If we found out that there was something catastrophic about her health it obviously would matter, but you have to be very careful about extrapolating shorter-term news,” Jonathan Golub, managing director and chief US market strategist at RBC Capital Markets Llc. in New York, said by phone. “What we do know is we have two candidates around 70 years old, and in reality, it must be brutal running around the world for two years.” Speculation central banks are losing their taste for extra stimulus on Friday tore through the blanket of tranquility that has enveloped global markets. The S&P 500, global equities and emerging-market assets tumbled at least 2 percent in the biggest drop

since Britain voted to secede from the European Union. The yield on the 10-year Treasury note jumped to the highest since June and the dollar almost erased a weekly slide. The extent to which investors have been able to ignore politics is illustrated by the CBOE Volatility Index, the options-derived gauge of price turbulence that in August recorded one of its lowest monthly averages since the bull market began in March 2009. A measure of cross-market volatility encompassing equities, rates, currencies and commodities overseen by Bank of America hit its lowest level of the year last week. To many bears, the calm betokens complacency and that’s what gave rise to Friday’s fireworks, with plunging stock and bond markets the predictable consequence of central bank policies that have allowed investors to ignore slowing economic growth, falling earnings and rising share valuations. US stocks started on Friday trading above 20 times annual earnings, one of the highest multiples since the Internet bubble. “We’re fragile right now,” said Kevin Kelly, chief investment officer at Recon Capital Partners Llc. in Greenwich, Connecticut, which oversees $350 million. “It’s already

priced into the market that Hillary Clinton is going to be president so right now anything that changes that narrative is going to give the market a pause to consider what that would mean.” Future contracts on the S&P 500 slipped 0.2 percent at 7 p.m. in New York on Sunday. Clinton’s sudden departure from the ceremony in New York and a bystander’s video showing her appearing to stumble, as she was helped into a black van by aides and Secret Service agents, is sure to resurface health questions. She blamed recent coughing jags on allergies, but Republicans have sought to raise questions about her fitness for office, particularly following a concussion in 2012 that resulted in a blood clot. “If Clinton’s health becomes a larger factor with regard to voter decision-making, the market may have to recalculate the risk-reward of a regime change in the White House, as Clinton right now is assumed as a continuity from the current administration,” Yousef Abbasi, global market strategist at JonesTrading Institutional Services Llc., said by phone. “Obviously today is another thing that’s going to draw closer attention.” Bloomberg News

Mayor’s discipline probe stirs China’s political chessboard T he investigation of the top leader in China’s northern port of Tianjin comes amid a nationwide reshuffle of provincial leadership posts and could add uncertainty to the Chinese Communist Party’s mid-term power transfer next year. Mayor and acting par t y chief Huang Xingguo is being probed for “serious disciplinary violations,” the top antigraft agency said on Saturday, using a euphemism for corruption. The Central Commission for Discipline Inspection statement provided no details about the nature of the allegations. The move could have broader implications since past leaders of Tianjin—less than an hour’s train

ride from Beijing and one-of-four centrally administered municipalities—have held seats on the party’s elite 25-member Politburo. The post was already among the most closely watched as President Xi Jinping reassigns provincial posts ahead the party congress in 2017. As many as 11 members of the Politburo—including five of the seven on its supreme Standing Committee—are expected to retire at the twice-a-decade congress. A party plenary session in Beijing next month is expected to help lay the groundwork for that event. “Tianjin is an important battle ground and the position of its party chief is directly decided by the central leadership,” said Qiao

Mu, a professor at Beijing Foreign Studies University and a political commentator. Huang’s case pointed to jostling going on before the party congress, Qiao said.

Interim leader

Party officials have usually been detained when disciplinary investigations are announced and Huang couldn’t be reached for comment. H u a n g ’s u n u s u a l l y l o n g 20-month stint as interim Tianjin leader took in the massive warehouse fire and chemical explosions in August last year that killed at least 165 people and caused almost $1 billion in economic losses. He retained his posts, even as scores of local government officials and port executives were punished

for allowing the large stockpile of hazardous chemicals so close to a residential area, in violation of safety rules. Huang’s career overlapped with at least three Standing Committee members, including Xi. Huang, 61, spent more than three decades in the eastern province of Zhejiang, where he worked under Zhang Dejiang, who’s now chairman of the National People’s Congress and the party’s No. 3 leader.

‘Protective umbrella’

Huang was party chief of the port city of Ningbo in 2002, when Xi began a five-year stint in the Zhejiang leadership, first as governor and then party secretary. After being sent to Tianjin in 2003, Huang

worked under Vice Premier Zhang Gaoli, who was municipal party chief, until ascending to the party’s No. 7 position in 2012. “Huang didn’t lose his title in the aftermath of the Tianjin explosion, which showed there was some sort of ‘protective umbrella’ covering him,” said Zhang Lifan, a Beijing-based historian and political commentator. “It’s hard to say at this moment whether his case was too severe to paper over, or whether Xi wanted to use it to show that he’s ready to punish his own people if justice demands it.” Had Huang formally assumed the top job in Tianjin, he would’ve been expected to secure a seat on the Politburo. Instead, he became

the 10th Central Committee member investigated under Xi and the most senior official probed since ex-Hebei provincial party secretary Zhou Benshun was detained in July 2015. Huang last appeared in public on Friday, when he visited a school and met with a delegation from Taiwan’s Kuomintang opposition, according to the official Tianjin Daily. The city now lacks a party secretary, mayor and public security chief, with the last occupant of the latter position detained in July 2014. So far, Xi’s antigraft drive has ensnared three top Tianjin officials, including a deputy mayor placed under investigation last month. Bloomberg News

The World

Tuesday, September 13, 2016 • Editor: Lyn Resurreccion

BusinessMirror

www.businessmirror.com.ph

NoKor seen ready to conduct new nuclear test ‘any time’

orth Korea is ready to conduct additional nuclear tests at “any time,” South Korea said on Monday, raising the prospect it will detonate its sixth device this year. The isolated nation may conduct the test in the yet unused No. 3 tunnel at its Punggye-ri test site, South Korean Defense Ministry Spokesman Moon Sang Gyun told reporters at a briefing in Seoul. North Korea’s first test in 2006 was conducted in No. 1 tunnel, with the next four—including Friday’s fifth blast—No. 2, Moon said. Work at No. 3 tunnel at Punggyeri test site appears complete, suggesting Pyongyang could conduct

a test at any time, Yonhap reported earlier, citing unidentified officials. The news agency said South Korea and US intelligence officials believed there was a “high” probability the reclusive regime’s next detonation could come before the end of the year. North Korea’s latest test drew condemnation from the US, Japan and South Korea. The blast came just days after Kim Jong Un’s regime launched three bal-

listic missiles off its east coast, at least one of which flew into Japan’s air-defense zone. Nuclear- and ballistic-missile tests are banned by the United Nations. Japanese Prime Minister Shinzo Abe said on Monday the level of threat from North Korea has changed, and that Tokyo is considering unilateral sanctions against Pyongyang. Meanwhile, Kyodo News reported that North Korea’s foreign minister arrived in Beijing on Monday. China is seen as the one nation that can stop North Korea’s nuclear ambitions. Friday’s test may have shown North Korea overcoming what had been seen as hurdles to the advancement of its weapons capabilities. The official Korean Central News Agency said the detonation showed the regime

could now produce miniaturized nuclear arms and attach atomic weapons to rockets. North Korea’s state-run media on Sunday released a statement from the foreign ministry saying the country would continue to strengthen its nuclearweapons ability. South Korean Defense Ministry Spokesman Moon also said Seoul’s “Korea Massive Punishment and Retaliation” plan stipulates that it will target Pyongyang’s war leaders for punishment should it threaten the South with its nuclear weapons. South Korea agrees with Japan that the two countries need to sign a pact on bilateral military information protection, but is not yet ready due to “various issues” between the two countries, Moon said. Bloomberg News

Libyan oil fields and pipelines Wikimedia Commons

Libyan troops recapture key oil terminals from militia

ENGHAZI, Libya—Libyan forces loyal to a powerful general on Sunday recaptured two key oil terminals from militias in a surprise attack, according to officials familiar with the operation, a move that adds a new layer to the turmoil gripping the North African nation since 2011. They said forces led by Gen. Khalifa Hifter, who heads the Libyan National Army, took over the Ras Lanuf and al-Sidra terminals on Libya’s Mediterranean coast and were battling militias at a third terminal, al-Zueitina. The majority of Libya’s oil exports went through the three terminals before a militia, known as the Petroleum Facilities Guards, seized them more than two years ago. “Zero hour has arrived, so march for ward like wolves and charge like lions,” Hifter told his forces as they prepared for

Sunday’s dawn attack. In a radio message, he urged the troops not to harm civilians or damage the facilities. The militia, driven out of the facilities, is allied with the recently formed United Nations-backed government headquartered in the capital, Tripoli. That government does not recognize Hifter as commander of the national army. T h e Pe t r o l e u m Fa c i l it i e s Guards’ leader, Ibrahim Jedran, struck a deal in July with the UN envoy to Libya Martin Kobler. The details of that pact were never disclosed, but critics have speculated that it involved billions of dollars, sparking charges that Kobler and the UN were empowering the warlord, viewed by many as having held Libya’s oil hostage. The officials said there were no casualties among the attacking

forces and that the militiamen at the three facilities did not offer much resistance. The attack took place on the eve of a major Muslim holiday, Eid al-Adha, which began on Monday. “Many of them [militiamen] abandoned their weapons to escape or turned themselves in,” said Brig. Gen. Ahmed al-Mosmary, a spokesman for Hifter’s forces. “ We w i l l cont inue to move till we secure the whole area.” Hifter’s forces also moved aga inst t wo areas in t he easter n cit y of Bengha zi t hat rem a i n u nder m i l it i a cont rol . A l - Mo s m a r y s a id t he re w a s a lso litt le conf rontation f rom t he mi litiamen t here, but t hat land mines were slow ing dow n t he advancing troops. Hifter enjoys the support of several Arab nations, including Egypt, the United Arab Emirates

and Jordan, as well as others in the West, but he is also viewed by many as an obstacle to peace. He is allied with the parliament based in eastern Libya, which refuses to recognize the UN-backed government in Tripoli. He is widely viewed as the savior of Libya’s eastern region, which had long suffered from marginalization under the rule of longtime dictator Moammar Qaddafi. Libya has been split between rival parliaments and governments, each backed by a loose array of militias and tribes. Western nations view the UN-brokered government as the best hope for uniting the country. If the terminals are operational again and oil exports resume, the revenues, together with a continuing political impasse, could provide the eastern region with a strong temptation to declare self-rule. AP

Secretary of State John Kerry talks with Russian Foreign Minister Sergei Lavrov during their joint news conference following their meeting to discuss the crisis in Syria, in Geneva, Switzerland, on September 9. Kevin Lamarque/Pool Photo via AP

Syrian rebels leery of cease-fire plan B EIRUT—Rebel factions in Syria expressed deep reservations on Sunday about the terms of a US-Russian deal that seeks to restart the peace process for the war-torn country, with the leader of at least one US-backed rebel faction publicly calling the offer a “trap.” The second in command of the powerful, ultraconservative Ahrar al-Sham group condemned the superpower agreement as an effort to secure President Bashar al-Assad’s government and drive rebel factions apart. “A rebellious people who have fought and suffered for six years cannot accept half-solutions,” Ali al-Omar said in a video statement. But the commander and other rebel leaders stopped short of fully rejecting the agreement’s interim cease-fire, which is slated to come into effect in stages beginning on Monday at sunset. The deal hammered out between US Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov in Geneva on Saturday allows the Syrian government to continue to strike at al-Qaeda-linked militants, until the US and Russia take over the task in one week’s time. The arrangement has divided rebel factions, who have depended on the might of the powerful al-Qaeda-linked Jabhat Fatah al-Sham faction to resist government advances around the contested city of Aleppo. Al-Omar said his group would “refuse the targeting of any faction of our blessed factions” and called on rebels to unify into a single front. Still, a senior official inside Ahrar al-Sham said rebels would, nevertheless, abide by the ceasefire to regroup after a punishing conf lict w ith progover nment forces over Aleppo. “ The Islamist factions and Jabhat Fatah al-Sham will abide by the cease-fire without publicly declaring it,” the official said. “ They will announce they are opposed to the US-Russian agreement, but they will halt their operations on the ground because of the losses they sustained in the battles for Aleppo,” he said, speaking on condition of anonymity. Other factions less closely tied to Jabhat Fatah al-Sham, including those backed by Turkish ground forces in the northern frontier area, will publicly commit to the agreement, according to the Ahrar al-Sham official. “The free Syrian factions under the Euphrates Shield banner will announce their commitment to the agreement, of course,” he said. Under the terms of the agreement, the US and Russia will coordinate to target the Islamic State group in Syria and Jabhat Fatah al-Sham, while rebels and the Syrian government will be expected to stop attacking one another. The deal has received the endorsement of President A ss ad ’s gover n me nt a nd it s key a l l ies—Russi a, Ira n a nd the L ebanese mi litant g roup Hezbol la h. But that scenario is complicated by the fact that

Jabhat Fatah al-Sham remains intertwined with several other factions. It is not clear how these governments intend to disting u ish bet ween Jabhat Fat a h al-Sham and other allied rebel factions or how they will be able to attack the al-Qaeda-linked militants without hitting other rebels, as well.

The number of civilians killed on Saturday presumably by Russian or government air strikes on rebel-held Idlib and Aleppo provinces

Despite fundamental differences in their vision for Syria, rebels and opposition activists hailed a rebel coalition led by Jabhat Fatah al-Sham when it broke a government siege on the rebelheld eastern quarters in Aleppo. The United Nations estimated a quarter million residents were trapped inside with dwindling food and medical supplies. The government has since reestablished its siege. Over 2,000 people have been killed in fighting over the past 40 days in A leppo, including 700 civilians and 160 children, according to a Syrian humanrights group. One of the more immediate goals of the KerryLavrov agreement is to allow the UN to establish aid corridors into Aleppo. On Saturday presumed Russian or government air strikes on rebel-held Idlib and Aleppo provinces killed over 90 civilians, including 13 children, in an attack on a marketplace in Idlib, according to the Britainbased Syrian Observator y for Human Rights. In the aftermath on Sunday, rebels and opposition activists were asking whether the government’s side could be trusted. “What truce, when the regime commits a massacre in Idlib?” said Ahmad Saud, commander of the US-backed Division 13 brigade, on Twitter. “I am starting to feel that the truce is a military trap to kill us more.” Several previous negotiated cease-fires have all eventually collapsed. A partial “cessation of hostilities” that brought sorely needed relief to civilians in March unraveled as the government continued to strike targets in opposition areas, including near a hospital and school near Damascus and a marketplace in Idlib province, killing dozens of civilians. Previous cease-fires were also preceded by soaring violence, as parties on all sides sought to improve their positions in the buildup. AP

The World BusinessMirror

www.businessmirror.com.ph

Hajj’s significance in Islam

UBAI, United Arab Em i r ates — A rou nd 2 mi l lion Muslims from around the world started their hajj pilgrimage on Saturday. They circle Islam’s most sacred site, the cubeshaped Kaaba in the Saudi Arabian city of Mecca, and take part in a series of rituals intended to bring about greater humility and unity among Muslims. Here’s a look at the pilgrimage and what it means for Muslims:

What is the purpose of the hajj?

The hajj is one of the five pi l l a rs of I sl a m , a nd a l l able - bod ied Mu sl i m s a re required to perform it once in their lifetime. The hajj is seen as a chance to wipe clean past sins and start fresh. Many seek to deepen their faith on the hajj, with women ta k ing on the Islamic hair covering, known as “ hijab,” upon returning from the pilgrimage. Despite the physical challenges of the hajj, many people rely on canes or crutches and insist on walking the routes. Those who cannot afford the hajj are sometimes financed by charities or community leaders. Others save their entire lives to make the journey. A few even walk thousands of miles by foot to Saudi Arabia, taking months to arrive.

What is the history of the hajj?

While following a route the Prophet Muhammad once walked, the rites of hajj are believed to ultimately trace the footsteps of the prophets Ibrahim and Ismail, or Abraham and Ishmael as they are named in the Bible. Muslims believe Ibrahim’s faith was tested when God commanded him to sacrifice his only son Ismail. Ibrahim was prepared to submit to the command, but then God stayed his hand, sparing his son. In the Christian and Jewish version of the story, Abraham is ordered to kill his other son, Isaac. Pilgrims also trace the path of Ibrahim’s wife, Hagar, who Muslims believe ran between two hills seven times searching for water for her dying son. Tradition holds that God then brought forth a spring that runs to this day. That spring, known as the sacred well of Zamzam, is believed to possess healing powers and pilgrims often return from the hajj with bottles of its water as gifts.

Why is the Kaaba so important to muslims?

Islamic tradition holds that the Kaaba was built by Ibrahim and Ismail as a house of monotheistic worship thousands of years ago. Over the years, the Kaaba was reconstructed and attracted different kinds of pilgrims, including early Christians who once lived in the Arabian Peninsula. In pre-Islamic times, the Kaaba was used to house pagan idols worshipped by local tribes. Muslims do not worship the Kaaba, but it is Islam’s most sacred site because it represents the metaphorical house of God and the oneness of God in Islam. Observant Muslims around the world face toward the Kaaba during the five daily prayers.

What are the rituals performed during the hajj?

Pilgrims enter into a state of spiritual purity known as

“ihram,” that is aimed at shedding symbols of materialism, giving up worldly pleasures and focusing on the inner self over outward appearance. Women forgo makeup and perfume, and wear loosefitting clothing and a head covering, while men dress in seamless, white ter r ycloth garments. The white garments are forbidden to cont a i n a ny st itc h i ng—a restriction meant to emphasize the equality of all Muslims and prevent wealthier pilgrims from differentiating themselves with more elaborate garments. Musl ims are forbidden from engaging in sexual intercourse, cutting their hair or trimming nails while in ihram. It is also forbidden for pilgrims to argue, fight or lose their tempers during the hajj. Inevitably, though, the massive crowds and physical exhaustion of the journey test pilgrims’ patience and tolerance.

Tuesday, September 13, 2016

Growth expected for at least 2 more years, economists say

usiness economists still think the economy will continue to grow for the next two years, but they again have scaled back their expectations for just how much.

The median estimate from economists surveyed by the National Association for Business Economics calls for GDP growth of 1.5 percent this year, down from the 1.8 percent they forecast in June. The outlook for next year calls for 2.3-percent growth. In addition, 81 percent of

those surveyed said they don’t expect the US economy to peak until at least 2018. The association notes that the September repor t, released on Mond ay, represents the fourth-consecutive quarterly sur vey in which the par ticipating economists have lowered their expectations

for 2016 for GDP growth. The group points to lower expectations for business investment as the main reason, but it also notes that worries about the outcome of November’s presidential election are also weighing on expectations. Just over half of the economists surveyed said election uncertainty had a “modest negative” impact on their GDP expectation for this year. The association added that 56 percent of those sur veyed said they saw the possibility of a Hillar y Clinton win as having a neutral effect on their economic-growth expectations, while 60 percent said they thought the election of Donald Trump

would have a negative effect. On the bright side, the economists don’t expect the reduced GDP expectations to carr y over t o con s u me r s p e nd i n g. T he repor t ’s med ia n forecast for growth in real personal consumption expenditures is 2.7 percent in 2016 and 2.6 percent in 2017. Both predictions represent an increase of 0.1 percentage points from June numbers. And the panel is now predicting flat corporate profits in 2016—better than the median 2-percent decline projected in June. For 2017, they expect a gain of 4.2 percent. The survey of 46 forecasters was taken between August 8 and August 25. AP

The first day of hajj

The hajj traditionally begins in Mecca, with a smaller pilgrimage, called the “umrah,” wh ic h c a n b e per for me d year-round. To perform the umrah, Muslims circle the Kaaba counterclockwise seven times while reciting supplications to God, then walk between the two hills traveled by Hagar. Mecca’s Grand Mosque, the world’s largest, encompasses the Kaaba and the two hills. Before heading to Mecca, m a ny p i l g r i m s v i s it t he cit y of Medina where the Prophet Muhammad is buried and where he built his first mosque.

The second day of hajj

After spending the night in the massive valley of Mina, where 160,000 tents are set up to house them, the pilgrims head to Mount Arafat, some 20 kilometers east of Mecca, for the pinnacle of the pilgrimage. The Prophet Muhammad is believed to have said hajj is A rafat, in reference to the day spent there and its impor t a nce. Pi lg r ims a re packed shoulder to shoulder, with some men and women openly weeping and praying. Tens of thousands scale a hill called Jabal al-Rahma, or mountain of mercy, in Arafat. It is here where Muhammad delivered his final sermon, calling for equality and for Muslim unity. He reminded h is fol lowers of women’s rights and that every Muslim life and property is sacred. Around sunset, pilgrims head to an area called Muzdalifa, 9 kilometers west of Arafat. Many walk, while others use buses. They spend the night there and pick up pebbles along the way that will be used in a symbolic stoning of the devil back in Mina, where Muslims believe the devil tried to talk Ibrahim out of submitting to God’s will.

The final three days of hajj

T he l a st t h ree d ay s of the hajj are marked by three events: a final circling of the Kaaba, casting stones in Mina and removing the ihram. Men often shave their heads at the end in a sign of renewal. The final days of hajj coincide with Eid al-Adha, or the festival of sacrifice, celebrated by Muslims around the world to commemorate Ibrahim’s test of faith. During the threeday Eid, Muslims slaughter livestock and distribute the meat to the poor. AP

Muslim pilgrims pray on a rocky hill, known as Mountain of Mercy, on the Plain of Arafat, during the annual hajj pilgrimage, near the holy city of Mecca, Saudi Arabia, on Sunday. Mount Arafat, marked by a white pillar, is where Islam’s Prophet Muhammad is believed to have delivered his last sermon to tens of thousands of followers some 1,400 years ago, calling on Muslims to unite. AP/Nariman El-Mofty

Muslims gather for climax of hajj pilgrimage

OUNT ARAFAT, Saudi Arabia—Before dawn on Su nd ay, Mu s l i m pilgrims from around the world began ascending a hill just outside Mecca, where the Prophet Muhammad delivered his final sermon some 1,400 years ago. The day spent on Mount Arafat is the pinnacle of the five-day hajj pilgrimage, which all able-bodied Muslims are required to perform at least once. Muslims spend the day there in deep prayer, many openly weeping as they repent and ask God for forgiveness. Prayer on this day at Mount Arafat, about 20 kilometers east of Mecca, is believed to offer the best chance of erasing past sins and starting anew. Many Muslims who are not performing the hajj fast from dawn to dusk

on this day, for similar reasons. Many of the roughly 2 million pilgrims taking part in this year’s hajj will climb a hill called Jabal al-Rahma, or mountain of mercy, in Arafat and spend time there in supplication. It was here where the Prophet Muhammad delivered his final sermon, calling for equality and for Muslims to unite.

1,400 The number of years that has passed when the Prophet Muhammad delivered his final sermon on Mount Arafat

T he wh ite ter r yc lot h ga r ments worn by men throughout the five-day hajj are forbidden to contain any stitching—a restriction meant to emphasize the equality of all Muslims and prevent wealthier pilgrims from differentiating themselves with more elaborate garments. T he d ay of A r a f at i s t he one time during the hajj when roughly all pilgrims are in the same place at the same time. The site of people from more than 160 different countries, with all the men dressed in simple white garments, is breathtaking. Egyptian pilgrim Mahmoud Awny said the feeling of being in Arafat is “ indescribable.” “All Muslims on Earth wish they could have been here today. Thanks to Allah for enabling me

to be here,” he said. The hajj is a physically and emotionally exhausting experience, and this year temperatures soared to 108 degrees Fahrenheit (42 degree Celsius) in Arafat. Volunteers passed out water, juice and umbrellas to shade pilgrims from the sun. Around sunset, the pilgrims w i l l he ad to a n a re a c a l le d Muzdalifa, 9 kilometers west of Arafat. Many walk the route, while others use buses. They spend the night there, most in the open air huddled near one another, and pick up pebbles along the way that will be used in a symbolic stoning of the devil in Mina, where Muslims believe the devil tried to talk the Prophet Ibrahim—named Abraham in the Bible—out of submitting to God ’s will. AP

N. Korea mobilizes to deal with major flood damage

OK YO —North Korea is mobilizing to deal with a disastrous flood that killed more than 130 people, destroyed tens of thousands of homes and crippled infrastructure in its northern-most province. Br igades of sold iers f rom around the country have been enlisted to help victims of the flooding, which began August 29 and was caused by Typhoon Lionrock.

According to a United Nations report issued by the Office for the Coordination of Humanitarian Affairs, the f loods displaced tens of thousands of people and destroyed homes, buildings and critical infrastructure. North Korean media said it was the worst single case of downpours a nd h ig h w i nd s si nce 19 45, though that claim couldn’t be verified. T he report said the

government has confirmed 133 people were killed and another 395 missing. It said more than 35, 50 0 hou s es, sc ho ol s a nd public buildings were damaged, with 69 percent completely destroyed. It reported widespread inundation of farmland and at least 140,000 people in urgent need of assistance. The hardest-hit areas, parts of which remain inaccessible,

are Musan and Yonsa counties near the Chinese border in the northern tip of the countr y. Nor th Korea’s state media reported on Sunday that high winds and heav y rainfall swept over several cities and counties, causing buildings to collapse a nd leav i ng ra i lways, road s, parts of the electric power system, factories and farmlands destroyed or submerged. AP

A10 Tuesday, September 13, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Globalization or nationalism

ost people, including many political leaders and some policy-makers, do not understand what “globalization” means in the real world. We tend to think of the concept as having to do with trade, particularly the so-called free trade, when goods cross borders without tariffs and duties. The politicians and news outlets tell the people that the opposite of globalization is “protectionism,” and protectionism is bad because it means that nations are not cooperating for the greater good of the world. The idea is that all nations give up a little bit of their authority, and then everyone prospers and the world is a better place. Who could ever be against globalization? Only the greedy and selfish. However, the opposite of globalization is not protectionism. Further, globalization is much more than trade. Trade is only the most evident result of globalization. Globalization is being sold to the people, especially in countries like the Philippines, as being the result of a new age of enlightenment that will bring peace and harmony to a world without poverty. But globalization is not a new idea. Only the name has been changed. One hundred years ago it was called “colonization”. When the League of Nations was formed in 1920, there were 43 founding member-nations. The total number of sovereign countries in the world was 53. Today there are 193 sovereign nations that are members of the United Nations. Where did all those countries come from? All were former colonies or nations formed from former colonies. Under colonization, it was nearly all free trade. Raw materials, like cotton from India, was imported into the United Kingdom without taxes, manufactured into finished goods like cloth, and exported duty-free back to India. Of course, the UK did not want the Indians thinking about protectionism, so the British military ensured peace and harmony with the locals. The opposite of globalization is “nationalism,” when a nation determines its own domestic and foreign policies. Graham Summers is chief market strategist for Phoenix Capital Research, an independent investment research firm based in Washington, D.C., with clients in 56 countries around the world. Summers wrote recently, “Brexit, Trump, Le Pen, Duterte, are all part of a larger global trend away from centralization toward nationalism. Whether you like or despise these people/issues is irrelevant. Their popularity is the product of the last eight years of cronyism/central planning. This terrifies the global elites, particularly those who have been riding the crony capitalist gravy train to billions of dollars. It also terrifies those who link their power and prestige to the current system [central bankers, academic economists and media shills].” The centralization that Summers speaks of is the globalization of trade agreements, like the Trans-Pacific Partnership. This requires countries like the Philippines to produce certain goods in certain quantities that are in “best interests” of the greater good, no matter if it is not in the best interest of a particular nation. Globalization is 21st-century colonization. Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua Founder

Publisher Editor in Chief Managing Editor Associate Editor News Editor City & Assignments Editor Senior Editors

T. Anthony C. Cabangon Jun B. Vallecera Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Dante S. Castro

BusinessMirror is published daily by the Philippine Business Daily Mirror

HOM

Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines. Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025. (Advertising Sales) 893-2019; 817-1351, 817-2807. (Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

Printed by brown madonna Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila MEMBER OF

Manny B. Villar

THE Entrepreneur Continued from A1

he Japanese International Cooperation Agency (Jica) has recommended other measures, such as improving and strengthening traffic-management systems through geometric improvements, road maintenance, bus-scheduling assistance, signal-control system, pedestrian facilities, traffic surveillance and even traffic-safety education.

All of these measures, including the high-technology proposals from Jica, are designed to maximize Metro Manila’s road capacity. These measures are commendable, and should provide some relief to motorists and commuters. However, the extent of the problem, which is already being labeled a crisis, requires more than maximizing road capacity or increasing the efficiency of transport systems. Solving traffic congestion in Metro Manila requires going back to the root cause, which is the concentration of people, business, education and other activities in the metropolis. To this day, Metro Manila still serves as a magnet for people. Many

Filipinos in the countrysides, where livelihood opportunities are lacking, aspire to migrate to the city of bright lights, where they hope to have a better life. In this light, the solutions to traffic congestion should include nontraffic measures, or what I call the creative approach. Other countries impose higher taxes on the purchase of motor vehicles. I don’t think this measure, which is designed to restrict the sales of motor vehicles, is appropriate for the Philippines, for two reasons: one, we’re still developing the domestic automotive industry; and, two, our public-transport systems cannot fill up demand for transportation.

They really, really hate you John Mangun

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos

Online Editor Social Media Editor

Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Creative approach to PHL traffic crisis

OUTSIDE THE BOX

ost of human history has been a struggle between freedom and slavery. There has always been one group of people that wanted, and tried, to put another group under control, steal their possessions and rule the world. Whether you want to admit it or not, it is not a conspiracy theory to say that it is always the political elite against the people. Of course, “we the people” are notorious for making bad decisions that go against our own self-interest. Looking back several thousand years, it was probably a bad idea for the Israelites to worship the Golden Calf while Moses was up the mountain getting the Ten Commandments. However, it was the “political elite” that led the movement against Moses. The Israelites had been slaves under the Egyptian Pharaohs for some

400 years, but they were reminded: “Remember all the free fish we ate in Egypt and the cucumbers, watermelons, leeks, onions and garlic we had?” Further, “If only the Lord had let us die in Egypt! There we sat by our pots of meat and ate all the food we wanted! You brought us out into this desert to let us all starve to death!” Yet, from time to time, the people rebel against the political elite, and the establishment always fights back

Developing economic zones outside Metro Manila, such as in Visayas and Mindanao, may be implemented and completed at the same time as conventional measures such as the new elevated rail systems, expressways and roads. By then, we will have a comprehensive solution to traffic congestion, which will also benefit not only the motorists and commuters in Metro Manila, but the whole nation as well. An example of a creative approach was initiated by President Duterte. In May, before Mr. Duterte took his oath of office, he announced that he would set up economic zones outside Metro Manila, where he would encourage investors to build factories. The President said Manila was already saturated. Establishing new centers of economic activities would not only help residents in those areas but will also provide sustainable relocation sites for informal settlers in Metro Manila. In fairness, the Jica study also proposed the expansion of Metro Manila northward to Central Luzon and southward to Region 4A, or Cavite-Laguna-Batangas-RizalQuezon (Calabarzon).

usually to the death. The one word that the elite always use is “populism”. The word itself comes from the Latin root for “people”—populus. At its root, populism is a belief in the power of regular people, and in their right to have control over their government rather than a small group of political insiders or wealthy elite. The political elite hate the people when they try to exercise control over their lives. When the people do try to implement their freedom, this is the response. “Revere your laws—instantly punish those who, under the mask of popular freedom, would destroy Constitutional Liberty. These considerations were not sufficient to check the fury of the populace, animated by the success of the Enterprise and heated with the spirit of vengeance. In the history of mankind, we have no precedent of such wanton and disgraceful excesses.” “Communities will barricade themselves into fearful, hostile camps, with populists like them, and the extremists as the commandants. The atmosphere will become thick

Policy reforms on the traffic problem should not be limited to discouraging the construction of factories in Metro Manila. We should also freeze other activities that will exacerbate the traffic problem. For instance, the government should refrain from selling public lands for the construction of shopping malls. Instead, idle public lands in the metropolis could be developed into open parks to provide breathing space for city residents. Good for traffic, good for family bonding and good for stress reduction. Even reclamation activities should be discouraged, unless these are done in areas far from Metro Manila. The beauty of some creative solutions, such as the freeze on the disposal of public land in Metro Manila or the restriction on reclamation activities, is that they can be implemented immediately. Developing economic zones outside Metro Manila, such as in the Visayas and Mindanao, may be implemented and completed at the same time as conventional measures, such as the new elevated rail systems, expressways and roads. By then, we will have a comprehensive solution to traffic congestion, which will also benefit not only the motorists and commuters in Metro Manila, but the whole nation, as well.

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

with hate; at this point, it can descend rapidly into colossal violence. Inflame and quench, repeat many times over, until anxiety has been hardened into hatred.” The first is from a letter written by the British Ambassador to France describing the beginning of the French Revolution in July 1789. The second is the current United Nations High Commissioner for Human Rights Zeid Ra’ad Al Hussein in a speech one week ago about the European nationalist populists who led the Brexit movement. Two things are certain. The popular revolt of the people against the political elite has only begun. First, Brexit, then the battlegrounds: the US presidential polls, followed by elections in France and Germany. Second, the political establishment will not quietly give up their power to the people. 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.com.ph

Opinion

The human-rights issue

Rescuing our children

BusinessMirror

Cecilio T. Arillo

database

N these days of distorted textbook accounts and biased media reports of the martial-law years up to the Edsa revolt and beyond, the late strongman Ferdinand E. Marcos was a tyrant and oppressor and the Aquino couple, Ninoy and Cory, icons of democracy and inordinate symbols of the dominant yellow color.

Unknown to the general public, however, the late President Corazon C. Aquino’s regime, compared with Marcos, was marked with a more gruesome record of humanright (HR) violations during her six years and four months of presidency, compared to that of Marcos over a span of 20 years. She unquestionably outperformed Marcos in this category. Worse, human right advocates, mostly actually yellow loyalists and their leftist allies, who turned the explainable Marcos regime’s records on human rights into a propaganda hyperbole to continuously demonize him, and who are mostly now at the forefront attacking President Duterte’s relentless antidrugs campaign, using also HR issues, did not create even just a whimper of protest when Aquino was brazenly violating human rights. The implication of this is that they are conveniently using the issue of human rights to divert pubic attention from their status quo, which President Duterte is now looking into, involving graft and corruption, plunder, narco politics and their own HR violations. According to existing records in the United Nations, during Aquino’s incumbency, respectable quarters in the world HR community ventilated the issue about her regime’s despicable record of HR violations. The information contained in the Core Document on HR Violations of the Aquino Administration (1989), submitted to the United Nations High Commissioner for Human Rights in Geneva, Switzerland, the Philippines’s HR record had reached a “record low during the Aquino administration.” Between 1986 and 1992, the Task Force Detainees of the Philippines (TFDP), at that time the leading, nonprofit HR organization in the country, documented the following: n 816 desaparecidos (the disappeared, or the victims of enforced disappearances) n 135 cases of massacres (including the famous Mendiola carnage and the Hacienda Luisita massacre) n 1,064 victims of summary executions (extrajudicial killings) n 20,523 victims of illegal arrests and detention n 1.2 million civilian victims of dislocations due to military operations These disturbing figures came about despite Aquino’s creation of the Commission on Human Rights on May 5, 1987, through Executive Order 163. Former Supreme Court Justice Abraham Sarmiento, one-of-four Philippine-based oppositionists who Ninoy said he admired the most, also drew attention to the massive HR violations under Aquino.

He noted that from 1988 onward, an average of 200 persons were arrested daily, with 94 percent of the arrests done illegally. He reported 4,408 political detentions in the 21 months from January 1989 to September 1990. Of those arrested, 535 showed signs of torture, 109 disappeared following their arrest, 218 people died from massacres, while 157 were wounded in 54 cases of frustrated massacres. It was estimated that from 1988 until April 1991, over 1 million people suffered injuries in the course of the government’s counterinsurgency drive. The Philippine Alliance of Human Rights Advocates, in a report covering January 1987 to September 1991, stated that the rights of over 20,700 persons were violated, as a result of 18,281 arbitrary arrests, 701 involuntary disappearances, 1,000 extrajudicial executions and 727 summary killings. The Children’s Rehabilitation Center also reported that in 1988 and 1989, the rights of 346,789 children were violated. What do these statistics and figures tell us? The book Lost in Time noted: “Aquino finally experienced how difficult it actually was to defend democracy. It was a lot easier to condemn her predecessor, Marcos, and to keep on ascribing to him problems that plagued her reign. To her dismay, the HR class suit against the Marcos Estate in America did little to spare her regime from intense criticism for its own HR record.” The nationalist, the late Renato Constantino, whose house was raided by government agents in August 1988, added: “The success of Mrs. Aquino’s advisers in institutionalizing vigilantism, food blockades and other counterinsurgency measures shows us that…the Aquino administration cannot keep up with its own rhetoric of upholding human rights, even in its narrow sense.” So, while the illusion created was that the Aquino administration is markedly different from that of Marcos, since it was not as politically repressive as its predecessor, this perception was accepted in a shrinking group of Cory believers. Granting that Mrs. Aquino was sincere in her HR pronouncements, this was contradicted by factual record. It would not be surprising, thus, if one day victims of HR violations will also seek to attach those of her surviving family, including parts of Hacienda Luisita, for compensatory damages similar to what was done by supposed Marcos’s victims of HR violations. To reach the writer, e-mail cecilio.arillo@ gmail.com.

Edgardo J. Angara

AVE THE CHILDREN’s recent Cost of Hunger report on the Philippines shows a looming public-health hazard—the continuing prevalence of malnutrition among our children 5 years and under. The report states that, after a little more than a quarter-century of steady improvement, childhood undernutrition in the Philippines has increased by more than 10 percent between 2013 and 2015, with under-five stunting increasing from 30.3 percent to 33.4 percent and underweight rates from 20 percent to 21.5 percent.

Such malnutrition has terribly worrying long-term impacts on our economic growth and education outcomes, given various studies have shown that undernourished children perform poorly in school, due to impaired cognitive development and hence, are more likely to have lower income levels later in life. Overall, the country incurs very heavy costs today. According to the Department of Education, some 330,418 primary and secondary students repeated a grade for AY 2013 to 2014. Up to 15 percent of these students—some 48,597—repeated because of stunting. More than 60 percent happened at the primary level. These stunting-induced repetitions force both families and government to shell out extra funding. By SAVE THE CHILDREN’s calculations, these extra costs can reach up to P1.23 billion a year. Malnutrition also leads to pre-

mature mortality—child deaths that would otherwise have been prevented with proper nutrition (such as through sustained breastfeeding early in life), adequate sanitation and ready access to public healthcare services. Around 838,000 children—who would have been part of the working-age population in 2013—have already died because of malnutrition. And according to the report, the drop in the country’s productivity because of these needless deaths translates to around P160billion loss. Malnutrition also impairs our workforce today. The Cost of Hunger report shows that in 2013, up to 53 percent of our working-age population (15 to 64 years old)— some 32.6 million Filipinos—were undernourished and stunted before they reached their 5th birthday. On average, this cohort of adults undernourished as children completed only 5.74 years of schooling, compared to

blasting ordnance left and right this year. It conducted a nuclear test in January; launched a long-range rocket in February; fired a ballistic missile off a submarine in August; and sent three more hurtling toward Japan earlier this week. These alarming pyrotechnics are pushing East Asia toward a new era of instability. They raise the likelihood that Japan and South Korea may seek their own nuclear deterrent, even as tensions with China rise over plans to install missile defenses in the region. They increase the chances of a clash that would draw in the world’s two leading

Malnutrition also impairs our work force today. The Cost of Hunger report shows that in 2013, up to 53 percent of our working-age population (15 to 64 years old)—some 32.6 million Filipinos—were undernourished and stunted before they reached their 5th birthday. the 7.16 years of their well-nourished counterparts. Their lower educational attainment has limited the job opportunities open to them and, in turn, has led to smaller incomes. The report calculates that in 2013 this group incurred up to P166.5 billion in lost income—for reasons stemming back to their malnourishment as children. All these—extra schooling expenses and productivity losses from premature child mortality and skillimpaired work force—combine to a total of P328 billion worth of economic losses from malnutrition. That is equivalent to around 2.83 percent of our GDP in 2013. This figure does not even include health costs. SAVE THE CHILDREN states that if they did so, the total impact of stunting on GDP could be an additional 1.6 percent—jacking up the costs of malnutrition to P513.4 billion. However, malnutrition is not a new problem to the country. As early as 2002, this public-health hazard convinced me and a group of business and civic leaders to launch

the first scientifically formulated school-meal menu under the Kalusugan ng Bata, Karunungan ng Bayan (K and K) program. With help from the DSWD and donations from the private sector, children from partner-schools were put under a 120-day feeding program for three years. Some 25,500 pupils in 50 public elementary schools in seven provinces and five cities throughout the country benefited from the program. The dropout rate in their schools plunged by more than 50 percent. Academic performance and physical health dramatically rose. The K and K program ceased in the early 2010s. Later, we launched the Oh My Gulay! (OMG) campaign, where elementary students were encouraged to eat properly by getting them involved in planting and maintaining in-campus vegetable and fruit gardens. To be sure, K and K and OMG covered a limited number of children. We had hoped that government would eventually adopt good practices and come up with more comprehensive and sustained programs to combat the scourge of child malnutrition. We are quite proud of our entry into a so-called demographic window as a boon for the country—that our relatively young population can spell immense dividends to our national prosperity. But when we fail to provide proper nourishment to our children, that opportunity can quickly become a demographic time bomb.

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

Steel company wants to rise from the ashes Ernesto M. Hilario

ABOUT TOWN

id you know that the country now has only one operational steel factory? That’s the Batangas-based Steel Corp. of the Philippines (SCP), and it is now in danger of going belly up if its insurance claims worth over P1 billion against nine insurance firms isn’t settled soon. The steel factory has sought the intercession of the Court of Appeals after its formal complaint against the nine firms filed with the Insurance Commission (IC) for over a year now has yet to be decided upon. Here’s what I gathered from the facts of the case. SCP’s steel mill in Balayan, Batangas, was hit by fire twice, one in 2008 and the other in 2009. On July 25, 2007, SCP insured its assets, including plant, buildings and equipment, for material damage and business interruption losses with the following insurance companies: UCPB General Insurance Corp., 40 percent; Oriental Assurance Corp., 40 percent; PNB General Insurers Co. Inc., 15 percent, and Equitable Insurers Co. Inc., 5 percent. In the aftermath of the 2008 fire, SCP filed claims with the four insurance firms, but they refused

to pay based on the insurance plan bought by the steel company. After SCP’s sad experience with the first group of insurers, SCP decided to insure its assets with another consortium of insurers, namely, Philippine Charter Insurance Corp., 39.5 percent; Mapfre Insular Insurance Corp., 26 percent; New India Assurance Co. Ltd., 4 percent; Standard Insurance Co. Inc., 12 percent; and Asia Insurance Phils. Corp., 8.50 percent. But another fire occurred on December 7, 2009. Notwithstanding the fact that the steel company met all the requirements of the insurance firms, it said, “the insurers failed and refused to pay its claim for the material damage and business interruption losses sustained by SCP.” The SCP, thus, filed two separate cases with the IC. The first was docketed as IC Case NRD-420 for

Taming North Korea

n conducting yet another nuclear test on Friday, North Korea has escalated its confrontation with the rest of the world. The regime celebrated, saying it had made progress in miniaturizing nukes and attaching warheads to missiles. South Korea’s president rightly called it an act of “maniacal recklessness.” It’s clear, if it wasn’t already, that North Korea is no longer just looking for bribes: Its goal is to build a full-fledged nuclear capability. The only prudent response is to harden sanctions in a way that finally gets the country’s attention. Kim Jong Un’s regime has been

Tuesday, September 13, 2016 A11

China doesn’t want the North Korean regime to collapse, but it ought to see advantages in imposing some restraint. It should help to enforce sanctions already in place, and move against the North’s covert weapons trade. Preventing the North from learning how to miniaturize and deliver its weapons should be as urgent a priority for China as it is for the US. powers. And they bring North Korea ever closer to its goal of being able to reach the continental US with a nuclear-tipped missile. North Korea is likely exaggerating its abilities—it wouldn’t be the first time—but its weaponry is

improving, and this alone ought to concentrate minds. Are there any sanctions left to deploy? Yes. The United Nations was already mulling stiffer penalties. It could designate more of North Korea’s companies for

The IC is empowered under the law to “adjudicate claims and complaints involving any loss, damage or liability for which an insurer may be answerable under any kind of policy or contract of insurance, or for which such insurer may be liable.” Thus, SCP immediately sought the IC’s intervention because of the latter’s supervisory power over insurance companies.

inquiries and hearings in order to determine an offense or violation by any parties to an insurance contract, SCP filed the case with the IC to seek redress for the nonpayment of the insurance companies of the insurance proceeds worth more than P1 billion. The SCP thought that the cases they filed against the insurers would be brief since the Rules of Procedures specifically provides that all cases filed with the IC would be resolved within 30 days from the time all documents required by the rules had been filed by the parties. According to Section 1 of Rule 6, “Unless a different period be fixed by special law, all contested cases or incidents shall be decided within 30 days from the date of submission for resolution.” But, despite this rule requiring cases to be resolved 30 days after the submission for resolution, the SCP case versus the insurers has yet to be decided upon by the IC. The country’s only remaining operational steel maker is now on the brink of bankruptcy because its insurance claims have yet to be resolved. Now that the case has been elevated to the Court of Appeals, will the judicial process favor the SCP? Meantime, what can the Insurance Commission say on this issue? It would be interesting to hear their side of the story.

the first batch of insurers and the other case was docketed as IC Case RD-515 for the second group of insurers. The IC is empowered under the law to “adjudicate claims and complaints involving any loss, damage or liability for which an insurer may be answerable under any kind of policy or contract of insurance, or for which such insurer may be liable.” Thus, SCP immediately sought the IC’s intervention because of the latter’s supervisory power over insurance companies. Under Section 439 of the Insurance Code, the Insurance Commissioner shall have the power to adjudicate claims and complaints filed by the insured against the insurance company. Since the primary mandate of the IC is to conduct investigations,

sanctions and more of its operatives for travel and trade blacklists. The US Congress should tighten restrictions on traveling to the North, and the White House should press other countries to stop hiring North Korean laborers whose remittances support the regime. The Treasury should intensify its efforts to cut off the North’s banks and their enablers from the world financial system. This means building a case against Chinese financial institutions, which North Korea uses to procure illicit missile and nuclear technology. China’s support in sanctioning those banks would be

invaluable, obviously—but the US should go ahead even if that cannot be secured. China doesn’t want the North Korean regime to collapse, but it ought to see advantages in imposing some restraint. It should help to enforce sanctions already in place, and move against the North’s covert weapons trade. Preventing the North from learning how to miniaturize and deliver its weapons should be as urgent a priority for China as it is for the US. China and the US may not be natural allies, but they have a shared interest in taming the world’s worst regime. Bloomberg View

E-mail: ernhil@yahoo.com.

2nd Front Page BusinessMirror

A12

Tuesday, September 13, 2016

www.businessmirror.com.ph

Congress asked to scrutinize ₧566.4-B Palace tax package ₧1B L By Butch Fernandez

@butchfBM

awmakers were asked to scrutinize more closely the Duterte administration’s tax-reform package, which aims to raise over P500 billion in new taxes to offset individual and corporate tax breaks of P198 billion, in the wake of findings that “regressive features”negate the benefits promised to some sectors like labor. The Freedom from Debt Coalition (FDC), in a news statement released on Monday, acknowledged Malacañang’s efforts to reform the two-decade tax system, even as it voiced fears over the regressive effects of the five tax policy packages submitted by the Palace for Congress approval. It warned that unless amended by Congress, the Palace proposal could end up penalizing ordinary wage-earning citizens. FDC also prodded Finance Secretary Carlos G. Dominguez III to disclose details of the administration’s tax-reform packages presented to Congress so

people would know how these will impact the lives of millions of Filipinos to whom every centavo counts in their daily struggle to make ends meet. At the same time, FDC Secretary-General Sammy Gamboa aired concerns that the tax reforms would be “based on trade-offs and compromises with corporate interests rather than principles of equity, fairness and justice.” He warned that any increase in workers’ take-home pay due to lower individual income tax “would hardly [be] felt with higher prices of goods and services as a result

The estimated net loss from the swap between lower corporate income tax and rationalization of fiscal incentives

of increases in excise tax on oil, which would hike fares in public transportation, and reduction of value-added tax exemptions [VAT].” This developed after the Department of Finance (DOF) earlier bared plans to slash existing tax rates on individual and corporate income, fiscal incentives to investments, property and capital income alongside increases in excise tax on oil, property valuation and stocks traded in the stock market. It added that exemptions from VAT will also be limited to raw food, health, medicines and education, even as the DOF, likewise, identified additional measures on sugary and fatty foods, mining, alcohol and tobacco, gambling, luxury items and carbon. FDC noted that with the proposed five tax policy packages, the government stands to lose P198.3 billion but collect P566.4 billion in new taxes, “resulting in a net gain of P368.1 billion by 2019.”

“These figures are worrisome,” Gamboa said. “Net gain from the trade-off between lower personal income tax and higher excise tax on oil, lesser VAT exemptions and new levies on sugary and fatty foods will be P220.7 billion.” Meanwhile, he added, “there will be a P1-billion net loss from the swap between lower corporate income tax and rationalization of fiscal incentives. This means that Duterte’s new revenue-generating measures will be borne mostly by salaried workers!” Moreover, Gamboa noted that public-transportation subsidies and the Conditional Cash Transfer Program would not be enough to cushion the effects of price hikes, stressing livelihood assistance and employ ment for affected sectors should be assured and could be funded by earmarking proceeds of the increased tax on oil for this purpose. “We need to know,” he said. “The public deserves to be consulted. Will the proposed revenue measures facilitate economic gains to ‘seep through’ or will it force hardearned money to pour out of ordinary people’s pockets?” Gamboa said, in allusion to the Duterte administration’s promise of equitable prosperity for all.

China, Russia launch South China Sea naval war games Continued from A1

The ministry didn’t say exactly where the drills would be held in the South China Sea, home to heated territorial disputes between China and its Southeast Asian neighbors. Joint Chinese-Russian drills have grown increasingly common in recent years—this week’s exercises are the fifth between the two navies since 2012—with the countries joined in their mutual suspicion of the US and its allies. Russia has been the only major country to speak out on China’s behalf in its demand that the US and other countries stay out of such arguments. That came as an arbitration panel in The Hague, Netherlands, issued a ruling invalidating China’s claims to virtually the entire South China Sea, a result that Beijing angrily rejected as null and void. Following the ruling, China

vowed to continue developing man-made islands in the disputed Spratly island group and said it would conduct regular aerial patrols over the strategically vital sea through which passes an estimated $5 trillion in trade each year. While China says the drills do not envision specific enemies or target any third parties, their location in the tense South China Sea has drawn criticism. During a visit to China last month, the commander of the US Pacific Fleet Adm. Scott Swift said: “There are other places those exercises could have been conducted.” He described them as part of a series of actions “that are not increasing the stability within the region.” Russian news outlets said 18 ships, 21 aircraft and more than 250 marines from both sides would take part in the drills. The ships include destroyers, cruisers, a Russian battleship, amphibious warfare ships and supply vessels. AP