Issuu

What do you do when compliance issues arise?

By Henry J. Schumacher

here is no doubt that organizations and their managers are more and more exposed to compliance breaches, be it in data-privacy protection, anticorruption, quality control, tax payments or meeting regulatory requirements in general.

It is also very clear that the reputation of organizations hinges on their compliance records and how compliance breaches are handled. So, what do you do when compliance issues arise? When a compliance issue is raised, the organization’s response should be reasonable and proportionate to the circumstances. For compliance professionals, the witness interview plays a critical role in determining the scope of an internal investigation.

»continued on A14

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Tuesday, September 19, 2017 Vol. 12 No. 341

Ex-DENR chief disputes COMP claim on open pits By Jonathan L. Mayuga

LOPEZ: “We are not Canada. In Canada you don’t hit a water table. Here, you hit a water table. In Costa Rica they banned open-pit mining. In Venezuela they do not want to get the gold because they want to keep the mountain.”

@jonlmayuga

ormer Environment Secretary Regina Paz L. Lopez on Mond ay ref uted Chamber of Mines of the Philippines (COMP) Chairman Gerard H. Brimo’s critique of her policy pronouncements and order banning the open-pit mining method in the Philippines. Lopez clarified that the open-pit mining ban applies not to nickel mining, but that of gold, copper, mercury and silver. “He [Brimo] is confusing the issue. The ban on open-pit mining is not a ban on nickel. It’s not on nickel. It’s a ban on gold, copper, mercury, silver,” she told the BusinessMirror. Lopez defended her decision to impose the open-pit mining ban during her short stint as secretary

of the Department of Environment and Natural Resources (DENR), insisting on the adverse and irreversible impact of the method on the environment, particularly watersheds, and the threat it poses to communities. She was reacting to a BusinessMirror report wherein Brimo, the president of Nickel Asia Corp., questioned Lopez’s bias against large-scale mining, and the wisdom of imposing the ban on openpit mining. Continued on A2

CA affirms decision junking petition to stop Army and Navy Club project By Joel R. San Juan

@jrsanjuan1573

HE Court of Appeals (CA) affirmed its decision that dismissed the petition filed by an anticrime group seeking to stop the conversion of the historic Army and Navy Club in Manila into a boutique hotel and gaming facility. In a two-page resolution penned by Associate Justice Ramon Garcia,

the CA’s former Fifteenth Division denied the motion for reconsideration filed by the Volunteers Against Crime and Corruption (VACC) seeking the reversal of its decision issued on February 28. The appellate court, in the said ruling, held that the VACC violated the principle on hierarchy of courts in filing the petition for certiorari and prohibition against the project. Continued on A14

PESO exchange rates n US 51.2420

Boosting employment in the countryside Manny Villar

@joveemarie

he chairman of the House Committee on Appropriations said businesses engaged in selling or trading goods and services that promote environmental protection and climate-change mitigation can now avail themselves of fiscal and nonfiscal incentives under Republic Act (RA) 10771, or the Philippine green jobs law.

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Firms with ‘green jobs’ can start enjoying perks DO 180 T By Jovee Marie N. dela Cruz

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THE ENTREPRENEUR

The department order issued by the DOLE setting the rules for the availment of incentives under the Philippine green jobs law

House Appropriations Committee Chairman Karlo Alexei B. Nograles of the First District of Davao City said the Philippines is now officially

while back I wrote about the tourism industry’s potential to become a major dollar earner for the country, after remittances from overseas Filipino workers (OFWs), the business-process outsourcing (BPO) industry and exports. In an industry report, the World Bank said the Philippines generated $6.42 billion in tourism receipts in 2015. In another report, the Philippine Statistics Authority (PSA) said international tourists brought in a total of P313.6 billion ($6.27 billion at P50 to $1).

See “Firms,” A2

Continued on A10

BMReports

Quezon City residents reckon with overdue land valuation By Alladin S. Diega Correspondent

Part Two

IFFERENCES in zonal values in a given area vary and can have the widest margin depending on its classification. San Bar tolome,Nova liches, Quezon City, for example, has all the four classification of land or lot in a typical city. These classifications are industrial and commercial regular with an P18,000per-square-meter (sq m) value; residential commercial and residentia l condominium w ith a P16,250- per-sq-m value; residential regular with a high of P15,000 and a low of P5,000 per sq m; and commercial condominium with a P35,000-per-sq-m value. Pamela Lucas, a resident of Villareal Street, Barangay Gulod, Novaliches, is paying a little more than P5,000 annually in real- property tax for their 200-sqm residential lot and a bungalow-type house covering a floor area of 85 sq m. Lucas said she believes the prices of lots in her area have been increasing for the last few years. Originally from the Ilocos region, Lucas’s family moved to Quezon City in the early-1970s. A single parent to

This September 15 photo shows a skyscraper being erected along Scout Borromeo in Quezon City. A city ordinance approved last year prompted an increase in land values in Quezon City of up to 300 percent. Nonie Reyes

a college student, Lucas is 44-years old and is currently worki ng in a brokerage company based in Manila.

Lucas’s reckoning

LUC AS told the BusinessMirror, “Three years ago the average

price per sq m in my area was only P5,000. But, just last year, my elder sister bought a 400-sq-m lot priced at P6,500 per sq m.” She added that when they inquired last month, the selling price is already between P8,000 per sq

m and P10,000 per sq m. Lucas’s reckoning with the market value in their area a year ago matches the P6,500-per-sq-m zonal value, which was supposed to be scheduled in 2015.

n japan 0.4613 n UK 69.5098 n HK 6.5537 n CHINA 7.8232 n singapore 38.1038 n australia 40.9782 n EU 61.0907 n SAUDI arabia 13.6642

Continued on A2

Source: BSP (18 September 2017 )

BMReports BusinessMirror

A2 Tuesday, September 19, 2017

Firms. . .

Continued from A1

a “green investment hub” following the issuance of the implementing rules and regulation (IRR) for RA 10771. A green job is defined as a “ job or employment that contributes to preserving or restoring the quality of the environment, be it in the agriculture, industry or services sector”. Nograles, main author of the law, said the government is expecting 1 million green jobs this year. The issuance of the IRR is expected to attract sizable foreign direct investments. He added that, with the IRR, business owners can be properly guided on the law’s implementation. “With the IRR of the Green Jobs Act already in place, local companies should grab the opportunity to qualify for the tax incentives to be given by the Bureau of Internal Revenue and the Bureau of Customs. This means going full throttle on the generation of green jobs and services,” Nograles said. The Department of Labor and Employment (DOLE) released the IRR via Department Order (DO) 180 on September 8. RA 10771 further defines green jobs as “decent jobs that are productive, respect the rights of workers, deliver a fair income, provide security in the workplace and social protection for families, and promote social dialogue.” Nograles said that, with the issuance of DO 180, companies that will qualify to be covered by the law will get special deductions in their taxable income equivalent to 50 percent of the total expenses for skills training, as well as research and development activities. The deductions will be made from the firms’ taxable income and shall be over and above the allowable ordinary and necessary business deductions for expenses. Moreover, they will also be exempted from paying importation tax from acquiring capital equipment that will be directly and exclusively used in promoting, generating and sustaining green jobs. “It’s about time that companies take a proactive role in caring for the environment. The incentives offered by the law ensure that such partnership with Mother Nature is sustainable and rewarding. It’s a win-win situation,” Nograles said.

Quezon City residents reckon with overdue land valuation Continued from A1

But based on Finance Secretary Cesar V. Purisima’s announcement that the last actual zonal-value adjustment was made in 2002, the pertinent zonal pricing is P4,000 per sq-m based on the zonal value of the area in 1996. At that time, lots in Villareal Street do not even have a separate zonal value. The zonal-value appraisal was only for Novaliches proper and along the stretch of Quirino Avenue. The sudden spike of available lots in Villareal, therefore, cannot be attributed to the adjustment last year of zonal values.

FMV UNDER Section 199(l) of the Local Government Code (LGC), “fair market value” refers to the price at which a property may be voluntarily sold by a seller and may be bought by a buyer. It is an approved schedule of unitbase market values for different classes of real property (except machinery) prepared by local assessors as basis for computing real-property tax (RPT) assessments, which provinces and cities are authorized to impose under the Local Government Code. The assessment of real- estate value is fixed through ordinances of the Sangguniang Panlalawigan (provincial council), Sangguniang Pambayan (municipal council) or, in the case of Quezon City, Sangguniang Panlunsod or (city council). Late last year the Quezon City Council approved an ordinance that revises fair market values in the city. Under Ordinance 141, land values in Quezon City can go up by as high as 300 percent, relative to its location within the city.

Native. . .

Continued from A14

assaulting his girlfriend in March, just a month before the event. According to published reports, the chef had admitted that substance abuse led to his spiraling out of control in the weeks leading to the assault and unlawful restraint incident. Foro de Debate’s Plana said more Filipino chefs have been invited to participate in next year’s gastronomic event. In an interview with Business Insider in August, Bizarre Foods host Andrew Zimmern reiterated: “I think Filipino

CUÑA said it is not true that higher taxes are being paid by property holders now.

“If you look at it at the market value, the real-property market, they [real estate] sell properties in Quezon City higher than what is indicated in our fair market schedule so we feel that everybody is in the losing end if properties are being sold at a higher rate and ours is still pegged at 1995 rates compared to the 2016 or 2017 rates,” he explained. “The city is losing a lot of revenues, which could have funded several big-ticket projects.” Cuña said to cushion the burden of citizens while the fair market valuation is being applied, the city council also passed two ordinances designed to alleviate the burden of real-estate taxpayers. The first measure grants an additional 10-percent discount for senior citizens. The second measure provides for an additional 5-percent discount for single parents. Reyes cited as example a 100-sqm residential lot, which, under current rates, would have a P900 tax at an 18-percent assessment level with the land valued at P200,000. With the new measure, the value of the land will increase to P1.2 million and the owner will have to pay P1,500 at the new 5-percent assessment level, which is a 60-percent increase. Both Cuña and Reyes said that, even with the measure, Quezon City remains the only city in the country with a singledigit assessment level. Cuña said that prior to the implementation of Ordinance 141, the local government had received a memo from the Department of Finance and the Department of the Interior and Local Government “on the matter”, noting the local government code’s general revision in real-property assessment, which must be done every three years. To be concluded

food is...you know, I’ve been calling it for five years. It’s just going to keep getting more and more popular simply because of the variety of ingredients and European techniques that are found in that food.” Many Filipino restaurants have, in fact, been recognized by several food critics and trade publications over the years, including New York’s Purple Yam of Amy Besa and Chef Romy Dorotan, Qui’s namesake restaurant in Austin and, most recently, Bad Saint by Chef Tom Cunanan in Washington, D.C. Cunanan, who was in Manila in April to personally attend the MFM, is a James Beard

nominee this year for Best Chef, Mid-Atlantic. At Friday’s event, the DOT chief also handed out tokens of appreciation to event partners, guest chefs, sponsors, media partners and supporters, associations and schools, supporting agencies and event manager for the record-breaking MFM 2017. “This project has effectively bound all these sectors together. We are rallying behind one common goal of establishing the Philippines as a center of gastronomy on this part of the world. We are making great headway. And for this, we are thankful to all of you,” Teo said.

During deliberations of the Quezon City Council, Allan Benedict Reyes, member of the council and the author of Ordinance 141, eased taxpayers’ fears and clarified as baseless speculations that a rate of increase in land values will also be applied when computing the tax.

Deliberations ACCORDING to Quezon City Administrator Aldrin C. Cuña, the fair market value ordinance was supposed to be implemented this year “but we were restrained by the court to revise the schedule of [the] fair market value”. In April the Supreme Court issued a temporary restraining order for the implementation of the increase in property taxes. “We’ve waited for 21 years before we scheduled or reappraise all of our property tax,” Cuña told the BusinessMirror, adding that “1995 was our last adjustment of the fair market value”. Data from the Quezon City assessor’s office showed that, while property values may increase five times, taxpayers will only have to pay around 39 percent to 131 percent more than what they presently pay in taxes. Assessment levels were, however, lowered from 18 percent to 5 percent for residential lands. For commercial properties, the payment saw an increase from 45 percent to 14 percent. These adjustments were made to soften the impact of the increase in property values after the local government conducted consultations with its residents and different stakeholders, according to Cuña.

Revenues

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Ex-DENR chief disputes COMP claim on open pits Continued from A1

During her short stint as DENR chief, Lopez launched a 10-month crackdown and signed closure or suspension orders, affecting more than two dozen largescale mines. She also canceled 75 mineral production-sharing agreements (MPSAs) and a Financial and/or Technical Assistance Agreement (FTA A) within or near watersheds to protect the country’s water supply. Days before her rejection by the powerful Commission on Appointments (CA), Lopez signed an order banning the open-pit mining method. The COMP, which represents mining industry’s big players, is seeking a reversal of Lopez’s policies, particularly the ban on openpit mining. Brimo said Lopez was making the industry look bad in belittling mining’s contribution to the economy, while blaming miners for the massive environmental damage that cause people in mining communities to suffer. He said openpit mining is the only way to mine in the Philippines because of the nature of the mineral deposits. He added that the method of mining is dictated by the mineral deposits, which is mostly near the surface. Brimo lamented that critics of mining are always bringing up the issue of the so-called legacy mines, which were the result of mining activities before the Philippine Mining Act of 1995. The law, he said, has put in place environmental safeguards and rules on mining rehabilitation, as well as provisions requiring mining companies to set aside funds for Social Development Management Program (SDMP), which benefits mining communities through various projects. Debunking claims that mining is not contributing enough to the economy in terms of share to GDP, Brimo pointed out that mining has spurred economic activities that led to the growth and development of host towns or provinces. However, Lopez insisted on the irreversible, adverse environmental impact of large-scale mining, particularly by open pit or surfacemining method, which requires massive cutting of trees and excavation covering vast tracts of land to extract minerals. Aside from threatening the countr y’s precious freshwater sources and endangering the lives of people in mining communities, these open pits become a perpetual financial liability of the government, she stressed. “When you get these kinds of minerals, gold, copper, invariably, you hit a water table. You cannot not hit a water table because that is the geophysical makeup of the country. When you put [use] explosives, you hit a water table and that water table is needed by the communities,” she lamented. According to Lopez, in open-pit mining, mining companies eventually leave behind a huge hole from which the minerals were extracted. The “inverted cones”, or the shape of the open-pit mines, accumu l ate tox ic water over the years, posing threats to the communities below. “All these mines, the inverted cones, they will be there forever. Who will take care of them? Will the mining companies take care of them? Will they do it forever?” she stressed. L opez a l so br u shed a side Brimo’s pronouncement that members of COMP will adopt Canada’s mining model, dubbed “Towards Sustainable Mining”, to improve mining operations. “We are not Canada. In Canada you don’t hit a water table. Here, you hit a water table. In Costa Rica they banned open-pit mining. In Venezuela they do not want to get the gold because they want to keep the mountains,” she said. The former DENR secretary also insisted that mining has not improved the

lives of the people in host communities, citing the case of the high poverty incidence in Dinagat Islands and the Caraga region. She added that, while she was impressed by Rio Tuba’s mining operation, she said it has its flaws. She said a report from the Department of Interior and Local Government (DILG) indicated that there was zero growth in the area despite mining. Lopez said, instead of mining, people should explore the benefits of protecting and conserving the country’s rich biodiversity. She said mining benefits only mining companies by raking huge profits while denying communities access to important economic resources like land and water in the process. Exploring the economic benefits of biodiversity, she said, is more profitable and a more worthy endeavor Lopez said in Hinatuan, mining operation caused the mountain to shrink by two-thirds. “Yes, the Philippines is rich in mineral deposits. But it is also beautiful,” she said. She also took a jab at COMP’s plan to copy Canada’s mining model. “Canada is not the Philippines. In Canada mining there happens in deserts. In the Philippines, there are people [who will be affected],” she said. Meanwhile, Lopez wrote an open letter to the Mining Industry Coordinating Council (MICC) reiterating the reasons for the ban. “The open pits are going to be there forever. After mining, the open pits need to be maintained forever. If the open pits are not detoxified and neutralized regularly, the acid water and toxic metals they are generating will continue to pollute our rivers, our streams, and adversely affect the lives of the communities living there,” she said. Because the miners will not stay there forever, she said the government will be left to shoulder the maintenance works, hence, they become a continuing financial liability to the government. She also reiterated that the existence of toxic open pits kills the economic potential of the area, the biodiversity and the possibilities of ecotourism. “There are at least 14 open-pit mines in the Philippines—10 of them are abandoned or suspended, while five are filled with toxic acid water and/or heavy metals,” she said. “The existence of the open pits violates the constitutional rights of our people to a clean and healthy environment. Mining is not a right. Mining is a privilege granted to operators under certain conditions. Our right to clean air and clean water is not only constitutional, but it is also a God-given right,” she said. Lopez then expressed concern over MICC Cochairman lawyer Bayani H. Agabin, who worked as a lawyer for mining companies, while Cochairman Secretary Carlos G. Dominguez III’s family has interests in mining. “He himself was a president of a mining firm. “Just like what happened to me in the Commission on Appointments, business interests may navigate to win the day—instead of the well-being of our people—which is as it should be,” she warned. Lopez enumerated a number of abandoned open-pit mines, including that of the Maricalum Mining Corp. and CDCP Mining Corp., both in Negros Oriental; Manila Mining Corp. in Surigao del Norte; Dizon Copper-Silver Mines Inc. in Zambales; Palawan Quicksilver Mine Inc. in Palawan; Marinduque Mining and Industrial Corp. in Samar; Marcopper Mining Corp. in Marinduque; Acoje Mining Co. Inc. in Pangasinan; Benguet Corp. in Benguet; Consolidated Mines Inc., also in Marinduque. A ll the said open pits, she said, are still there, “eternally” posing grave threats to people and the environment.

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Charges filed vs Faeldon, 11 others for ‘complicity’ in ₧6.4-B drug haul By Joel R. San Juan @jrsanjuan1573

HE Philippine Drug Enforcement Agency (PDEA) has sought the indictment of former Customs Commissioner Nicanor E. Faeldon and 11 others for violation of the Republic Act (RA) 9165, or Comprehensive Dangerous Drugs Act, in connection with the entry into the country of P6.4 billion worth of shabu shipment in May. In a 23-page complaint filed before the Department of Justice (DOJ), PDEA accused Faeldon and 11 other Customs officials of conspiring to import illegal drugs and coddling drug traffickers, which is punishable under RA 9165. The PDEA also asked the DOJ to prosecute Faeldon and his corespondents for obstruction of justice under Presidential Decree 1829, by “harboring or concealing, or facilitating the escape” of the persons behind the illegal shipment. The complaint named 11 other respondents in the charge sheet, namely, Customs Directors Milo Maestrecampo and Neil Anthony Estrella; intelligence officers Joel Pinawin and Oliver Valiente; Manila International Container Port District collector lawyer Vincent Phillip Maronilla; lawyer Jeline Maree Magsuci; and Customs employees Alexandra Ventura, Randolph Cabansag, Dennis Maniego,

Dennis Cabildo and John Edillor. The complaint filed by the PDEA is separate from the complaint for drug smuggling filed by the National Bureau of Investigation against the importers and brokers of the shipment, which is already undergoing preliminary investigation before the DOJ. Aside from these, graft charges were also filed against Faeldon and the other Bureau of Customs (BOC) officials under Section 3 of RA 3019 (Anti-Graft and Corrupt Practices Act) for allegedly “causing any undue injury to any party, including the government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence.” The PDEA also charged Faeldon and other respondents with negligence and tolerance under Article 208 of the Revised Penal Code. “The said incompetence and corruption effectively shielded and facilitated the escape of Chen Ju Long and prevented his immediate arrest and prospective prosecution for the importation of the 602.279 kilograms of methamphetamine hydrochloride, or shabu,” the complaint read. “As can be culled from the proceeding discussion, the gross inexcusable negligence, manifest partiality, or

bad faith of Faeldon, Maestrecampo, Estrella, Pinawin, Valiente, Maronilla, Ventura, Cabansag, Maniego, Cabildo and Edillor made possible the importation of 602.279 kilograms of shabu and the evasion of Chen Ju Long from being arrested and prosecuted,” it added. In the same complaint, the PDEA also sought the indictment for illegaldrugs importation under RA 9165 of the alleged importers and facilitators of the shabu shipment identified as Chen Ju Long, Chen Rong Juan, Manny Li, Kenneth Dong, Mark Taguba II, Teejay Marcellana, Eirene May Tatad, Emily Dee, Chen I-Min and Jhu Ming Jyun. Also included in the charge sheet the directors and officers of Hong Fei Logistics Inc., the warehouse where the shabu shipment was seized—Genelita Arayan, Dennis Nocom, Zhang Hong, Rene Palle, Richard Rebistual and Mary Rose de la Cruz. Sen. Panfilo M. Lacson Sr., meanwhile, wished Faeldon “good luck” after the former Customs commissioner had filed an ethics complaint against him, after the two traded barbs triggered by Lacson’s exposé of alleged rampant irregularities at the BOC. “Good luck to him,” Lacson said on Monday upon learning about Faeldon’s filing of the complaint before the Ethics Committee. “As I said: That’s his right.” With Butch Fernandez

Editor: Vittorio V. Vitug • Tuesday, September 19, 2017 A3

Duterte invites UNHRC to set up office, monitor drugs war in PHL

By Elijah Felice Rosales

@alyasjah

resident Duterte on Tuesday invited the United Nations Human Rights Council (UNHRC) to establish a satellite office in the Philippines to monitor alleged atrocities of the war on drugs. In an interview with reporters, Duterte said he is open to the idea of the UNHRC monitoring each and every police operations launched against suspected drug criminals. “I will personally, through an official channel, invite the human-rights commission of the United Nations to set up a satellite office here,” he said. Duterte added members of the UNHRC can join police operatives to see if they do really shoot suspects as an act of self-defense. He is also mulling over the possibility of attaching body cameras to authorities while doing their duty so as to record the entire operation. “Nobody in the police would operate without a camera. It will be strictly followed and [the] media is free to cover and you can send your correspondents there,” he said. Duterte told the UNHRC it has no other excuse to reject his offer, as he will

even provide them with an office. “I will even be the one to provide the office for the human-rights commission and they can put their people there,” he said. “I will really tell the police to discontinue with their operations without any human-rights officer with them. All of them must wear a camera,” Duterte added. The UNHRC has repeatedly expressed concern over the rising number of extrajudicial killings in the Philippines, mainly linked to the war on drugs. However, the President has shrugged off criticisms not only from the UNHRC, but also from other local and international human-rights groups. Meanwhile, the earthquake drill on Thursday is not intended to disrupt the massive demonstrations scheduled by administration critics, according to the spokesman of the Office of Civil Defense.

In a chance interview, Civil Defense Spokesman Romina B. Marasigan said the nationwide earthquake drill on Thursday was not meant to upset the protest scheduled on that day. “This is not a distractive strategy. This is an ongoing campaign. [It’s] regular,” Marasigan said. “Remember our nationwide simultaneous earthquake drills [are] done quarterly. And normally, we do [it] toward the end of the last month of the quarter. [We try as much not to hold it] at the last day of the month,” she added. The first nationwide earthquake drill was conducted on March 31, while the second was held on June 29. The drills are part of government efforts to prepare the public should a 7-magnitude earthquake hits the Philippines, especially areas lying above the West Valley Fault. The intention of the drill was a nonissue for activist groups, but its date is. It was scheduled on the day activist groups are scheduled to protest the spate of killings of the Duterte administration and commemorate the declaration of martial law. In a news statement, the militant group Bagong Alyansang Makabayan said Malacañang seems to have forgotten the significance of September 21 to the nation, the day the late strongman Ferdinand E. Marcos placed the whole of the country under military rule.

Economy

A4 Tuesday, September 19, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

Group hits MGB plan to ‘streamline’ issuance of mining project permits By Jonathan L. Mayuga @jonlmayuga

ntimining groups under the A lyansa Tigil Mina (ATM) slammed government regulators on Monday, following a reported plan to “streamline” the issuance of mining project permits. “We believe MGB [Mines and Geosciences Bureau] has misinterpreted the instructions of President Duterte. He [Duterte] said [the Department of Environment and Natural Resources (DENR) should ensure that the environmental impacts of mining are reduced and that more rigid monitoring must be done,” Jaybee Garganera, ATM national coordinator told the BusinessMirror in a text message. Garganera was reacting to an announcement issued over the weekend by the MGB detailing its proposal to streamline the permitting process for mining projects. “ This move of the MGB to streamline the permitting process is an attempt to fast-track the resumption of canceled and suspended mines, and to anticipate the impending contract [expiry] of several operating mines between 2018 and 2019,” Garganera said. Garganera was referring to the mining contracts of Didipio in Nueva Vizcaya; Manicani in Samar; Cantilan in Surigao del Sur; and Tampakan in South Cotabato. According to Garganera, the move is “questionable” at the least, saying it was done in haste, and that no consultations with affected sectors were even conducted. “We doubt that even LGUs [local government units] we’re consulted on this,” he said. According to Garganera, they suspect that the MGB wants to fast-track its streamlining process because the Mining Industry Coordinating Council will soon release two controversial decisions—the review of the closure/suspension orders of the mining audit and the recommended lifting of the ban on open-pit mining. “The proposed streamlining proc-

ess is designed to either cushion the impacts of this decision or circumvent the eventual closures/suspension orders,” Garganera said. Posted on its web site over the weekend, the MGB said that, following the directive of Duterte to all government agencies to reduce the number of requirements in applying for permits, the MGB has proposed to rationalize the requirements for the different types of mining applications. The streamlining applies to applications for exploration permit (EP), mineral production-sharing agreement (MPSA), declaration of mining project feasibility (DMPF), mineral processing permit (MPP), industrial sand and gravel permit (ISGP), operating agreement (OA) and deed of assignment for MPSA (DOA). From 19 and 10 documentary requirements for new and renewal of EP, respectively, the requirements will be reduced to 15 and 8, respectively. For MPSA renewal, the 16 documentary requirements will be lessened to six. The 16 and nine documentary requirements for DMPF for integrated MPSA and EP, respectively, will be cut down to 15 and eight. For MPP renewal, the 13 documentary requirements will be reduced to 10. For new and renewal of ISGP, the 20 and 13 documentary requirements, respectively, will be cut down to 16 and four, respectively. Finally, for OA, the seven documentary requirements will be reduced to five; while the 13 documentary requirements for DOA will be lessened to 10. The streamlining proposal is currently undergoing review by the MGB regional offices until September 15, before it is finalized for publication. The decision to rationalize the requirements was arrived at during the MGB Management Conference held at the Waterfront Insular Hotel in Davao City from August 30 to September 2.

BusinessMirror

PHL cut undernourished count to 13.9M in 2016–FAO study By Jasper Emmanuel Y. Arcalas

@jearcalas

espite the presence of conflict for two decades, the Philippines managed to cut its undernourished population to 13.9 million in 2016, from 14.1 million in 2014, according to the latest report of the United Nations’s Food and Agriculture Organization (FAO).

In its report, titled “The State of Food Security and Nutrition in the World: Building Resilience for Peace and Food Security”, FAO noted that the Philippines is among the 14 countries affected by conflict to achieve the Millenium Development Goal (MDG) of reducing the number of people suffering from hunger by half, or commonly known as MDG 1c. “Countries that have recently been relatively free of conflict and/ or experienced low-intensity, localized conflict made the greatest progress,” FAO said in the report published in Rome recently. “Only 14 of the 46 countries affected by conflict achieved the MDG 1c target, of which, eight have been relatively free of civil conflict in recent years [the Philippines, Angola, Cambodia, Georgia, Ethiopia, Indonesia, Nepal and Uzbekistan] or experienced very localized low-intensity conflict [the Philippines],” FAO added. The FAO study noted that the Arroyo administration’s Pantawid Pamilyang Pilipino Program could have helped in reducing the number of conflict-related incidents that posed threats to the country’s food security. “A recent study in the Philippines offers experimental evidence of conditional-cash trans-

fers leading to a substantial decrease in conflict-related incidents in treatment villages relative to control villages,” the study read. “The Pantawid Pamilyang Pilipino Program was also found to have reduced insurgent influence in the villages involved, although it cannot be excluded that this could also have been the result of insurgents shifting their focus of activity to controlling villages,” the study added. The FAO study noted that the prevalence of the undernourishment in the Philippines’s total population in 2014 to 2016 declined to 13.8 percent, from a 16.3-percent prevalence from 2004 to 2006. FAO defined undernourishment as “the outcome of poor nutritional intake in terms of quantity and/or quality and/or poor absorption and/or poor biological use of nutrients consumed as a result of repeated disease”. “It includes being underweight for one’s age, too short for one’s age [stunted], dangerously thin for one’s height [wasted] and deficient in vitamins and minerals [micronutrient malnutrition],” the study added. FAO data showed that the prevalence of wasting in children under 5 years of age in 2016 was pegged at 7.9 percent, or about 900,000 kids.

@alyasjah

resident Duterte’s antipoverty chief on Monday slammed the proposed 2018 budget, saying it will finance the same programs that have allegedly averted the development of Philippine industries. In a news statement issued on Monday, National Anti-Poverty Commission (NAPC) Lead Convener Liza L. Maza said the budget will be used to bankroll “neoliberal policies and programs that have prevented the growth of the local economy, kept agriculture backward and normalized labor schemes, such as labor contractualization”. “We have massive P1.097-trillion funding for an intensive infrastructure program that will displace poor communities, while only 28 percent, or P624.9 million, is allocated for their relocation, a P1.5-billion budget cut for direct health services, no budget allocation for the implementation of the free-tuition law and no substantial budget for free-land distribution,” Maza said. The proposed 2018 budget is facing scrutiny in Congress. The Department of Public Works and Highways and the Department of Transportation received hefty allocations of P643.3 billion and P73.8 billion, respectively, as part of the Duterte administration’s efforts to accelerate infrastructure spending. This, according to Maza, is the epitome of the government’s continuation of neoliberalism. She also expressed concern over the P145-billion allocation for the

Armed Forces, the additional P25 billion for its modernization program and the P131.5-billion budget for the National Police, P900 million of which was intended for the war on drugs. “National security should go beyond fighting drugs and crime. Socioeconomic policies that will address basic needs will secure the people,” Maza said. Maza told economic managers to discontinue its neoliberal policies, saying even the United Nations Conference on Trade and Development (Unctad) recognizes that neoliberalism has always been biased in favor of “a handful of large corporations, financial institutions and wealthy individuals”. The 2017 Trade and Development Report of the Unctad claimed hyperglobalization has brought about a world economy with insufficient levels of productive investment, precarious jobs and weakening welfare provision. “A decade after sparking a massive global crisis that absorbed trillions of dollars of taxpayers’ money in bailouts, the dominant financial sector has barely changed. Indeed, debt levels are higher than ever,” the report read. “The result is a popular backlash against a system that is perceived to have become unduly biased in favor of a handful of large corporations, financial institutions and wealthy individuals,” the report added. Maza’s statement came in light of the growing tension between the Left and the government, highlighted by the decision of the Makabayan bloc, theseven-membercoalitionofmilitant lawmakers,toleavetheHousemajority.

Meanwhile, the Philippines’s prevalence of stunted children under 5 years of age decreased to 30.3 percent in 2016, or about 3.3 million kids, from 33.8 percent rate in 2005 (3.8 million children), according to FAO. The number of Filipino women in reproductive age (15 to 49 years old) suffering from anemia, or iron deficiency, in 2016 declined by 34.37 percent to 4.2 million, from 6.4 million recorded in 2005. FAO said the prevalence of anemia among Filipino women in the country was pegged at 15.7 percent in 2016, compared to the 29.3 percent rate in 2005. However, the FAO study noted the number of overweight children (under 5 years of age) in the Philippines grew more than double in 2016 to 600,000, from the recorded 300,000 in 2005. The FAO study added the this translated to a 5-percent overweight prevalence rate among Filipino children under 5 years of age in 2016, higher than the 2.4- percent prevalence rate in 2005.

Data from the FAO study also showed that the prevalence of obesity in the adult Filipino population, aged 18 years and older, grew in 2016 to 5.2 percent, from the recorded prevalence rate in 2005 of 3.2 percent. This translated to some 3.1 million adult Filipinos being obese last year, which was more than double of the 1.5 million recorded obese adult Filipinos in 2005. The FAO defined conflict as “struggles between interdependent groups that have either actual or perceived incompatibilities with respect to needs, values, goals, resources or intentions.” “This definition includes [but is broader than] armed conflict—that is organized collective violent confrontations between at least two groups, either state or non-state actors,” it said. “This report focuses on conflicts that threaten or entail violence or destruction, including where fragility raises the risk of damaging conflicts and where protracted crises persist,” it added.

A recent study in the Philippines offers experimental evidence of conditional-cash transfers leading to a substantial decrease in conflict-related incidents in treatment villages relative to control villages. The Pantawid Pamilyang Pilipino Program [initiated by the Arroyo administration] was also found to have reduced insurgent influence in the villages involved, although it cannot be excluded that this could also have been the result of insurgents shifting their focus of activity to controlling villages.”—Study

Govts told: Be prepared to support aging population

Left-leaning Cabinet member slams ‘neoliberal’ 2018 budget By Elijah Felice E. Rosales

news@businessmirror.com.ph

By Cai U. Ordinario @cuo_bm

Maze climber

A lineman tries to make his way through a maze of wires and cables atop a power post in Manila as part of a regular facility-maintenance program to deliver optimum service to their subscribers. ALYSA SALEN

overnments need to prepare for an aging population to prevent the demographic dividend from becoming a tax, according to the Asian Development Bank (ADB). In an Asian Development Blog, ADB Economic Research and Regional Cooperation Department Consultant Kevin Donahue, Statistician Arturo Martinez and Consultant Raymond Adofina said countries in the Asia and the Pacific should learn from the experience of countries that have seen more advanced aging. While the Philippines still has a relatively young population, this will eventually change. The median age in the country increased to 23.4 years old in 2010, from 21.3 years old in 2000. “Over time, though, the age structure in an economy gradually becomes uniform as the average number of births per women falls to two, and will resemble an inverse pyramid if fertility levels fall even further,” the authors said. “The decline in the working-age population as a share of the total population has an adverse effect on the labor supply. This could negatively impact potential growth, as relatively fewer workers must support an increasing number of retirees,” they added. The authors urged countries to create or support adult day-care services and give tax relief for multigenerational families, which will allow adult children to take care of

their aging parents. They also urged countries to implement migration-friendly policies, such as guest worker programs that can prevent a steep decline in labor force participation. The authors also said the role of personal savings are crucial in countries where people rely for financing consumption after retirement. Other policies that could be imposed include the change in the mandatory retirement age in countries to allow older workers to continue working and support themselves. “Reforming labor laws to encourage firms to retain older workers by making employment conditions more flexible—for instance by allowing part-time working hours or wage scales that are not automatically based on seniority—can create more job opportunities for the elderly and delay retirement,” the authors said. The ADB experts also said there is a need to reform pension systems because they usually have collection issues and saddled by inefficient management. These pension reforms may require countries to either cut benefits or raise payroll taxes, particularly if they follow the pay-as-yougo system. They added governments must also brace for higher health expenditures, which are needed to assist the elderly in their medical needs. “Countries at a more advanced stage of population aging need to immediately address the challenges of transitioning from a demographic dividend to a demographic tax,” the authors said.

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Tuesday, September 19, 2017

PHL eyes Japan ODA for farm mechanization By Jasper Emmanuel Y. Arcalas

@jearcalas

he Philippines is keen on tapping overseas development assistance (ODA) from Japan to finance a program of the Department of Agriculture (DA) which aims to provide Filipino farmers and fishermen with modern equipment and postharvest facilities.

“In my recent visit to Japan, I explored the possibility of getting foreign financing so the DA could provide more farm machineries to farmers and modern storage equipment to fishermen,” Agriculture Secretary Emmanuel F. Piñol said in a Facebook post over the weekend. “The prospects are very encouraging, with the Ministry of Agriculture, Forestry and Fisheries of Japan and the Japan International Cooperation Agency committing to look into the mechanization needs of the Philippines,” Piñol added.

He said the Philippines could have achieved its rice self-sufficiency target earlier if postharvest losses, currently pegged at 16 percent, was cut by at least half. “That would have meant that the current rice-supply deficit of about 500,000 metric tons [MT], according to recent production statistics, would have been filled up by the losses,” Piñol said. “It is worse in fisheries where about 40 percent of the fish catch and aqua harvests is lost because of lack of facilities, like ice factories

and cold storage. This is the reason why the [DA] is focusing on mechanization and equipment modernization,” he added. In a Facebook post on April 7, the DA chief said President Duterte has directed him to hasten the “improvement” of farm mechanization in the country. Piñol added that Duterte “promised” that he would provide “sufficient funds to support the program”. “The President also instructed me to make sure that in the mechanization program, the farm workers will not be displaced and that they would be given livelihood projects,” he said. “That was when I told him that the DA has already started a program called ‘Makinadong Magsasaka’ or ‘Mechanized Farmers’ where farm workers are organized into groups and trained on how to operate, maintain and repair farm equipment,” he added. Under the Makinadong Magsasaka program, the DA trains farm workers to become equipment and machineries operators and service providers, according to Piñol. Piñol added the program has already started in Regions 11 and 12.

Ifad project to help Asean farmers boost exports A $2.5-million project funded by the International Fund for Agricultural Development (Ifad) will look at ways to enable small farmers from the Philippines and other Asean countries to increase their agricultural exports. Dubbed as the “Agricultural Transformation and Market Integration (ATMI)”, Ifad partnered with the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (Searca) for the project. In an ATMI inception program hosted by Searca, the Philippine Statistics Authority showed that the Philippines’s agricultural exports are substantially lower than what it imports from Australia, the United States, Europe and Asean. PSA figures showed that the Philippines imported $555 million worth of goods from Australia but exported only $69 million in 2016. The US also enjoys a huge trade surplus with the Philippines as American producers exported $2.54 billion worth of goods compared to exports from local produc-

ers valued at $1.334 billion. Trade with other Asean countries was also not favorable to the Philippines. The Philippines imported $3.837 billion worth of goods from other Asean countries but its exports reached only $255 milion in 2016. Despite this grim situation, there appears to be opportunities to expand Philippine farm exports. Data from the PSA showed that coconut-oil shipments rose to $1.152 billion in 2016, from $1.129 billion in 2015. Pineapple exports also went up to $711 million last year, from $574 million in 2015. The aim of ATMI is to help countries such as the Philippines address this and encourage Asean countries to address common problems that hinder development. Improving policies, such as those that relate to investments, can help Asean countries confront challenges to expanding food production, according to A. Kishore of International Food Policy Research Institute (Ifpri), also an ATMI implementor. “[ATMI will enhance] coopera-

tion among Asean states for food security and agricultural development through preparation of strategic programs in the areas of research and development, food safety and investment in food and agri-based industries,” Kishore said in a statement. Kevin Chen, Ifpri senior research fellow, said the simultaneous development of industries sector (processing), services (logistics, marketing) are needed in transforming agriculture. “Value-chain development of the ‘postfarmgate’ segment has been a dual revolution,” Chen said. It means there is great progress in farming when small farmers are able to upgrade to processing, transporting and marketing their raw, fresh farm produce. ATMI will identify value chains of agricultural goods and identify how farmers’ competitiveness can be raised. For instance, small farmers should get credit assistance so they can invest in trucks that will enable them to transport their goods and hike their margins.

DA photo

5-year development plan for N. Luzon’s agribusiness, industry

orthern Luzon is expected to continue its rapid growth in the near term, with the government outlining a five-year action plan to ensure the region’s full potentials are unleashed for sustainable development and job creation, according to a government executive. The Philippine Development Plan (PDP) 2017-2022 and the Regional Development Plans (RDP) 20172022 have laid down the growth strategies and development priorities for Northern Luzon in the next five years, according to Dr. Adoracion Navarro, undersecretary for regional development of the National Economic and Development Authority (Neda). Navarro cited data showing that from 2014 to 2016, Northern Luzon contributed 16 percent to Philippine GDP and grew 6.92 percent annually on average. This growth compares to the gross regional domestic product (GRDP) of 6.64 percent in the National Capital Region, 5.28 percent in Southern Luzon, 6.56 percent in the Visayas and 6.56 percent in Mindanao during the same period. “Growth in Northern Luzon will continue to be driven by the industry and services sectors,” stressed Navarro, who spoke at the Northern Luzon Investors’ Conference on Sep-

tember 14 in Makati City. Industry is projected to have a growth rate for 2017-2022 of 6.7 percent to 7.7 percent yearly, and services to grow 6.3 percent to 7.4 percent during the same period. The agriculture, hunting, forestry and fishing sector could grow between 4.2 percent and 5.2 percent. Under the PDP and RDP for Northern Luzon, Navarro said priority sectors and development strategies have been identified based on the national industry road map localization and consultation conducted by the Department of Trade and Industry. For the Cordillera Administrative Region (CAR), priority sectors are coffee, processed vegetables, aerospace, electronics and tourism. Specific plans for CAR include supporting the electronics sector and metals/aerospace industry, promoting the sustained increase in IT-BPO activities, and improving eco-cultural tourism and educational services. The competitiveness of micro, small and medium enterprises (MSMEs), especially in manufacturing wood-based products, gifts, toys and souvenirs, will be another focal point, along with loom weaving promotion. Other tactics include sustaining the production of semitemperate vegetables and fruits, and

increasing the production of specialty crops, like organic vegetables, heirloom rice and organic coffee. For Region 1, or the Ilocos region, it will be developed as an agribusiness and tourism hub in the north. This, said Navarro, will entail helping MSMEs upgrade their food processing and product development skills and standards, and encouraging the export of high value-added products. Also being mulled is providing financing to enterprises to boost production of the region’s strategic commodities and agri-fishery products, such as mango, coffee, cacao, processed fruits and nuts, processed meat, housewares and wearables, bangus, and bamboo. Cagayan Valley, or Region 2, is being cultivated as a prime water resource, agro-industrial hub and emerging tourism destination, Navarro said. Among the products for priority in the next few years are dairy products, processed meat and fish, processed fruits and nuts, coffee, cacao, bamboo, rubber, furniture, furnishings, gifts and holiday décors. The administration also wants to cultivate the production of valueadded products for the agricultural, fishery and forestry sectors, and enhance the electronic, automotive, construction industries and IT-BPM services. Philexport News & Features

Any lice with that salmon? Parasite plagues global industry

T. ANDREWS, New Brunswick—Salmon have a lousy problem, and the race to solve it is spanning the globe. A surge of parasitic sea lice is disrupting salmon farms around the world. The tiny lice attach themselves to salmon and feed on them, killing or rendering them unsuitable for dinner tables. Meanwhile, wholesale prices of salmon are way up, as high as 50 percent last year. That means higher consumer prices for everything from salmon fillets and steaks to more expensive lox on bagels. The lice are actually tiny crustaceans that have infested salmon farms in the US, Canada, Scotland, Norway and Chile, major suppliers of the high-protein, heart-healthy fish. Scientists and fish farmers are working on new ways to control the pests, which Fish Farmer Magazine stated last year costs the global aquaculture industry about $1 billion annually. So far, it has been an uphill struggle that is a threat to a way

of life in countries where salmon farming is a part of the culture. “Our work has to be quicker than the evolution of the lice,” said Jake Elliott, vice president of Cooke Aquaculture in Blacks Harbour, New Brunswick. Experts say defeating the lice will take a suite of new and established technology, including older management tools, such as pesticides and newer strategies such as breeding for genetic resistance. The innovative solutions in use or development include bathing the salmon in warm water to remove lice and zapping the lice with underwater lasers. Farmers worldwide consider sea lice the biggest threat to their industry and say the persistent problem is making the fish more expensive to consumers. Farmed salmon was worth nearly $12 billion in 2015, according to the Food and Agriculture Organization of the United Nations. The only hope is to develop new methods to control the spread of

lice, which are present in the wild, but thrive in the tightly packed ocean pens for fish farming, said Shawn Robinson, a scientist with the Canadian Department of Fisheries and Oceans. “There are not enough tools right now to allow the farmer to

really effectively deal with it,” Robinson said. The lice can grow to about the size of a pea and lay thousands of eggs in their brief lifetime. But Atlantic salmon have held their own with sea lice in the wild for centuries, and fish farmers man-

aged them in aquaculture environments for many years. Then, farmers in Canada identified the lice as a problem around 1994, said Jonathan Carr, executive director of research and environment with the Atlantic Salmon Federation. Feeding fish a pesticide with the active ingredient of emamectin benzoate became the tool of choice to control lice, Carr said. But around 2009, the lice appeared to become resistant to the pesticide, and they have spread globally since. The industry’s key mistake w a s re a c t i n g w he n t he l ic e evolved to survive pesticide, Carr said, rather than “getting ahead in the game”. “The efficacy went away and pressure developed to create new treatments,” said Kris Nicholls, COO at Cooke, a major player in world salmon farming. The worldwide supply of salmon fell almost 10 percent last year, with Norway, the largest producer

in the world, especially hard hit. In Norway there are hundreds of times more salmon in aquaculture than in the wild. And the fish potentially can escape their pens with lice attached and introduce them to wild fish. Norwegian farmers are looking to use new closed-in pens that resemble giant eggs instead of typical mesh pens. Scottish farmers have deployed a device known as a Thermolicer to warm the water and detach the lice from fish. And farmers in North America and Europe are experimenting with using species of “cleaner fish” to coexist with the salmon and eat the lice. Research about farming salmon along with mussels, which researchers have found will eat larval sea lice, is under way. Underwater drones inhabit the other end of the technological spectrum, zapping lice with lasers to kill them. That technology was developed in Norway and has been used there and in Scotland. AP

Banking&Finance

Tuesday, September 19, 2017 • Editor: Jun B. Vallecera

BusinessMirror

news@businessmirror.com.ph

Policy rate seen steady as peso weakness counterpoint

By Bianca Cuaresma @BcuaresmaBM

he Bangko Sentral ng Pilipinas (BSP) is expected to keep a steady hand over the monetary-policy levers when the seven-man policymaking Monetary Board meets anew this Thursday.

Singapore-based DBS Bank economist Gundy Cahyadi said the BSP is forecast to keep the rate at which it borrows from or lends to banks unchanged after the meeting, citing ample cushion from lower-than-projected inflation in recent months. At the rate-setting meeting in August, the Monetary Board kept the BSP’s overnight reverse repurchase (RRP) rate at 3 percent. The corresponding rates on the overnight lending and deposit facilities were also kept steady and that of the banks’

reserve requirement ratios, which were widely expected by markets. “We remain of the view that the Central Bank is slightly behind the curve in policy tightening. While a move is still unlikely next week, we reckon there is a good chance for a 25-basis-point rate hike each in both the final quarter of 2017 and first quarter of 2018,” Cahyadi said. Cayhadi further said the softer-thanexpected inflation in June and July this year provided room for the BSP to keep the rates steady at the September 21 meeting. Consumer price pressures were a wee

Regulator cites insurer for confidence-building pre-need reserve boost

he Insurance Commission (IC) has lauded PhilPlans First Inc. (PhilPlans) for adopting the lowest discount rate set forth by the IC for preneed companies well ahead of schedule. According to Insurance Commissioner Dennis B. Funa, PhilPlans has implemented ahead of schedule a discount rate under Circular Letter 23-2012 on the valuation of transitory preneed reserves. “PhilPlans decided to use the 6-percent rate as early as this year since, based on the records they submitted, the company has more than enough reserves to absorb the increase in additional reserve requirement. Thus, PhilPlans is willing to take a one-time hit and adjust the discount rate essentially to 6 percent,” Funa said. Under the circular, the IC provided for a regulatory leeway in the computation of preneed reserves for the old basket of plans previously approved by the Securities and Exchange Commission (SEC). The IC provided for a graduated interest rate for the year 2012 onward to be used in the computation of preneed reserves for the old basket of plans. “While the early adoption of this conservative approach to valuation has reduced the surplus assets of PhilPlans, according to the company, their assets continue to be healthy, and the surplus now stands at P4.4 billion at a discount-interest rate of 6 percent. The actuarial liability of PhilPlans today is P33.2 billion, while its assets stand at P 37.6 billion,” he said.

Preneed reserves assure the investing public there will be adequate funds to pay for all future maturities and benefits. The discount-interest rate used in valuing preneed reserves shall not exceed the low end of the attainable rates as certified by the trustee and the following rates: 8 percent for years 2012 to 2016; 7.25 percent for year 2017; 6.5 percent for year 2018; and 6 percent for years 2019 and onward. According to the IC, PhilPlans board of directors approved the use of the discount rate of 6 percent in valuing its reserves. “The preneed industry has in place several regulations that will ensure the stability of the industry. These regulations will help the industry grow and expand and ensures that they offer viable financial products to its clients,” he said. Under the Pre-Need Code, preneed companies are required to set aside a certain amount in their trust fund to pay for future liabilities and used mainly for this purpose. “With a business based on trust and stability and the assurance that it will be there to pay benefits as they arise, preneed organizations that set aside more give the buying public better assurance that it will be there to settle its obligations. This is why the decision to value its business at 6 percent gives the public the assurance that PhilPlans will be there to serve its plan holders in the future,” Funa said. Rea Cu

bit restrained earlier in the year, averaging only 2.7 percent in June and 2.8 percent in July, for instance. It, however, surged right back to 3.1 percent the following August. “Inflation is slowly gaining momentum yet again, as seen from the latest August 2017 print, even if it is set to remain within the 2 percent-to-4 percent target for now. Additionally, there is plenty of liquidity in the banking system, evident in the near-20 percent loan growth in the first half of 2017,” the economist said. “More important, the upward pressure on global rates may also gain dominance going into 2018. This may put pressure on the peso to weaken further. The peso is already the worst-performing currency in Asia this year, having weakened by 2.8 percent against the US dollar [up to August 2017], or 5.4 percent in trade-weighted terms,” Cahyadi added. “We don’t expect the BSP to stay tolerant of further peso weakness, amid the potential negative impact on investment-related import demand,” he further said. The rate-setting meeting on Thursday is the sixth such meeting this year. The next one will be on November 9.

HSBC jury to consider if forex trader was front-running or hedging

SBC Holdings Plc. code-named a $3.5-billion currency trade “Project Shine” and swore traders to secrecy to reassure its clients would get the best price. Mark Johnson, then-head of global foreign exchange, was among those who knew, and Cairn Energy Plc. feared that news of the anticipated purchase of pounds would leak, Unites States prosecutors say. Instead, they say he bought sterling and tipped fellow traders, steps that gave HSBC $8 million in profit in December 2011. “Ohhh, f__ing Christmas,’’ Johnson said as Cairn went on with the trade despite a rising price, prosecutors say. Johnson, the first banker to go on trial following a crackdown on currencymarket rigging, is accused of defrauding Cairn and breaching his duty to HSBC in what prosecutors say is a clear case of front-running. HSBC wasn’t named as a defendant in the indictment, but the bank itself has been under US criminal investigation over currency trading and is in active talks with the Justice Department and US regulators to resolve the matters, according to a July 31 regulatory filing. Lawyers for Johnson are expected to argue that what he did was common in the $5.1 trillion-per-day currency market, by far the world’s largest. They have lined up witnesses to testify that HSBC’s traders provided best execution for Cairn, and that related trades were standard hedging practices, according to court papers. Jury selection begins on Monday in federal court in Brooklyn, New York. Currency traders around the globe will be watching the case, wondering whether they need to change behavior.

The many ways to save money

inancial experts say one needs discipline to save money. However, it is very clear this is hardly ever practiced. It is, indeed, challenging to save if your mind is not appropriately conditioned. Therefore, the primary thing one needs to do is to set one’s mind that “There is a need to save!” After that, one is now ready to save on everyday expenses and there one sees how simple decisions help one to save money. The most common means to save would be bringing one’s lunch or snack to work, as this helps save a large sum of money yearly. One can also save in the supermarket, as there are practical ways to trim down one’s shopping bill. Creating a list of things one needs to buy is advisable to avoid impulse buying. Before making the list, consider your cooking and eating habits. Plan your meals ahead of time. Challenging yourself to eat at least one more meal at home each

week should also be an excellent strategy. This helps you avoid wasting money on groceries or dine out in a restaurant. Buying groceries in bulk could also help you minimize your bills. If feasible, you can put your own garden to grow some veggies or fruits. Taking advantage of coupons or vouchers, using mobile apps to look for good deals or even looking at the price per item helps you get the most of your money. Sales and discounts can be great opportunities to save, but you need to be very vigilant. Spend on what is vital, save on what is not. The idea is you don’t need to stop spending on important ones but, rather, look for ways to cut or reduce those that are less important. Turning off the lights when leaving a room and unplugging gadgets when they are not used are brilliant ways to reduce household bills. Unknown to many, most electricity companies charge more

Don-Don Crisostomo

personal finance at particular points of the day. Generally, peak hours, like at midday when many of us use electricity the most, are charged significantly higher rates compared to, say, early morning or late nights. Proper water usage, like turning off your faucets when not being used, will definitely reduce your water bill. Consider using energy-efficient light bulbs, utilizing timers and power strips technologies, controlling your telephone, mobile and Internet data usage, among others. These are also examples contributing a lot to everyday saving. If you have your own car, you may

Biazon proposes end to sham consignees A

former commissioner of the Bureau of Customs (BOC) and now a lawmaker is proposing an accreditation system meant to stop the unscrupulous use of fake consignees. These nonexistent consignees have been blamed for the explosion of smuggling activities making possible the entry of high value but illegal substances, like methamphetamine or shabu worth billions of pesos. In House Bill 6390, Rep. Rufino B. Biazon of the Lone District of Muntinlupa City proposes a system of classification for third parties and assess their capability to import, export, move, store or clear goods. The bill has already been referred to the House Committee on Ways and Means on Monday. Section 102(uu) of the Customs Modernization and Tariff Act, or CMTA, defines a “third party” as any person who deals directly with the BOC for and on behalf of another person, relating to the importation, exportation, movement or storage of goods. Section 1226 of the same law also provides that third parties may also refer to logistics providers, importers, exporters, carriers, airlines, shipping lines, shipping agents, forwarders, consolidators, port and terminal operators and warehouse operators, if such persons or entities transacted with the bureau. Biazon said he filed the bill after the Committee on Ways and Means and the Committee on Public Order and Safety exposed the alleged smuggling of high-grade shabu through the express lane of the BOC using “consignees for hire” by unscrupulous persons and entities to smuggle goods into the country. “These ‘consignees for hire’, more often than not, are small companies that are used as dummy companies by unscrupulous persons and entities to hide their true identities and thus escape prosecution,” he said. Under this setup, Biazon said the fake consignees are usually small companies

Biazon

that may not even have the capability to engage in the import, export, movement, storage or clearance of goods based on their capital. “There is, therefore, a need to address this problem in order to abate the smuggling of goods and ensure that proper duties and taxes of goods are collected,” he added. Under the bill, third parties transacting with the BOC are liable for acts committed in violation of the act and related laws. It said upon the recommendation of the commissioner, the secretary of finance shall issue rules and regulations to govern and regulate the conduct of all third parties dealing directly with the bureau in relation to the importation, exportation, movement, storage and clearance of goods for and on behalf of another person. The measure also provides specific conditions under which third parties may directly transact with the bureau via a written notice in case such third parties are, for valid reasons, barred from transacting with the BOC. It shall also prov ide a classification for third parties according to their capitalization and volume of transaction used in assessing their capacity to import, export, move, store or clear good. Jovee Marie dela Cruz

Case clippings

By Justice S J Ranada Jr.

COMMON CARRIERS–liability for moral damages In a suit for damages brought by passengers of a bus common carrier that collided with another vehicle, imputing negligence of the bus owner and driver, but failed to discuss or impute fraud or bad faith, or such gross negligence which would amount to bad faith, such suit shall fail. There being no allegation nor proof that defendants acted in fraud or bad faith, they are not liable for moral damages. Dariñes v. Quiñones 02 Aug 2017

consider a gas station in your area that is often offering the cheapest price. Public transportation vehicles, such as buses, jeepneys and tricycles, are options available for everyone on a tight budget. Transport Network Vehicle Services also help you save on transportation costs. Walking or biking, especially if your office is near your home, is a cost-effective and healthy alternative to driving and taking public transportation. At times, one is influenced by family, colleagues or friends into overspending. However, one can try to plan activities ahead of time to avoid temptations like unplanned and recurring meal outs. Saving does not mean one ought to forego fun. In fact, one can still have fun with inexpensive entertainment options, such as getting a good deal online for outdoor activities. You just need to check where you’re spending and what items you’re willing to cut back. You don’t need to do math and

GR 206468 Del Castillo, J

adjust in the budget on every single decision you make. That could be exhausting. Being careful of where your money goes, and looking for other options contribute a lot to the habit of saving in the long run. It can help you be creative and find ways to trim costs daily to achieve the discipline in spending. In conclusion, always be aware to spend within your budget, avoid unnecessary costs and try to keep saving a daily habit. When somehow tempted to overspend, go back and remember that you need to save! Do not just stop. You can do it. You must do it. Don-Don Adolfo Crisostomo is a Registered Financial Planner of RFP Philippines. To learn more financial planning, join the 65th RFP program this October 2017. To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.

The World BusinessMirror

www.businessmirror.com.ph

Tuesday, September 19, 2017

US-N. Korean tensions prompt delay in Guam-Japan flights

A Rohingya Muslim man Abdul Kareem walks toward a refugee camp carrying his mother Alima Khatoon after crossing over from Myanmar into Bangladesh at Teknaf, Bangladesh, on September 16. United Nations agencies say an estimated 409,000 Rohingya Muslims have fled to Bangladesh since August 25, when deadly attacks by a Rohingya insurgent group on police posts prompted Myanmar’s military to launch “clearance operations” in Rakhine state. Those fleeing have described indiscriminate attacks by security forces and Buddhist mobs. AP/Dar Yasin

The UN ‘club’ Trump derided forges alliance on key issues

resident Donald J. Trump, who derided the United Nations as a “club for people to get together, talk and have a good time” after his election, is surprising veterans of the global body by leaning on it to help carry out his foreign policy agenda. From pushing the Secur it y Council to tighten sanctions on North Korea to forging a partnership with Secretary-General Antonio Guterres over cutting troubled peacekeeping programs, the Trump administration and UN officials have found overlapping areas of agreement that many analysts didn’t expect. “The Korean crisis has focused US attention on the value of the Security Council,” said Richard Gowan, a UN expert with the European Council on Foreign Relations and author of a new report on Trump and the UN. “The irony is that the Trump administration now really needs a functional UN to help it deal with the biggest threat on its agenda.” The annual UN General Assembly, which is drawing almost 200 world leaders to New York this week, will put that relationship to the test. European leaders will press Trump, who addresses the global body for the first time on Tuesday, to recommit to a 2015 Iran nuclear deal that he’s threatened to walk away from. And another North Korean missile launch or nuclear blast could quickly force Trump to choose between more diplomacy or a devastating military conflict. While the State Department is taking the fewest number of diplomats to the gathering in more than a decade, Trump is bringing a coterie of top aides and spending four full days in New York, about double the time former presidents Barack Obama and George W. Bush typically spent at General Assembly meetings. That’s in large part because US officials see an opportunity to make progress in so many key areas. “It’s a new day at the UN,” Nikki Haley, the US envoy to the UN, said last Friday in Washington. “It’s not just about talking, it’s

about action.” The cooperative relationship— at least in a few key areas—can be attributed to the relationship forged bet ween t wo seasoned politicians: Haley, a former South Carolina governor, and Guterres, a former Portuguese prime minister who, like Trump, took office in January. W h i le m a ny U N of f ic i a l s watched with horror as the Trump administration vowed to slash spending on foreign aid, including the UN, by about one-third, Guterres and Haley found a way to target troubled peacekeeping efforts. Those programs, in countries including the Democratic Republic of Congo and South Sudan, had long been criticized for not protecting civilians and, in some cases, sexually exploiting the very populations they were meant to defend. For Guterres, it’s a partnership forged in practicality: The US is the UN’s top contributor, providing 28.5 percent of the $7.3 billion peacekeeping budget and 22 percent of the core budget of $2.7 billion. Targeting cuts in US contributions to efforts the UN admits are ineffective is a win for both sides.

Hosting Ivanka

The secretary-general has shown his politica l acumen, hosting Trump’s daughter Ivanka for lunch and, in private meetings with ambassadors, outlining plans to revamp UN agencies that provide humanitarian aid to avoid duplication and proposing changes to strengthen his office.

“All major reforms in the UN have been the result of the largest financier working with the secretary-general to convince other members of the need for reform,” said Brett Schaefer, senior research fellow at Heritage Foundation. In a letter sent in July and seen by Bloomberg News, Haley urged member-countries to back Guterres to “use his executive authority to pursue a robust management and reform agenda.” “It’s imperative that Guterres works hand-in-glove with the US ambassador,” said Peter Yeo, a vice president at the nonprofit United Nations Foundation. “Otherwise, it’s difficult to achieve anything at the UN.” Haley bragged last Friday that 120 nations have signed on to the “very, very important, massive reform package led by” Guterres. Trump will host those signatories at an event on Monday in New York, part of a full, four-day agenda for the president that will touch on top global issues including:

North Korea

Haley and National Security Adviser H.R. McMaster say two recent rounds of tougher sanctions against Kim Jong Un’s regime for it’s nuclear- and ballistic-missile tests need more time to take effect, and they emphasized that Trump has plenty of military options at his disposal. Trump will meet the leaders of South Korea and Japan on Thursday in a show of unity on the issue.

Iran

Trump has fumed at the 2015 agreement reached by Obama with Iran and five other world powers aimed at curtailing the Islamic Republic’s nuclear program. The US president has to “certify” Iran’s compliance with the accord every 90 days to Congress and has signaled he won’t do so when the next deadline arrives in mid-October. But European allies, as well as Russia and China, still support the accord. UK Foreign Minister Boris Johnson, standing alongside US Secretary of State Rex Tillerson last week, said “it’s important

The Korean crisis has focused US attention on the value of the Security Council.”—Gowan

that we make it work and that we keep it alive.” Officials from all the countries involved in the deal are expected to discuss their views on Wednesday.

Climate change

The Paris climate-change treaty was agreed on by world leaders just two years ago and enjoys wide support internationally, despite Trump’s decision earlier this year to withdraw from the agreement. But now that decision could be reversed. Tillerson said last Sunday that, “under the right conditions,” the US might remain part of the accord. With an almost daily series of events and meetings planned this week to shore up support for the accord, diplomats will be keen to understand where exactly the US now stands.

Qatar

The months-long diplomatic and economic standoff between Qatar and a bloc of Middle East nations led by Saudi Arabia continues to fester, despite Trump’s vow to personally mediate in the crisis if needed. With allies on both sides of the dispute, Trump and Tillerson are expected to meet with leaders from the range of countries involved to forge a truce, if not a resolution, that allows more attention to be put back on Iran.

AGATNA, Guam—Tensions between the United States and North Korea have prompted a Hong Kong-based airline to delay flights between the US Pacific territory of Guam and Japan. HK Express announced five weeks ago that it planned to start the flights on October 29, but has since delayed flights until next summer “in view of geopolitical concerns in the region,” Pacific Daily News reported. North Korean leader Kim Jong Un has threatened Guam. The country has fired two missiles over Japan, including one launched last Friday. Passengers who bought tickets will get refunds, HK Express said in a statement last Friday. Customers outside of Guam will also be eligible for a destination change or free transfers to United Airlines flights. The flight cancellation is the latest hit for the island since tensions with North Korea escalated. The island’s tourism industry lost $9.5 million in August after there were more than 7,000 cancellations from tours, school groups and business ventures—mostly from Japan— despite Guam leaders’ constant reassurance that the island is safe and well-protect from possible attacks, according to a report by the Guam Visitors Bureau. “It’s hard to change the perception of visitors that now see Guam as risky,” the bureau’s Global Marketing Director Pilar Laguana said earlier this month. HK Express also stopped Guam-Hong Kong flights in June. That cancellation was prompted by operational cost concerns, said Nathan Denight, the president and CEO of the visitors bureau.

Trump mocks N. Korea leader as ‘Rocket Man’

President Donald J. Trump last Sunday mocked the leader of nuclear-armed North Korea as “Rocket Man”, while White House advisers said the isolated nation would face destruction unless it shelves its weapons programs and bellicose threats. Trump’s chief diplomat held out hope the North would return to the bargaining table, though the president’s envoy to the United Nations said the Security Council had “pretty much exhausted” all its options. Kim Jong Un has pledged to continue the North’s programs, saying his country is nearing its goal of “equilibrium” in military force with the US. North Korea will be high on the agenda for world leaders this week at the annual meeting of the UN General Assembly, Trump’s biggest moment on the world stage since his inauguration in January. Trump is scheduled to address the world body, which he has criticized as weak and incompetent, on Tuesday. Trump, who spent the weekend at his New Jersey golf club, tweeted that he and South Korean President Moon Jae-in discussed North Korea during their latest telephone conversation last Saturday. Asked about Trump’s description of Kim, national security adviser H.R. McMaster said “Rocket Man” was “a new one and I think maybe for the president.” But, he said, “that’s where the rockets are coming from. Rockets, though, we ought to probably not laugh too much about because they do represent a great threat to all.” McMcaster said Kim is “going to have to give up his nuclear weapons because the

president has said he’s not going to tolerate this regime threatening the US and our citizens with a nuclear weapon.” Asked if that meant Trump would launch a military strike, McMaster said “he’s been very clear about that, that all options are on the table.” Some doubt that Kim would ever agree to surrender his arsenal. “I think North Korea is not going to give up its program with nothing on the table,” said Democratic Sen. Dianne Feinstein of California, a member of the Senate Intelligence Committee. Kim has threatened Guam, a US territory in the Pacific, and has fired missiles over Japan, a US ally. North Korea also recently tested its most powerful bomb. The UN Security Council has voted unanimously twice in recent weeks to tighten economic sanctions on North Korea, including targeting shipments of oil and other fuel used in missile testing. Trump’s UN ambassador, Nikki Haley, said North Korea was starting to “feel the pinch.” Trump, in a tweet, asserted that long lines for gas were forming in North Korea, and he said that was “too bad.” Secretary of State Rex Tillerson said he was waiting for the North to express interest in “constructive, productive talks.” “All they need to do to let us know they’re ready to talk is to just stop these tests, stop these provocative actions, and let’s lower the threat level and the rhetoric,” he said. But Haley warned of a tougher US response to future North Korean provocations, and said she would be happy to turn the matter over to Defense Secretary Jim Mattis “because he has plenty of military options.” Mattis said after Kim tested a hydrogen bomb earlier this month that the US would answer any threat from the North with a “massive military response, a response both effective and overwhelming.” Trump has threatened to rain “fire and fury” on North Korea if the North continued with its threats. Haley said that wasn’t an empty threat from the president but she declined to describe the president’s intentions. “If North Korea keeps on with this reckless behavior, if the United States has to defend itself or defend its allies in any way, North Korea will be destroyed and we all know that and none of us want that,” Haley said. “None of us want war. But we also have to look at the fact that you are dealing with someone who is being reckless, irresponsible and is continuing to give threats not only to the United States, but to all their allies, so something is going to have to be done.” In other developments last Sunday: • McMaster said “the president’s ears are open” to possible participation in a new global climate agreement that addresses his concerns about the original 2015 deal, when Barack Obama was president. The White House has denied reports that Trump has changed his mind about withdrawing the US from the accord. • McMaster suggested that Friday’s bomb attack in London could lead Trump to introduce a stronger travel ban. Trump’s original travel ban has been tied up in court, with the Supreme Court scheduled to hear arguments next month in a legal challenge. Haley and Feinstein spoke on CNN’s State of the Union, McMaster appeared on ABC’s This Week and Fox News Sunday and Tillerson was on CBS’s Face the Nation. AP

Myanmar’s refugees

Leaders are sure to take up the issue of Myanmar’s displaced and persecuted Rohingya minority. The UN’s top human-rights official has accused Myanmar, led by Nobel Peace Prize winner Aung San Suu Kyi, of “ethnic cleaning” after an estimated 400,000 Rohingya Muslims were driven from the Buddhist-majority nation.

Venezuela

The nation with the world’s largest oil reserves has been sliding into an economic and political crisis for years, but the situation seemed to pass a tipping point this year as President Nicolas Maduro called for a constituent assembly to rewrite the Constitution after months of deadly street protests. Tr u m p a n d s e v e r a l L a t i n American leaders, including Colombian President Juan Manuel Santos, are expected to discuss Venezuela over dinner on Monday. Bloomberg News

In this September 10 photo, Chinese tourists stand watch on Tumen bridge linking China and North Korea as seen from Yanbian, Jilin province. AP

Hurricane Maria heads toward battered Caribbean islands

ANTO DOMINGO, Dominican Republic— A strengthening Hurricane Maria swirled toward the eastern Caribbean early on Monday, with forecasters warning it probably would be a major storm by the time it passed through the already battered Leeward Islands later in the day. Maria grew into a hurricane last Sunday, and forecasters said it was expected to become

much stronger over the next 48 hours following a path that would take it near many of the islands wrecked by Hurricane Irma and on to Puerto Rico, the Dominican Republic and Haiti. Hurricane warnings were posted for Guadeloupe, Dominica, Saint Kitts, Nevis, Montserrat and Martinique. A tropical storm warning was issued for Antigua and Barbuda, Saba, Saint Eustatius and Saint Lucia. AP

A4 Tuesday, September 19, 2017 A8

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Macron reminds the world: France is a nuclear power too

French President Emmanuel Macron greets visitors in the Elysee presidential palace in Paris, on September 17, as part of the 34th France’s Heritage Days. The national buildings and administrations of France are open to the public for the Heritage Days weekend. AP/Thibault Camus

mmanuel Macron is aiming to show France can still punch its weight. After North Korea tested a nuclear weapon this month, the French president took time out of a state visit to Greece to lobby China’s Xi Jinping on ratcheting up sanctions. He’d already spoken to the leaders of Germany, the United Kingdom and Italy on the issue and in August he discussed it with US President Donald J. Trump. Within three days of the underground detonation, he was on the phone to assure South Korea’s Moon Jae-in of France’s support. North Korea may be on the other side of the world and 8,000 kilometers away from the closest French territory, but that didn’t stop the 39-year-old president from wanting to get involved. As the United Nations will hear when he addresses the General Assembly on Tuesday, Macron wants to be involved in everything. With Trump’s erratic behavior, Britain preoccupied with Brexit and Germany perennially lacking a serious military, there’s a vacuum where the world has become used to seeing a western power take the

lead on security. For Macron, who leads a nucleararmed nation that is one of just five veto-wielding members of the UN Security Council, that represents an opportunity to reestablish France’s traditional postwar position as a serious player. “It’s not just optics—there’s a void,” said Nicholas Dungan, senior fellow at the Atlantic Council and a professor at Paris-based institute Sciences Po. “Macron is positioning to fill it.”

Talk of grandeur

While the president may have devoted most of his energy so far to the economy and the euro area, enhancing France’s global standing is another part of his plan. He has sketched out the possibility of a virtual circle with a stronger economy, a more unified European Union and a

more assertive global presence feeding into each other. “France must become a great power, full stop,” Macron said in an interview with Le Point magazine last month. “I accept this rhetoric of grandeur. But we can only play this role if we have the means. Without an economic and social transformation, you can forget grandeur.” After four months in office, Macron has already weighed in on crises from Qatar to Yemen and, this week in New York, he’ll hold meetings about ongoing conflicts in Libya and Syria, which flooded the EU with refugees in 2015, opening rifts between member-states and straining their commitment to open borders. Macron’s advisers say in his UN speech he’ll call for France to leverage its influence in a reinvigorated EU to shape global issues. Previous French presidents weren’t exactly wallflowers. Nicolas Sarkozy ordered French forces to oust Cote d’Ivoire strongman Laurent Gbagbo and then led an intervention in Libya, while Francois Hollande sent troops into Mali and the Central African Republic, bombed Islamic State and helped broker a cease-fire in Ukraine. But in Macron’s view, they too easily accepted playing second fiddle to Germany or the US.

Syria talks

Martin Quencez, senior program

officer at the German Marshall Fund of the US, detects a more pragmatic approach from Macron than his predecessor Hollande, particularly in his acceptance that President Bashar alAssad’s exit is not a prerequisite for peace talks in Syria. Indeed, Syria is one area where Macron’s intervention might be productive in a conflict that involves a complex matrix of regional and global players like Russia’s Vladimir Putin, who Macron hosted at the Chateau of Versailles in May. “The US under Trump has a strange client relationship with the Saudis, it doesn’t talk to Iran, and Turkey is going its own way. But they are all a part of any solution and France talks to all of them,” Dungan said. “It was a success to have Putin at Versailles and tell him off.” Still, there are potential pitfalls for a former investment banker and economy minister launching into the geopolitical chess game with little direct experience. A July 25 meeting with Libyan Prime Minister Fayez al-Sarraj and military leader Khalifa Haftar succeeded in riling Italy, which sees itself as point guard on Libya, and North Africa experts puzzled at why Haftar was being granted such legitimacy by a founding member of North Atlantic Treaty Organization and the EU. Months later, the country remains split between Sarraj’s government in the west and Haftar’s militia in the east. Though that’s not deterring Macron from his other initiatives.

Dinner in Paris

Perhaps, nothing encapsulates his poise more than his handling of Trump. While Macron led the global criticism of Trump’s decision to quit the Paris climate accord in June, he then went out of his way to embrace the US leader. On June 27 he called Trump to say France would join air strikes in Syria if Assad used chemical weapons and invited him to join the Bastille Day parade. The night before France’s national celebration they had dinner at the Eiffel Tower. On Monday afternoon they’ll meet again, oneon-one, in New York. “He’s marked a few points on Trump, making their disagreements on climate very clear, but then showing on July 14 how closely they can work together,” Quencez said. “Macron’s working relationship with Trump is a card to play.” Bloomberg News

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A potent fuel flows to N. Korea; it may be too late to halt it

h en N o r t h K o r e a launched long-range missiles this summer, and again last Friday, demonstrating its ability to strike Guam and perhaps the US mainland, it powered the weapons with a rare, potent rocket fuel that US intelligence agencies believe initially came from China and Russia. The US government is scrambling to determine whether those two countries are still providing the ingredients for the highly volatile fuel and, if so, whether North Korea’s supply can be interrupted, either through sanctions or sabotage. Among those who study the issue, there is a growing belief that the United States should focus on the fuel, either to halt it, if possible, or to take advantage of its volatile properties to slow the North’s program. But it may well be too late. Intelligence officials believe that the North’s program has advanced to the point where it is no longer as reliant on outside suppliers, and that it may itself be making the deadly fuel, a chemical compound known as unsymmetrical dimethyl hydrazine (UDMH). Despite a long record of intelligence warnings that the North was acquiring both forceful missile engines and the fuel to power them, there is no evidence that Washington has ever moved with urgency to cut off Pyongyang’s access to the rare propellant. Classified memos from both the George W. Bush and Obama administrations laid out, with what turned out to be prescient clarity, how the North’s pursuit of the highly potent fuel would enable it to develop missiles that could strike almost anywhere in the continental United States. In response to inquiries from The New York Times, Timothy Barrett, a spokesman for the director of national intelligence, said that “based on North Korea’s demonstrated science and technological capabilities—coupled with the priority Pyongyang places on missile programs—North Korea probably is capable of producing UDMH domestically.” Some experts are skeptical that the North has succeeded in domestic production, given the great difficulty of making and using the highly poisonous fuel, which, in far more technically advanced nations, has led to giant explosions of missiles and factories. In public, at least, the Trump administration has been far more focused on ordinary fuels—the oil and gas used to heat homes and power vehicles. The United States

has pushed to cut off those supplies to the North, but it settled last week for modest cutbacks under a United Nations resolution. Nonetheless, last Sunday the president made a case that those sanctions were having an effect. He wrote on Twitter that he had spoken with South Korea’s president, Moon Jae-in, and tossed out a new nickname for the North’s leader, Kim Jong Un. “Asked him how Rocket Man is doing,” President Donald J. Trump wrote. “Long gas lines forming in North Korea. Too bad!” But inside the intelligence agencies and among a few on Capitol Hill who have studied the matter, UDMH is a source of fascination and seen as a natural target for the US effort to halt Kim’s missile program. “If North Korea does not have UDMH, it cannot threaten the United States, it’s as simple as that,” said Sen. Edward J. Markey, DemocratMassachusetts, who sits on the Senate Foreign Relations Committee. “These are the issues that the US intelligence community has to answer: from which countries they receive the fuel—it’s probably China—and whether North Korea has a stockpile and how big it is.” Today, the chemical is made primarily by China, a few European nations and Russia, which calls it the devil’s venom. Russia only recently resumed production of the fuel, after Western supplies were cut off over its annexation of Crimea. But the Russians are leery of the propellant: It triggered the worst disaster of the Space Age, in 1960, when scores of Soviet workers and spectators died during a test firing of one of Moscow’s early intercontinental ballistic missiles. The United States no longer produces the fuel—National Aeronautics and Space Administration warned of its toxic and explosive dangers as early as 1966, producing a video that opens with a spectacular explosion. Long ago, the US nuclear fleet turned to more stable solid fuels, a move the North Koreans are now trying to replicate. But it may be a decade, experts say, before the North masters that technology to power intercontinental missiles. The White House and US intelligence agencies declined to answer questions about what, if anything, they were doing to cut off North Korea’s supplies, citing the highly classified nature of their effort to disrupt the North Korean missile program. Those efforts have included cyberattacks authorized by President Barack Obama in 2014. New York Times News Service

EU tilts to China in climate fight amid signs of Trump softening

urope and China are stepping up their coordination in the battle against global warming, a top European Union (EU) official said, as the US mulls over reengaging in a landmark Paris Agreement to cut greenhouse gases. The 28-nation EU will press ahead with efforts to protect the environment by shifting to a low-carbon economy and reducing dependency on fossil fuels, said Frans Timmermans, first vice president of the European Commission, in an interview in Brussels. The EU accounts for about 12 percent of global emissions and China for around 20 percent. “The Chinese are faced with such a challenge that you can see the sense of urgency prevailing there more and more, and the willingness to cooperate with us is getting stronger and stronger,” Timmermans said. “People are suffocating in the cities in parts of China. They know they need to do something urgently about this. And in some areas they’re moving at incredible speed.” To meet its carbon-reduction

targets, set at 20 percent by 2020 and 40 percent by 2030, the EU has moved to sustainable energy sources and established the world’s biggest carbon market. With China intensifying its fight against air pollution and the EU helping the government in Beijing to design a nationwide cap-and-trade program, investors are awaiting political signals about a future link between the two systems and closer cooperation on clean energy technologies.

Trump reengaged

IN what could be a game-changing development in the fight against global warming, US officials said over the weekend that the administration of President Donald J. Trump could reverse its previous decision to abandon the Paris climate accord. Trump, who has called climate change a hoax perpetrated by the Chinese, last month began the formal process of exiting from the agreement. Speaking from Montreal last

Saturday, EU climate chief Miguel Arias Canete said in an interview that the US had signaled it wants to reengage with the Paris Agreement from within, rather than withdrawing from the pact outright and then attempting to renegotiate it. “Under the right conditions, the president said he’s open to finding those conditions where we can remain engaged with others on what we all agree is still a challenging issue,” US Secretary of State Rex Tillerson said last Sunday. Agreed in December 2015, the deal united more than 190 countries in a pledge to work toward limiting fossil-fuel emissions. The EU’s Canete made the comments about a change of stance after meeting with Everett Eissenstat, deputy director of the US National Economic Council. “The willingness not just in Europe, but also globally, to not let this fall apart is very strong,” Timmermans said. “Perhaps this summer I was a bit shell-shocked because of the decision of the

Trump administration, but also people I think are encouraged by the fact that many, many in the US see it differently.”

Timmermans, who is due to address a World Economic Forum conference in New York on sustainable development on Monday and

Tuesday, said he expected the fight against climate change in the US to be driven by cities and citizens. Bloomberg News

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Tuesday, September 19, 2017

UK officials lower terror-threat level

ONDON—British police made progress last Sunday in their frantic pursuit of suspects and evidence connected to the bomb that partially exploded on a packed London subway, leading counterterrorism officials to lower the country’s threat level because they no longer considered a fresh attack to be imminent. Home Secretary Amber Rudd announced the downgraded terror threat level hours after London police said a second suspect was in custody and a second property was being searched in connection with Friday’s attack that injured 30 people. Rudd cautioned that the investigation was ongoing and that Britain still faced a substantial threat even though the terror level had been reset to “severe” from “critical.” “Severe still means that an attack is highly likely, so I would urge everybody to be vigilant but not alarmed,” she said. The advancing investigation was welcome news for London commuters who had anticipated heading to work on Monday morning while suspects remained at large and police were racing to round them up before they could hit the city again. Mark Rowley, who heads the police counterterrorism operation, said the traveling public still would see an increased police and military presence in the coming days. “For practical and precautionary reasons, we made the decision that the increased resources will continue for the beginning of this week,” Rowley said. “So the pub-

30 The number of people who were injured when a bomb partially exploded on a London subway last Friday

lic will still see that high level of policing presence; some armed, some unarmed.” He added two properties were being searched and that police had “much more to do.” The fact that a second person— a 21-year-old man—was arrested under the Terrorism Act offered the clearest proof yet that police and security services believe the subway bombing was not just the work of one person. The first suspect, an 18-yearold man, was arrested early last Saturday in the departure area of the port of Dover, where ferries leave for France on a regular basis. The second was arrested in Hounslow in west London shortly

Police forces guard the entrance following an improvised explosive device detonation on a crowded tube at Parsons Green Station in London on September 17. AP/Frank Augstein

before midnight last Saturday. Both were questioned last Sunday at a south London police station. They have not been charged or identified. The subway bomb caused limited casualties because it failed to completely explode. Officials say 30 people were wounded, including some hurt in the panic that ensued, and all but one have been released from the hospital. Most of the wounded suffered burns. The two searches were taking place at a suburban home in Sunbury, southwest of London, and in

Stanwell, another suburb close to London Heathrow Airport. The first search, linked to the first subject, started in Sunbury last Saturday afternoon at a house that belongs to an elderly couple, who have for years taken in foster children, including refugees from conflict zones in Syria and Iraq. The pair—Ronald Jones, 88, and his wife, Penelope Jones, 71—have been honored by Queen Elizabeth II for their work with children in need of a stable home. A friend, Alison Griffiths, said the Joneses are “great pillars of

US flies powerful warplanes over Korean Peninsula amid tensions with North

U.S. Air Force B-1B bombers, F-35B stealth fighter jets and South Korean F-15K fighter jets fly over the Korean Peninsula during a joint drills, South Korea on September 18. South Korea Defense Ministry via AP

EOUL, South Korea—The US military flew advanced bombers and stealth jets over the Korean Peninsula and near Japan in drills with South Korean and Japanese warplanes on Monday, three days after North Korea fired a missile over Japan. The US often sends powerful military aircraft in a show of force in times of heightened animosities with North Korea. The North launched its latest missile as it protested against tough new UN sanctions over its sixth nuclear test on September 3. Monday’s f lyovers involved two B-1Bs and four F-35Bs from

the US military and four F-15K fighter jets from South Korea, according to the South Korean and US militaries. T he US and South Korean planes flew across the Korean Peninsula and practiced attacks by releasing live weapons at a firing range in South Korea, the US Pacific Command said in a statement. The US warplanes also conducted formation training with Japanese fighter jets over waters near the southern island of Kyushu, according to the Pacific Command. Since Kim Jong Un took power in North Korea in late 2011, his

nation has tested weapons at a torrid pace. The country flighttested two intercontinental ballistic missiles in July. Its nuclear test in September was its most powerful to date. Many experts say it’s only a matter of time until Kim achieves his stated objective of possessing reliable nuclear-tipped missiles capable of striking anywhere in the mainland US. State media on Saturday quoted Kim as saying that North Korea’s final goal “is to establish the equilibrium of real force with the US and make the US rulers dare not talk about military option” for the North.

Alarmed by North Korea’s advancing weapons programs, many conser vatives in South Korea have called for the reintroduction of US tactical nuclear weapons in the South. But the liberal-leaning government of President Moon Jae-in said it has no intention of requesting that the US bring back such weapons. South Korean Defense Minister Song Young-moo told lawmakers on Monday that it is “not proper” to reintroduce US nuclear weapons. He previously said the idea should be “deeply considered” by the allies, inflaming already-heated debate on the issue. AP

the community” who have taken in several hundred children in the last 40 years. Neighbors sa id t wo young men had been staying with them recently. The second search started last Sunday afternoon and was linked to the second suspect. The Islamic State extremist group has said last Friday’s subway attack was carried out by one of its affiliated units. Britain has endured four other attacks this year, which have killed a total of 36 people. The

other attacks in London—near Parliament, on London Bridge and near a mosque in Finsbury Park in north London—used vehicles and knives to kill and wound. The official terrorist-threat level is set by the Joint Terrorism Analysis Center, which consists of senior police and intelligence figures. The level has been set at “severe” for most of the past year, but was briefly raised to “critical” last Friday and after the bombing of an Ariana Grande concert in Manchester in May. AP

Dozens arrested as Saint Louis readies for more protests

AINT LOUIS—Hundreds of police officers in riot gear mobilized in downtown Saint Louis after another day of peaceful protests over an ex-police officer’s acquittal in the death of a black man, making dozens of arrests amid reports of property damage and vandalism in the streets. Authorities made the arrests shortly before midnight, saying people had ignored orders to disperse after the peaceful protests. A judge ruled last Friday that Jason Stockley, a 36-year-old who left the department and moved to Houston three years ago, was not guilty in the 2011 death of Anthony Lamar Smith. The ruling set off raucous protests throughout the weekend. Another peaceful demonstration was expected later on Monday. Last Sunday hundreds of people marched through downtown streets, the posh Central West End, and the trendy Delmar Loop area of nearby University City. Protesters also marched through two shopping malls in a wealthy area of Saint Louis County. The protest began at the police headquarters downtown. Following the same pattern of the previous days, well over 1,000 people marched peacefully for several hours. By nightfall, most had gone home. The 100 or so demonstrators who remained grew increasingly agitated as they marched toward the core of downtown. Along the way, they knocked over planters, broke windows at a few shops and hotels, and scattered plastic chairs at an outdoor venue. According to police, the demonstrators then sprayed bottles with an unknown substance on officers. One officer suffered a leg injury

and was taken to a hospital. His condition wasn’t known. Soon afterward, buses brought in additional officers in riot gear, and police scoured the downtown area deep into the night, making arrests. Later, officers in riot gear gathered alongside a city boulevard chanting “whose street, our street,” a common refrain used by the protesters, after successfully clearing the street of demonstrators and onlookers. Protest organizers said they were frustrated that a few people who have caused trouble at night could make it harder to spread their nonviolent message. State Rep. Bruce Franks, a Democrat who has participated in the peaceful protests, said those who are violent “are not protesters,” but a group separate from those marching in organized demonstrations. Others, though, said they understood why some act out. Protest organizer Anthony Bell said that while he believes change is made through peaceful protests, such as those led by Dr. Martin Luther King Jr., years of oppression has caused some to turn violent. “I do not say the demonstrators are wrong, but I believe peaceful demonstrations are the best,” Bell said. The recent Saint Louis protests have followed a pattern borne of months of angry and sometimes violent protests after the 2014 killing of Michael Brown in nearby Ferguson: The majority of demonstrators, though angry, are lawabiding. But as the night wears on, a subsection emerges, a different crowd more willing to confront police, sometimes to the point of clashes. AP

A10 Tuesday, September 19, 2017 • Editor: Angel R. Calso

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editorial

Coral reefs crisis

y next year the Department of Environment and Natural Resources (DENR) and the Department of Science and Technology (DOST) would be finished with their nationwide coral reef assessment, a joint project they call the National Coral Reef Status. What they have gathered so far, though, does not seem promising. Their studies seem to indicate only 20 percent of all coral reef systems in the country are alive, while 80 percent are dead coral because of illegal fishing and water pollution. According to local scientists, Tubbataha Reef remains the only largest coral reef system in the country that is alive. A BusinessMirror story quoted equally dismal results of another study. Dr. Porfirio Alino of the University of the Philippines Marine Science Institute found that only 5 percent—equivalent to just around 1,000 square kilometers—of the country’s total reef area remain in good condition in the face of wanton destruction of our coral reefs by poachers. Our coral reefs are endangered. This is old news. It’s easy to rant about how awful and terrible all this is but what are we going to do? This is the real question. In a country that has one of the largest reef areas in the Southeast Asia region and which is supposedly the center of marine biodiversity in the world, the horrifying degradation of our coral reefs is downright unforgiveable; especially since, on paper, it seems we’ve got enough laws and regulations to protect our marine environment. Local government units under the Local Government Code are authorized to protect the waters within their jurisdictions. We’ve got the National Integrated Protected Areas System Act, as well as a National Marine Policy that complies with the United Nations Convention on the Law of the Sea. The Philippine Fisheries Code has established fish sanctuaries or marine-protected areas (MPAs) all over the country. We also have the Bureau of Fisheries and Aquatic Resources (BFAR), which is responsible for the development, improvement, management and conservation of the country’s fisheries and aquatic resources. However, despite all these duly constituted government authorities, all these laws and regulations, enforcement has been found severely wanting, quite obviously. Why is that? Do we need to amend laws and introduce new ones that have more teeth? Do we lack the political will to implement these laws without interference or manipulation? We urge Congress to provide government agencies mandated to protect our marine environment more funds so that they could do their jobs well and to strengthen laws protecting our country’s biodiversity. We urge President Duterte to strongly take action before our life-supporting coral reefs are lost forever. The country’s coastal and marine resources require investments of at least 1 percent of GDP to improve efforts to safeguard them and ensure their sustainable development. Alino pointed out, for instance, that of the more than 600 MPAs that have been established in the country, only around 10 percent were actually being managed effectively. He said the capability of national government agencies to act decisively on marine problems appears to have diminished in recent years. He said there’s a need to provide more support “to enhance their capacity to provide technical assistance and improve their capability to fight crimes against our natural heritage”. More funding would not only provide for better law enforcement and regulation but, just as important, would boost our resource managers’ capability to start rebuilding damaged coral reefs, which science says is doable. Coral reefs are considered the “rainforests of the sea” and are integral to the livelihoods and well-being of our people. They not only provide protection from erosion and storm damage but could also generate income through ecotourism and fishing. The government with the help of our people and the private sector could still reverse the destructive impacts of overfishing, water pollution, poaching and climate change. Hopefully, it is not too late to prevent the extinction of our coral reefs.

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Boosting employment in the countryside Manny B. Villar

THE Entrepreneur Continued from A1

he amount does not include domestic tourism expenditure, which amounted to P2.11 billion in 2016, up 19 percent from P1.77 billion in 2015.

The Department of Tourism, in its latest report on industry performance, said tourism generated earnings amounting to P146.34 billion ($2.29 billion) in the first half of 2017, up 14.8 percent from the same period last year, as tourist arrivals grew. Tourist arrivals grew 12.7 percent to 3.357 million, compared to 2.978 million a year ago. The subject came back to mind following the administration’s proposal for a P10.1-billion budget for airport development in 2018, including the upgrading of six regional gateways, to enhance the tourism potential of key destinations. In his transmittal letter to Congress, President Duterte said the proposed budget would expand

e x ist i ng a i r por ts a nd bu i ld new ones. In terms of enhancement, Clark International Airport will receive P2.7 billion to improve its nightlanding capabilities. The airport in Pampanga is becoming a major gateway for tourism in central and northern Luzon, aside from being an alternate airport to the Ninoy Aquino International Airport (Naia). About P900 million is proposed for a new international airport in Daraga, Albay, which aims to make the province “an economic powerhouse by decongesting the crowded Legazpi airport, thereby attracting more tourists”. The Department of Tourism (DOT) considers the Bicol region as

In sum, expanding and modernizing existing airports and building new ones, particularly in the provinces, create a multitude of benefits: boost tourist arrivals and earnings; contribute more to the economy; create more jobs; and, eventually, lead to reducing poverty in areas that have been left behind by urbanization.

one of the top tourist destinations in the country. Other airports that will be constructed or scheduled to be rehabilitated next year include the New Bohol (Panglao) International Airport, Kalibo Airport in Aklan, Tacloban Airport in Leyte, Cauayan Airport in Isabela and the Zamboanga International Airport in Zamboanga del Sur. The improvement in regional airports is expected to boost tourism because visitors could go straight to destinations instead of passing through the congested Naia. Increased accessibility, after all, is key to bringing more visitors to areas that are being promoted as attractive destinations. For a country with more than 7,000 islands, improving airport facilities is an efficient and important means to link these islands, both for

Simple stock-market investing John Mangun

OUTSIDE THE BOX

hat is your stock market-investing strategy? On second thought, don’t answer just yet. Probably the best place to start is portfolio performance.

There are two classes of investors in the stock market—those that are particularly active and those that are not. The first group is like butterflies flitting from flower to flower looking for relatively large shortterm moves. This requires close attention to the prices, and stockmarket investing is more of an occupation than a passive investment. The vast majority of investors is not interested in devoting that amount of time and energy and is only looking to having their money work for higher returns than in other investments. Comparing portfolio performance between the two groups is not realistic and offers nothing in terms of determining a good stock-market strategy.

Risk/reward factors and tolerance are entirely different, and the trading psychology is also different. Then, as a passive investor, what was the return so far in 2017? Are you up 120 percent? How about 70 percent? Have you experienced a 30percent to 40-percent increase in the value of your stock-market portfolio? Your first reaction to that question might be that those kinds of return are only for the active traders. You would be wrong. One place you might want to start is finding out why prices are going higher or why they are not up. Fortunately, there are many experts out there with the answers. In fact, when the stock market is reaching historic highs, the “experts” turn into

The only stock market-investment strategy that makes sense is simple and smart and probably goes against what you have heard from some experts. Prices go higher when “everybody” is buying. Therefore, follow the crowd to get the best deals, just like you would to the SM three-day sale.

“geniuses”. You will read comments like these: “Market sentiment continues to be positively buoyed by the favorable outlook of analysts on the overall market”. “Investors should look at the Philippines’s business model and its economy’s growth prospects”. “The end of the ghost month is adding to positive sentiment”. But the fact is that all of those high returns mentioned above started at the beginning of the year—not as the “ghost month” ended or “corporate fundamentals” and economic growth kicked in. Annual economic growth dropped to 6.6 percent in first quarter 2017 from 7.1 percent in the last quarter of 2016. You should have bought when the peso was trading at 49 going down to near 52. Seven of the 30 Philippine Stock

Filipinos and visitors. I welcome this development not only because of the contribution of tourism to our GDP, which the PSA estimates at 8.3 percent in 2016. Equally important is tourism’s contribution to employment. According to the PSA, employment in tourism and tourism-related industries was estimated at 5.2 million in 2016, up 5.1 percent from the previous year. This gave the tourism industry a 12.8-percent share in total employment in 2016. An important feature in tourism as an employment generator is that the jobs are created in the provinces, where many of the tourist spots are located. This means that job opportunities are created not in urban areas but in the provinces, where poverty is more prevalent (precisely because jobs are limited to agriculture and a few industries). In sum, expanding and modernizing existing airports and building new ones, particularly in the provinces, create a multitude of benefits: boost tourist arrivals and earnings; contribute more to the economy; create more jobs; and, eventually, lead to reducing poverty in areas that have been left behind by urbanization.

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

Exchange composite index issues are up more than 25 percent in 2017. Megaworld has already gained over 40 percent. International Container Terminals has increased by nearly 50 percent. Ayala Land stock price is up 30 percent. We are not talking about the “high-flyers”. These are the blue chips. On the second tier is EastWest Bank, which has increased by 70 percent. Robinson’s Retail is up 28 percent. And the thing to remember is all of these issues have been climbing consistently through 2017. So, instead of having to wait for the historic high and the experts to tell you why the market is going higher, all you had to notice was that the composite index was up 5.69 percent at the end of January. The only stock market-investment strategy that makes sense is simple and smart and probably goes against what you have heard from some experts. Prices go higher when “everybody” is buying. Therefore, follow the crowd to get the best deals, just like you would to the SM three-day sale. 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

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Alarmingly weak border control

Cruel CHR budget cut Ernesto M. Hilario

Cecilio T. Arillo

database

HE country’s security screening capability is alarmingly pregnable, trade security expert and retired customs bureau official lawyer Ramon Cuyco said in an interview regarding the country’s customs-immigration-quarantine border control management. “In Mindanao, where the country shares borders with its Asean neighbors, whose nationals oftentimes look more Filipino than many Filipinos, the Philippines’s vulnerability is seriously high,” he said. According to him, there was a time when some 200,000 Indonesians reportedly entered the Philippines’s backdoors without visa and other similar entry documents. Conversely, thousands upon thousands of Filipinos sail to Borneo or Malaysia without legal travel documents. And they come back and go forth, often without notice, clearance or protestation from Bureau of Immigration (BI) officials. Elsewhere, the immigration bureau, known as the country’s doorman, has been “intensifying efforts to erase the Philippines’s image as a sex tourism hot spot by aggressively going after foreign pedophiles and convicted sex offenders attempting to enter the country. Since January last year, 312 sex offenders have been refused entry at the Ninoy Aquino International Airport and other ports of entry nationwide, which means that the immigration officers at the country’s airports have been turning back an average of 18 foreign pedophiles every month, or one sex offender every two days.” “That they trade freely—or, untaxed—is recognized to have predated the Philippine Republic, is not what is alarming; their capacity to bring in or out antisocial goods is what must send shivers down the spines of the country’s defense and security officials,” Cuyco said. In one of the Senate sessions last year, top officials of the immigration bureau were asked by Sen. Juan Ponce Enrile: “Can anyone from the BI tell me how many aliens do we have in the country today? And, of those numbers, how many are overstaying?” No one was able to answer. During that time, the BI was already having its processes computerized. With what has confronted the BI of late, one can argue that nothing has changed dramatically. If there is, it could be in the area of corruption where its key officers were reportedly caught “extorting” millions from a foreigner that has been bringing in thousands of “undocumented or inappropriately documented” aliens working in the casinos somewhere in Central Luzon. In a sense, corruption corrodes even the countr y’s migration security controls. And because these aliens are “undocumented or inappropriately documented”—whose faces could hardly be identified, their current residences unmonitored, and what they are actually doing right now no one can tell—how then can it be said that this Republic is safe?

With what has confronted the Bureau of Immigration of late, one can argue that nothing has changed dramatically. If there is, it could be in the area of corruption where its key officers were reportedly caught “extorting” millions from a foreigner that has been bringing in thousands of “undocumented or inappropriately documented” aliens working in the casinos somewhere in Central Luzon. The Siege of Marawi is Exhibit A of the country’s vulnerability, both in its customs and immigration border control capabilities.

Health surveillance

The country’s quarantine services are also fractious: there are health quarantine, crops quarantine and livestock quarantine services, all aimed at distinct purposes, albeit, sharing the same goal, to shield the country and its people from the entry of health hazards. In this day and age where viral and touch-based infections are susceptible of manipulation by criminal minds, the country’s quarantine security is still operating under the protocols of the past decades, with tools so crude and rusty and organizations so emaciated by natural attrition, and with a mind-set that is so hackneyed that it would rather facilitate entry rather than shut the door to keep the nation safe from toxins and other health hazards. For, how shall the eggs that breeders import be verified as to the legitimacy of their importation purpose— what if inferior eggs were imported so that the country’s poultry eggs be purposively destroyed, when the poultry industry should have been improving the poultry’s quality? “Or, who can say that a pet is not injected with virus that becomes manifest only after 30 or 60 days from its entry into the Philippine market, or a month after it has been ushered into the bedroom of pet lovers,” Cuyco asked. “Or, who can say that palms from tropical paradise islands, or orchids from Asean neighbors, or tulips from faraway Europe were not entered into the Philippine territory to cause plants or crops infestations and infect human health or wreak havoc of unimaginable magnitude,” he said. Again, one’s imagination could go wild: The Philippines is a sitting duck! To reach the writer, e-mail cecilio.arillo@ gmail.com.

ABOUT TOWN

’m totally dismayed by the move of Congress to reduce the 2018 budget of the Commission on Human Rights (CHR) from P623.38 million to a mere P1,000, thus practically abolishing this constitutional body tasked with protecting our civil and political rights. Human-rights advocates here and abroad have every reason to express outrage over this brazen travesty of the fundamental law by the House of Representatives. And I share the hope of the CHR that sober and rational voices within the Senate will not let this tyrannical exercise by some lawmakers of their power of the purse go unchallenged. The CHR’s mandate, as I understand it, is to investigate on its own or on complaint by any party, all forms of human rights involving civil and political rights. These rights are laid down in Article 3 of the Constitution, and include due process of law, equal protection of the laws, the right of the people to be secure in their persons, houses, papers and effects against unreasonable searches and seizures of whatever nature and for any purpose; privacy of communications and correspondence; freedom of speech, of expression and of the press; and the right of the people to peaceably assemble and petition the government for redress of grievances, among others.

Why doesn’t the CHR speak up and investigate the New People’s Army rebels who engage in extortion in the guise of so-called revolutionary taxation? Or the Abu Sayyaf who engage in kidnap-for ransom? Or ordinary criminals who commit murder, rape and other heinous crimes? Because the rebels, terrorists and criminals operate outside the purview of the law and running after them and filing charges against them is the job of the police and other law-enforcement agencies. If the CHR, as some suggest, ought to condemn and file charges against criminals and rebels for violating the right to life, liberty and property of people, I don’t think that’s what the framers of the 1987 Constitution had in mind, as the creation of the CHR was impelled first and foremost by the need to prevent massive humanrights violations during the martiallaw era, including torture, illegal arrests and detention, and enforced disappearances. If those lawmakers and others who now want the CHR abolished

‘Enough already,’ God said Nicholas Kristof

new york times

he famous televangelist Jim Bakker, who is preaching again on television after a rape accusation and a prison term for financial fraud, recently warned that Christians would start an armed insurrection if President Donald J. Trump were impeached. “If it happens, there will be civil war in the United States of America,” Bakker told his television audience. “The Christians will finally come out of the shadows, because we are going to be shut up permanently if we’re not careful.” Afterward, I received the following transcript of a conversation between Bakker and, er, God. It comes from a divine source. Bakker: “Dear God, thank You for blessing me with wisdom, courage, virtue and rugged good looks. Plus humility. Please help me raise up an army to smite the infidels trying to impeach President Trump.…” God: “Oh, enough already!” Bakker, trying to dive under the bed: “Who’s there? And oh, no! Fire! Fire! There’s a fire on my bed!” God: “It’s a burning bush.” Bakker: “Who said that? Fire! Fire! Help!” God: “Don’t be such a wimp: This is a smokeless burning bush. It won’t even singe your linens. So listen up. This is God.” Bakker: “Wow, that really is a burning bush! That’s You, God? Are You anointing me to lead my people

and smite our enemies? Will You give me a mighty, holy sword? I could crush all those infidels, just as if they were Amalekites.” God: “ Whoa! Remember: ‘Blessed are the peacemakers.’ I’m not into smiting these days. When you say deranged, violent things in My name, I want to sue you for defamation. Not that I go around feeling sorry for Myself, but it’s tough being the Almighty when crazies keep running around fomenting hatred in My name.” Bakker: “Like those God-forsaken Muslims! They don’t value human life. We should destroy them!” God: “You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.” Bakker: “You could be more respectful. And wait—are you not a Republican?”

Allow Iranian entrepreneurs to sell their apps

hether Iran’s ruling regime improves its behavior won’t depend on how many of their citizens can use their phones to hail taxis. Yet US sanctions are preventing American technology companies from offering Iranian-made apps in their online stores —a bad bargain for both US business and policy. Apple has removed the apps from its App Store out of an abundance of caution. Google followed suit last week, taking down Iranian apps for Android phones. US law prohibits American companies from doing business in Iran, though

the government grants exceptions for the national interest. In that spirit, and to support the emergence of a Westernized middle class in Iran, the US government should make clear that the apps are allowed. An estimated 40 million Iranians own smartphones. About 15 percent use iPhones, though Apple does not have a physical presence in Iran. Until recently, users could download iPhone apps made by Iranian companies and hosted on App Stores outside Iran; Iranian-made apps for Android phones were available on Google’s Play store.

That changed late last month, when Apple informed about a dozen start-ups that their apps will no longer be offered. The companies affected by the ban offer such products as a meal-delivery service and a ridehailing app. Iranians who have already downloaded the apps will still be able to use them, but companies won’t be allowed to update their services or attract new users. In its suspension notices, Apple said that “under the US sanctions regulations, the App Store cannot host, distribute, or do business with apps

or developers connected to certain US embargoed countries.” That’s technically true. At the same time, the regulations give US technology companies a general license to provide Iranians “services incident to the exchange of personal communications over the Internet”. Designed to encourage the use of social networks, like Twitter and Facebook—currently blocked by the Iranian government— this provision means Apple and Google are permitted to give Iranians access to US-made mobile apps. But because of the uncertainty about whether and

Tuesday, September 19, 2017 A11

for supposedly neglecting its duty, then they should ask themselves: who will protect them when their human rights are violated by the police, military and other persons in authority when they are no longer in power?

What’s going on at the Comelec?

Not everything, it seems, is A-OK at the Commission on Elections (Comelec) these days. We understand that the six election commissioners have already urged Chairman Andres D. Bautista to consider resigning. Then there’s persistent rumors of graft and unauthorized travel and leaves of absence. Commissioners Christian Robert Lim, Al Parreño, Luie Tito Guia, Arthur Lim, Rowena Amelia Guanzon and Sheriff Abas want Bautista to just resign and spare the institution from having its image tainted by allegations of hidden wealth against him. Bautista also failed to attend to some of the agency’s important commitments, including the first budget briefing of the Comelec at the House of Representatives on August 23. With the Comelec already preparing for the barangay and Sangguniang Kabataan elections scheduled for October, which could, however, be postponed to a later date, the poll body already has its hands full, and everybody in the Comelec needs to pitch in. But according to reliable sources, it appears that Guanzon is actually not on full work-mode herself, considering her frequent travels abroad even without travel authority. For this

month alone, she is said to have traveled twice—one is a vacation leave for a spiritual retreat. To be fair, there’s nothing wrong with taking a vacation once in a while and traveling on official business, but these should have the corresponding travel authority. Sources say Guanzon is always out and on leave. So what does this say about her then? What is the purpose of her frequent travel and leave? Is it still for the benefit of the agency? Lim has also found himself in hot water these days. Former Rep. Glenn Chong of Biliran has asked the Office of the Ombudsman to investigate him for graft and to initiate impeachment proceedings against him, citing Lim’s alleged manifest partiality in favor of election technology provider Smartmatic-Total Information Management Corp. in 2015, when he took over as officer in charge following the end of Comelec Chairman Sixto Brillantes’s term. Chong also accused Lim of “manipulating his colleagues and persistently calling on Bautista to resign or take a leave”. Is this an indication of his intense interest in the position as the Comelec prepares for the 2019 midterm elections? Whatever is happening to the Comelec now isn’t good for the agency, all the more for the Filipino people. How would it be able to “operate effectively, efficiently and free from political interference” with all these controversies? The Comelec needs to shape up now and stand united to keep the integrity of our elections intact.

E-mail: ernhil@yahoo.com.

God: “I’m nonpartisan. I just don’t like being used. I was mortified when four out of five white evangelical Christians voted for a thrice-married liar who bragged about sexual assault— and then cited Me as the reason for their votes. In polls, white evangelicals went from the group most likely to say that personal morality mattered in politics to the group least likely to say that—in just five years. These are values voters?” Bakker: “I admit, Trump isn’t perfect. No man is perfect, except our Lord Jesus Christ. But Trump is pro-life.” God: “He’s pro-life for fetuses. That’s about it.” Bakker: “But God, You put Trump in power! So many evangelical leaders, like Robert Jeffress, have pointed out that Trump could have been elected only if that was Your doing.” God: “Don’t blame Me! I endorse free will. And if Trump’s election had been My doing, I would have made sure he also won the popular vote.” Bakker: “Pastor Paula White said the other day on my television show that since Trump’s presidency is God’s will, opposition to Trump amounts to resisting ‘the hand of God’.” God: “Hmm. Did she say that when Barack Obama was serving two terms?” Bakker: “But Trump is an instrument of Jesus. Fighting abortionists and refugees.” God: “I wish you’d read your Bible, and not just thump it. Jesus never said a peep about abortions or gays. And you know who was a refugee?” Bakker: “Hitler?”

God: “How about Jesus? Jesus’s family fled King Herod’s slaughter of the innocents and found asylum in Egypt. Maybe ancient Egypt was more tolerant of refugees than Trump?” Bakker: “But God! We people of faith are just trying to do Jesus’s will!” God: “Jesus didn’t coddle the financiers of his day, the money-changers, but hounded them while comforting the needy. Follow Him, and the focus would be on: ‘I was hungry and you gave me no food, I was thirsty and you gave me nothing to drink, I was a stranger and you did not welcome me, naked and you did not give me clothing, sick and in prison and you did not visit me.’ Nuns and missionaries make me proud when they fight AIDS or tutor in prisons. I love World Vision’s humanitarian programs. But I’m just insulted when people invoke My name and side with bigots or hurt the poor.” Bakker: “It’s more complicated than that. If today’s foreigners spoke English and were good white Christians like Joseph and Mary, I’d welcome them. But they speak strange languages. If English was good enough for Jesus, it’s good enough for everyone in America.” God: “Eloi, eloi, lema sabachthani.” Bakker: “God, will You send Your flesh and blood again on Earth so that we can exalt Him?” God: “Her. You see, I did. She’s a 16-year-old Syrian Muslim girl in Arkansas. But ICE just arrested her and deported her to a refugee camp in Turkey.” Bakker: “Uh-oh.”

where apps can be hosted, Iranian start-ups increasingly rely on homegrown, third-party app stores to reach consumers. Clarity is essential—for the sake of both US companies and Iranian entrepreneurs. The most sensible step is for the government to grant licenses to US companies to continue to host Iranianmade mobile apps in their stores. The goals of US sanctions policy are to pressure Iran’s government to adhere to limits on its nuclear program, end its support for terrorism and respect human rights. Restrictions on apps have

instead handed Iran’s government a propaganda gift, allowing it to rail against American technology companies for discriminating against Iranian business people and consumers. The current administration, with reason, does not trust the Iranian regime. Nevertheless, it remains in the US’s interests to support the Iranian people’s aspirations for change, which technology can help bring about. Allowing Iranian entrepreneurs to sell their apps would serve as a reminder that, in the long game for Iran’s future, the US is still on their side. Bloomberg View

Global Eye

A12 Tuesday, September 19, 2017 • Editor: Angel Calso

BusinessMirror

news@businessmirror.com.ph

Digital currencies won’t kill the dollar

By Noah Smith | Bloomberg View

amie Dimon, the CEO of JPMorgan Chase & Co., recently slammed bitcoin in no uncertain terms: It “won’t end well”, he said, calling the cryptocurrency a “fraud” and “worse than tulip bulbs”. Is Dimon right? It depends. In at least two important ways, bitcoin and other cryptocurrencies will probably fail to achieve the dreams of their creators and enthusiasts. They are unlikely to usher in a hard-money revolution and are also unlikely to supplant national fiat currencies as the standard means of payment. But that doesn’t mean they won’t change the world. Many bitcoin enthusiasts believe that the digital currency will create what amounts to a new gold standard. The basic logic is that the number of bitcoins in existence is limited, while the number of dollars is not. Simple intuition says that if you create more of something, its value goes down—in other words, central bank money-printing makes the dollar slowly lose value over time through inflation. The great economist Milton Friedman summed it up when he said that “inflation is always and everywhere a monetary phenomenon”. Faced with a choice between money that slowly depreciates and money whose supply is permanently scarce, bitcoin bulls reason, who would

choose the former? The availability of this sort of “digital gold,” they believe, will force central banks to hold down inflation in order to keep the dollar and other fiat currencies competitive. If they fail to do so, everyone will switch to bitcoin, central banks will become powerless and inflation will fall anyway. This is an attractive scenario not just for hard-money supporters but also for libertarians, who would rather the government didn’t have control over the value of their bank accounts. But this thinking is flawed in at least two important ways. First, the number of bitcoins may be limited, but the number of cryptocurrencies is not. People are constantly creating new ones. Early examples included Dogecoin and Litecoin. Later came Ether, a currency that can be used in smart contracts. But the real bonanza came when start-ups realized that they could raise money by creating their own cryptocurrencies and selling them to investors—an innovation known as an Initial Coin Offering. Some create new digital currencies that immediately convert into dollars, bitcoin, Ether or some

Accelerating inflation? Brian Lawdermilk/Getty Images

other form. Others stick around and can then be used just like bitcoin. There are now almost 900 known cryptocurrencies in circulation. That number is likely to continue to climb. And what hard-money folks seem to not realize is that each time a new cryptocurrency is created, it expands the total money supply. When everyone uses dollars, the money supply is just the total amount of dollars in circulation. But if there are a bunch of currencies that can all be used to buy things, the money supply represents the sum total of all of them. Therefore, rather than restricting the money supply, the advent of cryptocurrencies is causing it to balloon.

Does this mean the economy is headed for inflation? Probably not. First of all, Milton Friedman was probably wrong—as the US and Japan have learned in recent years, more money probably doesn’t mean more inflation after all. Also, each new currency adds to the money supply only to the extent that it can be used to buy real goods and services. When was the last time you used Dogecoin to buy a loaf of bread? Cryptocurrency is inflationary, but it isn’t very inflationary. This brings us to the second way that cryptocurrency will disappoint: It almost certainly won’t become the standard means of payment in the economy. Bitcoin might be a hot

investment property, but people would rather receive their wages in something less volatile—you don’t want a fifth of your paycheck evaporating between payday and grocery day. The US dollar depreciates at a nice, steady, predictable rate of around 2 percent a year, making it perfect for buying food and paying the electric bill. This is the reason you don’t see people going around buying gasoline with gold coins—gold, like bitcoin, has too much short-term volatility to be useful as money. To top it off, the government requires us all to pay our taxes in the national fiat currency. So bitcoin and other cryptocurrencies won’t neuter central banks,

and they won’t make fiat currency go away. But they are already changing the financial world in other important ways. Initial coin offerings (ICO) are allowing companies to raise money with less of a regulatory burden. China bans them outright, but the US Securities and Exchange Commission has, so far, applied a light touch, and other countries may have few or no restrictions. It might thus be possible for start-ups in the US to raise money overseas through an ICO, convert the proceeds to bitcoin and exchange the bitcoin for dollars in the US, thus entirely evading financial regulation. This is not the only situation where cryptocurrency can help people evade regulation—money laundering is the other obvious application. The world’s governments maintain an extensive network of controls on financial flows, in order to stop drug dealers and other illicit businesses from moving money around freely. The existence of cryptocurrencies makes those controls a lot harder to maintain. Of course, since cryptocurrencies are volatile, this is an inherently risky way to raise money for your business or move your drug profits across borders. But for many, it’s better than nothing. So while cryptocurrency won’t create a new gold standard, it will move the world toward another libertarian dream—financial anarchy. If you think regulations are preventing start-ups from raising the money they need to grow, or if you think laws against drugs are unfair infringements on personal liberty, you should be looking forward to the new, crypto-powered world.

Economic growth isn’t necessarily good news for North Korea’s Kim Jong Un By Nisid Hajari Bloomberg View

yung-Yeon Kim, a professor at Seoul National University, began interviewing North Korean defectors seven years ago to learn more about their country’s economy. One wouldn’t have thought there was much to discover: Often described as “Stalinist”, the hermetic regime to the north seemed to preside over a crude, centrally planned system, with peasants toiling away for a pittance in collective farms and state-owned factories, dependent on food aid and growing poorer with each passing year. In fact, as Kim lays out in his new book, Unveiling the North Korean Economy: Collapse and Transition, that popular image is almost entirely wrong. By necessity, virtually all North Koreans, from farmers to army commanders, now buy and sell goods and services in capitalist markets—whether to survive or, in some cases, to get rich. The economy is growing and wages are rising; until recent rounds of United Nations sanctions, North Korea was about as dependent on foreign trade as the UK or Italy. This will come as a disappointment to those who hoped that popular discontent would spell the end of the North Korean regime; despite decades of isolation, the country has stabilized economically even as it rapidly develops its nuclear and missile arsenals. Kim is more sanguine: He sees the spread of markets and money as a threat to dictator Kim Jong Un—whom United States President Donald J. Trump now derides as “Rocket Man”—and a point of pressure that the outside world can exploit. We spoke last week soon after North Korea tested its first thermonuclear device but before its latest missile test flew over Japan. A lightly edited transcript: Nisid Hajari: How has the North Korean economy changed under Kim Jong Un? Byung-Yeon Kim: Since Kim took power in 2011 the economy has stabilized. While the rate of growth

isn’t that high, overall the economy has grown 1 percent to 2 percent for the last five years. It’s not really a Stalinist economy anymore. North Korea experienced a severe crisis in the late-1990s, when several hundred thousand people starved to death because of famine. Afterward the economy changed dramatically. Before, the regime repressed any kind of market activities. But, nowadays, households participate more in the informal economy than the official economy. About 70 percent to 90 percent of household income comes from markets. The reason is quite simple: The government cannot pay a salary sufficient to live on. I talked to one high-ranking diplomat who served in London and defected to South Korea last year. He said that he received a monthly salary of 2,000 North Korean won. At that time, the market rate was 3,000 North Korean won to the dollar. A typical North Korean household needs $50 per month for survival; markets fill the remaining part of this need. Some 70 percent of households participate in markets, while only 50 percent participate in the official economy. It’s a hugely informalized or marketized economy. Second, North Korea is not a closed economy anymore. I estimate the economy’s trade-dependency ratio is higher than 50 percent. The world average is 58 percent. NH: Critics argue that sanctions won’t work because North Korea is largely self-sufficient. But they really do need trade to survive. BYK: Exactly. Trade and the markets are a double-edged sword. The markets function well, but they also expose North Korea to a potential external shock, through trade. More than 70 percent of consumer goods are imported from China. These transactions require foreign revenue, and this revenue comes from trade. So, when trade is hit, markets can be hit hard as well. Then the two pillars that sustain the system may collapse. NH: Can we see any signs of this happening? BYK: Not yet. When you look at

People watch a TV screen showing a local news program reporting about North Korea’s missile launch with an image of North Korean leader Kim Jong Un, at the Seoul Railway Station in Seoul, South Korea, on September 16. Kim said his country is nearing its goal of “equilibrium” in military force with the United States, as the United Nations Security Council strongly condemned the North’s “highly provocative” ballistic-missile launch over Japan last Friday. The signs read, “Kim Jong Un attends the launch of the Hwasong-12 missile.” AP

market prices in North Korea, they haven’t moved. Trade has been hit hard: China stopped importing coal for much of this year, so exports from North Korea to China declined by 25 percent for the first half of the year. But imports have increased. That means consumer goods and food are still coming into North Korea through China. We know that some North Koreans are rich. We know that rich and middle-class North Koreans have some savings, so, therefore, they can spend this money. But if imports exceed exports this year and next year, then I would expect possible balance of payments problems because their foreign-revenue earnings will be insufficient to sustain imports. NH: Does the opening of the North Korean economy reflect a conscious decision by Kim Jong Un to reform, as China’s Deng Xiaoping did? BYK: Kim Jong Un is wiser than his father Kim Jong Il in managing the economy. The major opening took place in the 1990s, and it was forced upon North Korea by the food crisis. But Kim Jong Il believed that markets were bourgeois and, in 2009, he tried repressing them through currency reform. He introduced new currency bills and imposed a ceiling

on how much each person could exchange; those who had more money than the ceiling were unable to exchange it. But the scheme was a drastic failure. [To address public fury], one high-ranking official was shot, and the prime minister apologized to the public. Kim Jong Un may have thought, “OK, repressing markets may not be possible because, today, without markets, people will not survive. So, although I don’t like markets, without markets, I cannot maintain my power.” So that is some kind of endorsement, but it’s a forced endorsement. Market activities are now tolerated, and there are no harsh penalties for engaging in them. NH: But Kim isn’t pushing forward and implementing reforms that would expand markets or improve their functioning? BYK: No, I don’t see any clear indication that market reforms have been institutionalized. For example, China began reforms in 1978 by instituting the household responsibility system: Households were allowed to cultivate their land, give some part of the yield to the government and sell the rest in markets. A similar kind of reform was introduced in North Korea, but we don’t have any

firm information about whether the reform applies to all collective farms, or was a kind of experiment. If you look at the figures for agricultural production over the last four to five years, they’ve increased, but they haven’t increased as much as in China. That means that even though they’ve experimented with this kind of reform, it’s been a rather partial, cautious reform. The same applies to markets. They do something, they may try other things, but there are still institutional constraints that prevent these markets from growing into a full-fledged market economic system. NH: Is it possible for the regime to maintain this halfway state, to preserve stability without introducing further reforms? BYK: I don’t think so. If you look at the old socialist countries, they weren’t sustainable in the long run. There are two possible scenarios for North Korea [to launch Chinesestyle reforms]. The first way is compromise. If there’s no repression, then, at some point, markets will grow too big to control. They will then claim power from the dictator. Kim Jong Un may say, “You can do what you like economically, but do not threaten my political power.” This will introduce Chinesestyle capitalism. The other scenario is more violent. If Kim somehow loses power, his successor may want to open up. Then we might also see the start of Chinese-style reforms. NH: And what if Kim chooses not to compromise and tries to maintain the current constraints on markets? BYK: I think that could lead to a quite violent struggle between markets and the state. Politically, the state is quite intact; there’s no hint of perestroika or glasnost. But three things are undermining Kim’s power. The first is elites: Elites make a lot of money from trade because a big part of trade involves corruption. So, for example, North Korean exporters export cobalt to China, but their reported prices are lower than world market prices. The gap between these reported prices and

world market prices goes into the exporters’ pockets. At the same time, mid-ranking officials can’t live without bribes. The bribe-givers are market participants. So the incentives of these midranking officials are misaligned. Politically, they have to be loyal to the dictator. But economically, they have to be loyal to markets. Finally, households understand they can’t live without markets. The state rationing system has broken down, so they are disengaged from the official economy. They’ve changed their mindset as well in accordance with the functioning of markets. So the elites, mid-ranking officials and households—all three of the main elements of system have changed. They want to preserve markets because that is their means of survival. This will continue to the point where Kim has to decide which way he wants to go. And if he resists, there will be a big conflict. NH: Does this apply to the military as well? BYK: Yes, they can’t survive without the markets. The government coffers are rather empty, and the government cannot provide any resources to state institutions. Therefore, each institution has its own companies, and these companies make money and provide resources to state institutions, such as the army, party, the Cabinet and local governments. NH: You’re saying that all of these groups are currently invested in keeping the system stable, but, eventually, their interests will clash with Kim’s. BYK: Yes, I surveyed several of the North Korean refugees who came to South Korea after the failed currency reform, and they said they were very disappointed because it took too much effort and time and sacrifice for them to build up their businesses. With currency reform, it was all taken away by the state. So they expressed a great deal of anger against Kim Jong Il. If this kind of thing happens again, that could be quite dangerous to the dictator.

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Superpower India to replace China as global growth engine By Michael Heath Bloomberg

ndia is poised to emerge as an economic superpower, driven in part by its young population, while China and the Asian Tigers age rapidly, according to Deloitte Llp. The number of people aged 65 and over in Asia will climb from 365 million today to more than half a billion in 2027, accounting for 60 percent of that age group globally by 2030, Deloitte said in a report on Monday. In contrast, India will drive the third great wave of Asia’s growth—following Japan and China—with a potential work force set to climb from 885 million to 1.08 billion people in the next 20 years and hold above that for half a century. “India will account for more than half of the increase in Asia’s work force in the coming decade, but this isn’t just a story of more workers: these new workers will be much better trained and educated than the existing Indian work force,’’ said Anis Chakravarty, economist at Deloitte India. “There will be rising economic potential coming alongside that, thanks to an increased share of women in the work force, as well as an increased ability and interest in working for longer. The consequences for businesses are huge.’’ While the looming “Indian summer” will last decades, it isn’t the only Asian economy set to surge. Indonesia and the Philippines also have relatively young populations, suggesting they’ll experience similar growth, Deloitte said. But the rise of India isn’t set in stone: if the right frameworks are not in place to sustain and promote growth, the burgeoning population could be faced with unemployment and become ripe for social unrest. Deloitte names the countries that face the biggest challenges from the impact of ageing on growth as China, Hong Kong, Taiwan, Korea, Singapore, Thailand and New Zealand. For Australia, the report said the impact will likely outstrip that of Japan, which has already been through decades of the challenges of getting older. But there are some advantages Down Under. “Rare among rich nations, Australia has a track record of welcoming migrants to our shores,” said Ian Thatcher, deputy managing partner at Deloitte Asia Pacific. “That leaves us less at risk of an ageing-related slowdown in the decades ahead.’’ Japan’s experience shows there are opportunities from ageing, too. Demand has risen in sectors such as nursing, consumer goods for the elderly, age-appropriate housing and social infrastructure, as well as asset management and insurance. But Asia will need to adjust to cope with a forecast 1 billion people aged 65 and over by 2050. This will require: n Raising retirement ages: Encouraging this could help growth in nations at the forefront of ageing impacts. n More women in the work force: A direct lever that ageing nations can pull to boost their growth potential. n Taking in migrants: Accepting young, high-skilled migrants can help ward off ageing impacts on growth. n Boosting productivity: Education and retraining to bolster growth opportunities offered by new technologies.

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Warm waters off West Coast has lingering effects for salmon

By Phuong Le | Associated Press

EATTLE—The mass of warm water known as “the blob” that heated up the North Pacific Ocean has dissipated, but scientists are still seeing the lingering effects of those unusually warm sea-surface temperatures on Pacific Northwest salmon and steelhead.

Federal research surveys this summer caught among the lowest numbers of juvenile coho and Chinook salmon in 20 years, suggesting that many fish did not survive their first months at sea. Scientists warn that salmon fisheries may face hard times in the next few years. Fisheries managers also worry about below-average runs of steelhead returning to the Columbia River now. Returns of adult steelhead that went to sea as juveniles a year ago so far rank among the lowest in 50 years. Scientists believe poor ocean conditions are likely to blame: Coldwater salmon and steelhead are confronting an ocean ecosystem that has been shaken up in recent years. “The blob’s fairly well dissipated and gone. But all these indirect effects that it facilitated are still there,” said Brian Burke, a research fisheries biologist with the Northwest Fisheries Science Center. Marine creatures found farther

south and in warmer waters have turned up in abundance along the coasts of Washington and Oregon, some for the first time. “That’s going to have a really big impact on the dynamics in the ecosystem,” Burke said. “They’re all these new players that are normally not part of the system.” Researchers with National Oceanic and Atmospheric Administration (NOAA) Fisheries and Oregon State University Cooperative Institute for Marine Resources Studies have been surveying off the Pacific Northwest for 20 years to study juvenile salmon survival. In June they caught record numbers of warm-water fish, such as Pacific pompano and jack mackerel, a potential salmon predator. But the catch of juvenile coho and Chinook salmon during the June survey—which has been tied to adult returns—was among the three lowest in 20 years.

IN this photo taken on September 14, salmon, identified by biologists as a coho (left) and a Chinook, swim past viewing windows at a fish ladder where saltwater transitions to fresh at the Ballard Locks in Seattle. AP

Burke and other scientists warned in a memo to NOAA fisheries administrators last month that poor ocean conditions may mean poor salmon returns to the Columbia River system over the next few years. “There was hardly any salmon out there,” Burke said. “Something is eating them, and we don’t know what, and we don’t know precisely where,” he added. Seabirds, such as common murres, could be the culprits. Researchers caught fewer forage fish, such as herring, anchovy and smelt. When forage fish are low, avian predators may be forced to eat more juvenile salmon. Seabirds near the mouth of the Columbia River may have feasted on more juvenile salmon as they entered the ocean. The North Pacific Ocean had been unusually warm since the fall of

2013 with the blob, but sea-surface temperatures have recently cooled to average or slightly warmer than average conditions. Changes in the marine ecosystem are likely to be seen for a while. The research surveys also pulled up weird new creatures that had not been netted before. Researchers have caught tens of thousands of tube-shaped, jelly-like pyrosomes, which are generally found in tropical waters. Their impact on the marine food web isn’t yet clear. Fisheries managers are also seeing lower runs of steelhead to the Columbia River system this year. Joe DuPont, a regional fisheries manager with Idaho Fish and Game, blames poor feeding conditions when juvenile steelhead went out to the Pacific Ocean last year. Warm waters brought less nutrient-rich copepods, tiny crustaceans

at the base of the food chain. Meanwhile, northern copepods richer in lipids, that young steelhead eat, were less abundant. It’s the second year of consecutive low steelhead runs, said Tucker Jones, ocean salmon and Columbia river program manager with the Oregon Department of Fish and Wildlife. “There’s a lot of circumstantial evidence to point to an unhappy river experience and meeting ocean conditions that were far from hospitable,” Jones said. “The blob especially changed the zooplankton food-web structure that was out there,” he added. Fisheries managers have put some fishing restrictions in place due to low forecast of steelhead expected back this season. While the mechanisms for steelhead and salmon may be different, “large scale changes to the ocean are driving all of it,” Burke said.

How violence in Myanmar radicalized a new generation of Rohingya By Hannah Beech

New York Times News Service

ALUKHALI, Bangladesh— Nazir Hossain, the imam of a village in far western Myanmar, gathered the faithful around him after evening prayers last month. In a few hours, more than a dozen Arakan Rohingya Salvation Army (Arsa) fighters from his village would strike a nearby police post with an assortment of handmade weapons. The men needed their cleric’s blessing. “As imam, I encouraged them never to step back from their mission,” Hossein recalled of his final words to the ethnic Rohingya militants. “I told them that if they did not fight to the death, the military would come and kill their families, their women and their children.” T he y fou g ht — joi n i n g a n August 25 assault by thousands of the group’s fighters against Myanmar’s security forces—and the retaliation came down anyway. Since then, Myanmar’s troops and vigilante mobs have unleashed a scorchedearth operation on Rohingya populations in northern Rakhine state in Myanmar, sending hundreds of thousands fleeing their homes in a campaign that the United Nations has called ethnic cleansing. From its start four years ago as a small-scale effort to organize a Rohingya resistance, Arsa—which is known locally as Harakah al-Yaqin, or the Faith Movement—has managed to stage two deadly attacks on Myanmar’s security forces: one in October and the other last month. But in lashing out against the government, the militants have also made their own people a target. And they have handed Myanmar’s military an attempt at public justification by saying that it is fighting terrorism, even as it has burned down dozens of villages and killed fleeing women and children.

This radicalization of a new generation of Rohingya, a Muslim minority in a Buddhist-majority country, adds fuel to an already combustible situation in Rakhine, Myanmar’s poorest state. Increasingly, there is also concern that both the relatively few Rohingya who have taken up arms, and the broader population—hundreds of thousands of whom are crowded in camps in neighboring Bangladesh— will be exploited by international terrorism networks, bringing a localized struggle into the slipstream of global politics. Arsa’s attempt at insurgency politics has been disastrous—a ceasefire they declared this month was rejected by the military, and they are reported to have suffered lopsided casualties compared with the government’s. But the men caught up in the cause insist that resistance is worth the steep cost, even to their families. “This fight is not just about my fate or my family’s fate,” said Noor Alam, a 25-year-old insurgent whose family was sheltering in a forest in Myanmar after their village in Maungdaw Township was burned. “It’s a matter of the existence of all Rohingya. If we have to sacrifice ourselves for our children to live peacefully, then it is worth it.” Myanmar’s military, which ruled the country for nearly half a century, has systematically persecuted the Rohingya, subjecting them to apartheidlike existences and stripping most of their citizenship. The nation’s civilian government, led since last year by Aung San Suu Kyi, has justified the recent violent crackdown in Rakhine as a counterstrike against “extremist Bengali terrorists”. Although the Rohingya claim long-held roots in Rakhine, the official narrative in Myanmar holds that they are recent illegal immigrants from Bangladesh. “We’ve talked about the risks of radicalization for years, and the writing was on the wall for some sort

A Bangladeshi border guard sends a Rohingya woman and child back to their makeshift camp along the border with Myanmar near Gundum, Bangladesh, on August 31. Concern is increasing that Rohingya Muslims—both militants and those displaced in recent attacks—will be exploited by international terrorism networks. Adam Dean/The New York Times

of militant activity,” said Matthew Smith, a cofounder of Fortify Rights, a human-rights watchdog based in Bangkok. “In our view, the best way to deal with risks of extremism and radicalization is to promote and respect the rights of the Rohingya, which is not what the Myanmar military is doing.” Since August 25, these operations have caused more than 400,000 Rohingya to flee to Bangladesh. Rohingya who have tried to escape the latest violence have also had to contend with Arsa insurgents who want young men to stay back and fight. Rohingya informers, who may have leaked details of the August 25 strikes to the Myanmar military, have been executed, according to rights groups. Arsa has also been accused of killing other ethnic populations in Rakhine, such as Hindus and Buddhist Rakhine. At least a dozen nonRohingya civilians have been killed since August 25, according to Myanmar’s government, along with at least 370 Rohingya militants. The radicalized population in Bangladesh’s overcrowded refugee

camps does not hide its fervor. “Even if I stay in my home, I could get killed by the military,” said Abul Osman, a 32-year-old madrassa instructor and Arsa fighter who spent three months hiding in the jungly hills on the Myanmar-Bangladesh border after the group’s attack in October. “I might as well die fighting for my rights, as directed by my almighty God. My sacrifice will earn me a place in heaven.” But not everyone wants to be sacrificed. When vigilante mobs and Myanmar’s soldiers burned down his village, Noor Kamal, 18, tried to flee with his 6-yearold brother, Noor Faruq. Both were hacked in the head by ethnic Rakhine armed with machetes and scythes. At a bleak government hospital in Cox’s Bazar, Bangladesh, Noor Kamal shivered with outrage at the Arsa insurgents from his village in northern Maungdaw Township, who attacked a local police post last month. “We are the ones who are suffering because of Al Yaqin,” he said. “They disappeared after the attack. We were the ones left behind for the military to kill.” The besieged villages in Rakhine

and squalid refugee settlements in Bangladesh, where at least 800,000 Rohingya now live in desperate conditions, make for fertile ground for transnational militant groups looking for recruits—even if Arsa said this past week that it had no links to such groups. “We have seen how democratic and nationalist movements can be taken over by transnational terrorist groups,” said Ali Riaz, a professor of politics and government at Illinois State University who studies Islamic militancy in Bangladesh and surrounding areas. “The presence of legitimate discontent, despair and desperation among hundreds and thousands of people, growing radicalization of a movement, asymmetry of forces engaged in the conflict and a religious dimension to the crisis all provide a conducive environment.” Riaz noted how in the southern Philippines, the Islamic State had grafted itself onto a local separatist insurgency, dispatching foreign fighters and creating a ripple effect that threatens regional stability. “Neither the Myanmar government nor the regional powers should let this situation happen with the Rohingya,” he warned. In a video message this month, a leader of al-Qaeda in Yemen urged Muslims in Asia to show solidarity with the Rohingya by launching attacks on “enemies of God”. The military has only intensified its retribution in Rakhine. As international outrage mounted, Suu Kyi blamed the Rohingya and their supporters for creating an “an iceberg of misinformation”. Myanmar’s military has accused Rohingya of burning down their own homes to garner international sympathy. Arsa, which was founded by a Rohingya named Ataullah, who was born in Pakistan and raised in Saudi Arabia, does not yet have the kind of firepower that can pose a serious threat to one of Asia’s biggest armies.

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Risk of Filipino workers being replaced by robots low–Unctad T

By Catherine N. Pillas

@c_pillas29

he risk of workers in developing economies, including the Philippines, being displaced by robot-based automation of manufacturing processes remains to be low, according to the United Nations Conference on Trade and Development’s (Unctad) 2017 Trade and Development Report.

In the Trade and Development Report 2017, with the theme “Beyond Austerity: Towards a Global New Deal”, the impact of growing automation via robots on industries, specifically in manufacturing, presents a complex picture.

Routine tasks in well-paying manufacturing and service jobs are being replaced by robots, according to the report, but low-wage manufacturing jobs in areas such as clothing factories are left largely unaffected by automation.

50 per 10,000

The robot density, or the number of industrial robots in manufacturing per manufacturing employee, in the Philippines On a global scale, the use of industrial robots in terms of accumulation and installation is still minimal, and is still concentrated in developed economies. “Currently the use of industrial robots globally remains quite small, only around 1.6 million in 2015,” the Unctad report read. Developed countries accounted for 60 percent of the stock in 2015,

with just three countries—Germany, Japan and the United States— making up 43 percent. Deployment of robots is seen as “more rapid” in developing economies, but this has mostly been due to China. All developing countries, including the Philippines, accounted for less than 7 percent of the global stock of industrial robots in 2015. The use of industrial robots is also heavily concentrated in just five sectors: the automotive industry that accounted for 40 percent to 45 percent of annual deployment between 2010 and 2015, followed by computers and electronic equipment, electrical equipment, appliances and components; closely followed by the group of rubber,

Native ingredients, traditional techniques ‘star’ in MFM 2018 By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

The Department of Tourism (DOT) signed on September 15 a memorandum of agreement with Spanish event organizer Foro de Debate, for the holding of Madrid Fusión Manila 2018. In photo are (from left) DOT Undersecretary for Tourism Development Planning Benito C. Bengzon Jr., Tourism Secretary Wanda Corazon T. Teo, and Foro de Debate’s Lourdes Plana and Iñigo Iribarnegaray. The fourth serving of MFM will be held from April 19 to 21, 2018, at the SMX Convention Center. Image courtesy of DOT attended by culinary students, local chefs and culinary workers. “For our first two years, we were establishing the Philippines as a center of gastronomy, but now that the awareness is building, we need to come up with the tour packages already to further promote the country as a culinary destination,” said Verna Buensuceso, DOT director for market development, and MFM project director. Foreign travel and tour operators met with their Filipino counterparts during the Culinary Tourism Travel Exchange during the MFM 2017, to dis-

cuss collaborations and partnerships in culinary tour programs. “We want to have more buyers and tour operators abroad coming for the promotion of Philippine culinary and farm tourism next year,” Buensuceso stressed. Several Michelin-starred chefs have confirmed their participating in MFM 2018, such as Mexico’s Roberto Ruiz (Punto MX, 1 star); Pepe Solla (Casa Solla, 1 star); Diego Gallegos (Sollo, 1 star); South Korea’s Mingoo Kang (Mingles, 1 star); Singapore’s LG Han (Labyrinth, 1 star); Aito Je-

ronimo Orive (Iggy’s in Singapore, 1 star); Japan’s Hajime Yoneda (Hajime, 2 stars); and Chicago’s Curtis Duffy (Grace, 3 stars). Other chefs guesting in MFM 2018 include Javier Estevez (La Taqueria), named Gastronomic Ambassador of Madrid, and Filipino-American Paul Qui of Kuneho in Austin, Texas, winner of Top Chef Season 9, and Best Chef Southwest awardee from the James Beard Foundation in 2012. Qui was supposed to have participated in this year’s MFM, but he was arrested for See “Native,” A2

shields it from vulnerability to robot-based automation. The Philippines’s robot density is seen at less than 50 per 10,000 employees. “Most existing studies overestimate the potential adverse employment and income effects of robots, because they neglect to take into account that what is technically feasible is not always also economically profitable,” the report said. “The countries currently most exposed to robot-based automation are those with a large and well-paying manufacturing sector. Robotization has had a small effect on most developing countries, where mechanization continues to be the predominant form of automation,” it added.

CA affirms decision junking petition to stop Army and Navy Club project Continued from A1

HEN everything old becomes new again. That is how the fourth serving of the Madrid Fusión Manila (MFM) will be rolling out next year, as world-acclaimed chefs come to the Philippines to talk about native ingredients and traditional cooking techniques. In a speech last Friday, following the signing of a memorandum of agreement (MOA) with Spanish organizers for MFM 2018, Tourism Secretary Wanda Corazon T. Teo said: “In 2018, the gastronomic world is facing a third revolution—from haute cusine introduced by French and modern gastronomy techniques perfected by Spanish. The chefs of today’s world are now going back to their roots, looking into pantries, so to speak, and discovering what is available—locally produced ingredients, forgotten age-old techniques, and making them responsive to our time.” The fourth edition of the popular gastronomic event will be held from April 19 to 21, 2018, at the SMX Convention Center, and will carry the theme “Innovating Tradition”. Teo led the MOA signing for next year’s Madrid Fusión Manila, along with DOT Undersecretary for Tourism Development Planning Benito C. Bengzon, and Foro de Debate’s Lourdes Plana and Iñigo Iribarnegaray of Vocento. Madrid Fusión Manila is the only Asian edition of the popular Spainbased international gastronomic event. It aims to promote the Philippines as the center of gastronomy in Asia, by gathering multiawarded and popular chefs from all over the world in a threeday series of lectures and presentations

plastic and chemical products, and by machinery. Robot density, another indicator pertaining to the number of industrial robots in manufacturing per manufacturing employee, is highest in developed countries and developing countries at mature stages of industrialization; but this still excludes the Philippines. Even if the estimated share in manufacturing employment of the top two sectors highly exposed to automation—automotive industry and computers and electronic equipment—is relatively high at 40 percent, the fact that the Philippines’s manufacturing sector still accounts for less than 10 percent of the total country’s work force

The appellate court explained that the decision of the Manila City government to enter into an agreement with private entities for the development of the Army and Navy Club and the approval of the development by the National Historical Commission of the Philippines (NHCP) cannot be considered a judicial, quasi-judicial or ministerial action that can be a subject of a petition for certiorari. “The city of Manila’s execution of the lease contract with Oceanville Hotel and Spa does not fall within the ambit of judicial, quasi-judicial or ministerial function as the same is within its prerogative, powers and authority in the exercise of its executive function. On this court alone, certiorari and prohibition will not lie,” the February 28 ruling stated. In denying VACC’s motion for reconsideration, the CA said the group failed to raise new arguments that would warrant the reversal of its decision. “Reviewing the grounds relied upon by petitioner in its motion vis-à-vis with those discussed in the respective comment/opposition filed by respondents National Historical Commission of the Philippines [NHCP], Oceanville Hotel and Spa Corp., Vanderwood Management Corp. and the Office of the Solicitor General, we resolve to deny the said motion,” the CA said. “Petitioner has not shown any cogent compelling reason to warrant a reversal or even the modification of the aforesaid resolution. Hence, the dismissal of the petition for certiorari and prohibition must be sustained,” it added. Concurring with the resolution were Associate Justices Leoncia Dimagiba and Jhosep Lopez. The CA earlier noted that, while it has concurrent jurisdiction with the regional trial court in issuing the writ of certiorari, direct resort is allowed only when there are special extraordinary or compelling reasons that justify the same. “Unfortunately, the present petition for certiorari is bereft of any compelling reason or circumstance to warrant an exception to the rule,” it added. The petition primarily seeks the nullification of the agreement among respondents Philippine Amusement and Gaming Corp. (Pagcor), the city government of Manila, NHCP, Oceanville Hotel and Spa Corp. and Vanderwood Management Corp. for the development of the Army and Navy Club and to enjoin them from converting the said property into a boutique hotel and casino.

The CA said the VACC’s proper remedy is to file a civil action for annulment of contract, which falls under the jurisdiction of the trial courts. In its petition, the VACC sought the appellate court’s issuance of a temporary restraining order to stop the continuing construction activities at the Army and Navy Club facility and, after a hearing, to issue a writ or preliminary injunction to stop its conversion into a hotel and gaming facility. In 2014 the city government entered into a lease contract with Oceanville for 25 years. The contract also allows Oceanville to sublease any part of the Army and Navy Club. The NHCP then approved Oceanville’s redevelopment plan to renovate and restore the facility for the purpose of using the facility as a boutique hotel. The plan was also approved by the city government. Oceanville then entered into a memorandum of agreement with Vanderwood for the sublease of a portion of the facility for 20 years, or from November 2014 to November 2034. Vanderwood then started construction of a gaming facility, which it then subleased to Pagcor for a period of 15 years. But efforts to redevelop the facility according to the petitioner were then overtaken by Oceanville, whose activities were temporarily stopped by the NHCP after the facility’s façade where destroyed and demolished, while some of the original parts of the building were also dismantled. But the petitioner said the ceaseand- desist order of the NHCP did not cancel its previous approval of Oceanville’s redevelopment plan. The petition said the “conversion will not only change the physical appearance and usage of the Army and Navy Club but also will have the effect of substantially altering its nature and identity, as written in the pages of the country’s history.” Last year the VACC filed a P234-million plunder charge against former Pagcor Chairman Celestino Naguiat, Pagcor Director Jose Tanjuatco, Directors Enriquito Nuguid, Eugene Manalastas, lawyer Jorge Sarmiento, Bids and Awards Committee members Milagros Pauline Visqui, Ramon Jose Jones, Romeo Cruz, Annalyn Zogimann, lawyer Kathlene Delantar, Manuel Sy, former government corporate counsel Raoul Creencia and Jose Christopher Manalo IV, former chairman of Pagcor’s technical working group, for the award of the lease of space for a gaming facility in the Army and Navy Club to Vanderwood despite the firm’s nonsubmission of certain documents and noncompliance with some conditions indicated under the technical requirements of the bid.

What do you do when compliance issues arise? Continued from A1

These interviews, however, can be undermined by poor planning, lack of preparation and inadequate record-keeping, among other factors. A variety of avenues lead up to the point where you have no choice but to launch an investigation: someone in finance could report that they think something fishy is going on with a certain reimbursement request, or an employee could call your hot line to report a case of suspected bribery, or a member of your staff could claim that his or her personaldata protection has been violated by the organization. In either scenario, the next steps are going to require you to talk with the people who may have witnessed this issue.

Conducting interviews to gather this information is no simple matter. As the interviewer, you want to be civil and elicit responses from the person you’re interviewing. At the same time, you have to be ready to confront that person about uncomfortable issues. The witness interview is just one step in the investigation process, but it is an important part that requires finesse and preparation. GAN Integrity (www.ganintegrity.com) has developed compliance processes to help companies of all sizes manage regulatory and legal compliance. GAN Integrity is coming up with seven tips, based on best practices: 1. Determine whether a government agency is investigating the issue. If an agency is already involved (or likely to investigate),

you have to carefully consider whether the government could later request notes you’re taking as evidence. 2. Plan the sequence of interviews. Compliance issues usually involve more than one person, and the people being interviewed sometimes talk among themselves even though they are not supposed to discuss the issue. For that reason, it’s important to think about what person you want to have on the record first, and plan the sequence of interviews around the potential of chatter between your interviewees. 3. Make in-person interviews a priority. Talking in person helps you gather information effectively and get people to open up about what could be an uncomfortable issue. Body language also helps you size up the interviewee and how honest they’re being with you.

4. Prepare as if you’ll only get one shot at the interviewee. It’s a big mistake to assume that you can ask follow-up questions later, because you may not get another chance to interview a person—they could lawyer-up, for example. It’s better to do your homework and gather any documentation you want to ask about, so that it’s a meaningful and thoughtful discussion. Prepare a witness outline, as well as answers to predictable questions a witness may ask you. 5. Provide a warning on relevant company rules. Interviewees should be told that you represent the company, and reminded about company policies that require their cooperation. Employees typically have a duty to cooperate in an internal investigation, but not always. 6. Document the interview in detailed

written reports and memoranda. The interview is a fact-gathering activity. While the goal is to ask open-ended questions and make people feel comfortable to obtain as much information as you can, the process also needs to be recorded in copious notes. 7. Conclude with clarifications and reminders. End by reminding the person to refrain from talking about the issue with coworkers and give them some parameters for what to do if they are contacted by outside parties, such as the government. Ask them to provide you with any relevant e-mails, documents or other data. Finally, you also want to clarify whether the interviewee would be willing to help in the future. Give the interviewee your contact details in case they think of additional information, and ask

if it’s OK to call with follow-up questions. Let me remind you that for instance in data privacy-protection breaches, criminal liabilities arise. Personal data controllers have to comply with the following: ■ Appoint a data protection officer ■ Conduct privacy impact assessment ■ Create a privacy management program and manual ■ Implement privacy and data-protection measures, and ■ Establish a stringent breach reporting system (which could well be based on the above mentioned witness interview best practice). If you need any assistance contact us at the Integrity Initiative Inc. at schumacher@ integrityinitiative.com