Issuu

“This game is a 100-percent injury rate. It’s football and everyone’s just gotta do their job a little bit better.”—New England Patriots receiver Julian Edelman, after backup quarterback-turned-starter Jimmy Garoppolo suffered an apparent shoulder injury. AP

media partner of the year

“It’s always sad when a member of the family passes away—and in the case of the ‘family’ of the movie The Sound of Music, it’s especially sad when it is the first of the group to go.”—Ted Chapin, president of the Rogers & Hammerstein organization, in a statement. Charmian Carr played the oldest von Trapp child and, in some ways, she maintained that role in real life—guiding, cheering, supporting and generally being there for the rest of her “sisters” and “brothers.” AP

BusinessMirror

United nations

2015 environmental Media Award leadership award 2008

A broader look at today’s business

www.businessmirror.com.ph

Tuesday, September 20, 2016 Vol. 11 No. 346

‘Govt could be third telco player if Duterte wants it’ ₧30B W By Lorenz S. Marasigan

Pervasive sham deals at wells fargo, and no one noticed?

But the decision, he said, still rests on President Duterte, who vowed on numerous instances— like his first State of the Nation Address—to improve the Internet service in the country. The worry of Salalima, who previously worked as an executive See “Telco,” A2

Manila cites how policies on parking impact on traffic flow

BusinessMirror

www.businessmirror.com.ph

Pervasive Sham Deals at Wells Fargo, and No One Noticed?

‘I

DON’T want anyone ever offering a product to someone when they don’t know what the benefit is, or the customer doesn’t understand it, or doesn’t want it, or doesn’t need it.” That was John Stumpf, chief executive of Wells Fargo, one of the nation’s largest banks, in an interview about a year ago with The San Francisco Chronicle. We found out few days ago that at least 5,300 of his employees were engaged in rampant sham deals, secretly signing up myriad customers for 2 million accounts that they did not authorize, did not know they had, did not need, and clearly did not understand. Wells Fargo then charged customers at least $1.5 million in fees for those unwanted sham accounts, which were created simply to goose the income of bank employees whose incentive programs rewarded them for opening as many new accounts as possible. Some of the accounts were closed right away, as soon as the employee got credit for them. The executive who oversaw this group of rogue employees, Carrie Tolstedt, conveniently announced plans to retire over the summer and, according to Fortune, is being paid $124.6 million on the way out. (One analyst has called for a clawback of that exit package.) Clearly there is a disconnect between whatever Stumpf was telling the public and what was actually going on at Wells Fargo—and that’s putting it politely. Here’s Stumpf from that same interview in The Chronicle: “We think ev-

eryone here is a risk manager,” he said. “Whether it’s your official title or not, everything we do is a part of that.” Wells Fargo has long tried to separate itself from Wall Street. Its entire ethos, Wells Fargo has long suggested, is one of trust and ethics. But this episode raises all the same questions that have been asked about virtually every firm on Wall Street. Whatever distance Stumpf tried to maintain for Wells between it and the big New York banks with bad-boy reputations just evaporated. When politicians talk about Wall Street as a “criminal enterprise,” this is exactly what they are talking about. “This problem is a serious one and indicates that the company is feeling an intense pressure to perform that it cannot meet,” Richard Bove, a longtime research analyst, told me. “I would expect to see some meaningful internal adjustments. There clearly will be some management changes— whether they reach as high as John Stumpf is very hard to say.” Stumpf has always said, fairly, that it is impossible to do a perfect job policing hundreds of thousands of employees. Warren Buffett, Wells Fargo’s largest shareholder, has sounded a similar note, describing his own company, Berkshire Hathaway. “Somebody is doing something to-

cially when it comes to risk. On Monday, the bank said it had temporarily suspended its cross-selling initiative, to be on the safe side. Indeed, the great irony of this sham is how tiny it is in terms of dollars. That’s why the $185-million fine by the government wasn’t bigger. Given all the regulations in place and the billions of dollars poured into compliance efforts, how could something so staggeringly widespread and so blatantly corrupt have happened in the first place? Another question is what this scandal says about Wells Fargo’s seemingly down-home culture. Bove, noting that part of the sham included opening “566,000 phantom credit-card accounts,” asked in a note to clients, “What does this indicate about the bank’s underwriting policies? Can anyone have a Wells credit card without any checks being made concerning that person’s ability to make payments for debt created using this card?” And what does this say about the information the company has reported to investors and regulators? Bove added: “The bank also apparently opened 1.5 million false transaction accounts? Does this mean that accounts can be opened with no balances? What does it say about the willingness of the bank to operate with accounts on which it makes no money? What policies and procedures at this bank allowed this to occur?” So far, these are all just questions without answers. Wells Fargo took out full-page ads last week in many newspapers (including The Times) to “take responsibility.” But taking responsibility includes answering those questions— and we are all still waiting.

business sense John Stumpf, chief executive of Wells fargo, in new York, on September 15, 2009. “I don’t want anyone ever offering a product to someone when they don’t know what the benefit is, or the customer doesn’t understand it, or doesn’t want it, or doesn’t need it.” that was Stumpf in an interview about a year ago with The San Francisco Chronicle. James estrin/the new York times

Manny B. Villar

he failure by the Philippine economy to create enough jobs is one of the primary reasons the country’s poverty rate has barely improved in recent years, and continues to affect more than a quarter of the population.

In turn, part of the problem can be traced to what may be called misplaced priority: previous administrations failed to give priority to activities or industries that are labor-intensive. Continued on A10

By VG Cabuag

‘game of thrones’, ‘Veep’ take top honors at emmys This September 18 photo shows vehicles slow down as they pass by the two-way Maria Orosa Street near corner Pedro Gil, Manila, as vehicles are allowed to park left and right despite the narrow road. Nonie Reyes By Joel R. San Juan @jrsanjuan1573

Part Two

I show

the entrepreneur

of Liberty Telecoms

A WellS fargo billboard in Woodbury, minnesota. karen Bleier/agence France-Presse/gettY images

day at Berkshire that you and I would be unhappy about if we knew of it,” Buffett once said. “That’s inevitable: We now employ more than 250,000 people, and the chances of that number getting through the day without any bad behavior occurring is nil. But we can have a huge effect in minimizing such activities by jumping on anything immediately when there is the slightest odor of impropriety.” Perhaps if a handful of employees at Wells Fargo were responsible for signing up some phony accounts, we could generously say, “Oh, there were some bad apples.” But the scale and brazenness of this phoniness does not permit that. This sham, in its reach, is breathtaking. “The magnitude of this situation warrants thorough and comprehensive review,” Senate Banking Committee members, led by Sen. Robert Menendez of New Jersey, wrote in a letter to committee’s chairman, Sen. Richard C. Shelby of Alabama. The letter continued, “Specifically, the committee should thoroughly examine this issue, including: How it is possible that more than 5,000 employees could bilk customers over the course of five years; the timing, extent and disposition of customer complaints; whether Wells Fargo’s sales and compensation structure incentivized employees to engage in deceptive and abusive practices; and what additional safeguards may be needed to prevent this type of behavior.” All of this raises the question, based on Stumpf’s assertion that everyone at Wells Fargo is a risk manager: What, exactly, does an actual risk manager at Wells Fargo do? That’s an important issue because Wells Fargo has always had a reputation as one of the best-managed banks, espe-

Housing boost: Addressing a socioeconomic concern

Duterte admin looking at illegal SEC postpones sale parking as cause of traffic woes

analysis, ideas and commentary from

E1 Tuesday, September 20, 2016

The initial investment needed by a new player in the telco industry, according to experts

BMReports

BusinessSense

P25.00 nationwide | 5 sections 32 pages | 7 days a weekt

@lorenzmarasigan

hile he is open to the prospect of launching a government-owned telecommunications company to further challenge existing players and relieve Filipinos of their Internet and telecommunications-service woes, Information Secretary Rodolfo A. Salalima said the odds of the state investing billions of pesos in such a venture is not in his favor.

INSIDE

By Andrew Ross Sorkin

“A bomb exploding in New York is obviously an act of terrorism.” New York Gov. Andrew Cuomo. But, he added, “At this time, there’s no evidence of an international terrorism connection with this incident, but it is very, very early in the investigation.” AP

N the city of Manila, headed by Manila Mayor Joseph Estrada, efforts to clear major thoroughfares of illegal vendors, illegal terminals, road obstructions and illegally parked vehicles have been intensified over the past months in order to ease traffic congestion.

PESO exchange rates n US 47.7260

Despite of this, it seems the problem on illegal parking is giving not only law enforcers a headache but motorists and pedestrians, as well. Along the two-way Maria Orosa Street near corner Pedro Gil, vehicles are allowed to park left and right despite its narrowness, slowing down passing motorists. Estrada had acknowledged that most of the streets in Manila are narrow, owing to its Spanish-era design when the calesa, a horse-drawn

carriage, was the main transportation mode back then. “This is why we have narrow roads, which is often the cause of traffic congestion and, in rare instances, road-rage cases like the one that happened in Quiapo,” Estrada said, referring to the recent road rage in Manila where cyclist Mark Vincent Garalde was shot dead by a former Army reservist a few months ago. Continued on A2

@villygc

he Secur it ies and Exchange Commission (SEC) has effectively postponed the sale of Liberty Telecoms Holdings Inc. when it ordered Vega Telecom to defer the closing of the tender offer period for the telco unit previously owned by San Miguel Corp. (SMC). The SEC’s Market and Securities Regulation Department directed Vega Telecom Inc.—now owned by PLDT Inc. and Globe Telecom Inc.—to defer the conclusion of the tender offer, which was supposed to end at 12 noon on September 21. The SEC put the sale on hold due to valuation concerns. The offer was priced at P2.20 per share, covering some 165.88 million shares, or 12.8 percent of the telecom firm previously owned by conglomerate San Miguel Corp. The regulator directed Vega to submit a new timeline, among others, relative to the amended tender offer report. “The new offer period should provide reasonable time to the tendering shareholders to evaluate or assess the amended and/or additional information,” the SEC said.

“The new offer period shall recommence not later than October 17, 2016,” it added. Copies of the said letter were also furnished to PLDT, Globe and the Philippine Stock Exchange, among others. The SEC made the decision after several camps complained that the deal involving San Miguel and the two telecom duopoly was undervalued. In its seven-page order, the SEC said Vega failed to disclose information on the impact of the assignment of frequencies in Liberty’s financials. Specifically, the SEC said, “No disclosure was made about the transfer of frequency from Liberty to its sister company neither financial recording has been made or recognized in Liberty’s audited financial statement [AFS] nor in the relevant notes of the AFS.” The regulator said this and other information were “material” and should have been “included in the SEC Tender Offer Report (SEC Form 19-1), and critical to shareholders to arrive at an informed investment decision, including whether to hold or sell their shares in response to the tender offer.”

n japan 0.4673 n UK 62.1011 n HK 6.1518 n CHINA 7.1517 n singapore 34.8823 n australia 35.6847 n EU 53.2336 n SAUDI arabia 12.7246

Source: BSP (19 September 2016 )

BMReports BusinessMirror

A2 Tuesday, September 20, 2016

www.businessmirror.com.ph

Duterte admin looking at illegal parking as cause of traffic woes Continued from A1

Following the incident, the Manila City government immediately contemplated putting up dedicated bike lanes in some streets of Manila, one of the oldest inhabited cities in Southeast Asia.

Criminal syndicates

IN San Andres Bukid, jeepneys and private vehicles are parked on side streets, particularly along Dagonoy Street. The Businessmirror also noticed private vehicles parked outside the Manila Pavillon Hotel corner United Nations Avenue and T.M. Kalaw Avenue, leaving only one lane to what used to be a four-lane street for motorists. Manila Traffic and Parking Bureau (MTPB) Head Dennis Alcoreza, who assumed the post only last month, admitted that, aside from illegally parked vehicles, another concerned is the lack of parking at all of car owners. He also noted that other common, but illegal, parking practices in Manila are

perpendicular parking and parking in “no parking” zones. Alcoreza added there are even criminal syndicates handling parking in some areas, such as Divisoria. “Marami pang mga sindikato sa parking, lalo na sa Divisoria. Actually, next week sa Chinatown area I just met with the chairmen around Chinatown area with their [crime syndicates’] presence,” Alcoreza said. “We will clear the Chinatown open area. ’Yung mga sindikato na ’yan, usually mga local gatekeepers ’yan.” During his one-month stint, Alcoreza said he has implemented a “single-command” police system, which requires every traffic enforcer to directly report to the Manila Traffic Police, under the supervision of the MTPB. “It means the police is now issuing the orders,” Alcoreza explained. “If the PNP [Philippine National Police] is involved, the enforcement will be stronger.”

Too many

UNLIKE the previous administration,

A lcoreza sa id enforcement is wea k because they are many people calling the shots.“Now, you can easily pinpoint where the problem is,” he said. “Now, there is accountability.” To address the problem on illegal parking, Alcoreza cited a need for a Manila-wide mapping and no-parking zones. Through the mapping, we can identify which areas are allowed for parking and which are not, he explained. “’Yung mga sumusuway, automatic na huhulihin na. [Violators would be automatically apprehended].” Alcoreza added they plan to have a clear-cut policy where motorists can park “para hindi na subject to interpretation ng mga tao, traffic enforcers and the barangay officials.” Still, Alcoreza said the proposal to implement a city-wide no-parking policy for Manila employees to discourage them from bringing their cars needs further study. “I think it needs further consultation. We don’t want to be arbitrary,” he explained.

“The thing is baka mamaya hindi grounded; maybe this will be another ordinance that we cannot implement.” Alcoreza said the proposals need further studies. While a city-wide no-parking policy is still being studied, the city government has embarked on an intensify campaign to remove road obstructions, such as illegally parked vehicles, to ensure smooth traffic flow in various major thoroughfares, particularly in the country’s oldest economic hub: Binondo.

Designated execs

THE Manila Police District Traffic Enforcement Unit (MPD-TEU), the MTPB and the Manila Barangay Bureau (MBB) have been designated to be at the forefront of the efforts to clear the roads with illegally parked vehicles and other obstructions. Alcoreza also said the proposed tripartite agreement between the cit y government, the Federation of Jeepney Operators and Drivers Association of the Philippines (Fejodap) and similar group

Evasco open to scrapping of automatic debt servicing By David Cagahastian @davecaga

abinet Secretary Leoncio B. Evasco Jr. is open to the petition of Freedom from Debt Coalition (FDC) to stop the automatic appropriations for debt servicing in the annual national budget, officials of the FDC said on Monday. FDC President Eduardo C. Tadem said Evasco assured them of his support, for any initiative will redound to the benefit of poor Filipinos, he being the designated “antipoverty czar” of the Duterte administration tasked to coordinate the various government offices mandated to eliminate poverty, hunger and unemployment. “The message that he told us is that he is supportive of any initiative, which will benefit the poor Filipinos, regardless of the consequences,” Tadem told the BusinessM irror. These consequences include

a possible downgrading of the Philippines’s credit rating, which was upgraded to the minimum investment-grade status during the Aquino administration by the three big credit-rating agencies Fitch Ratings, Moody’s Investors Service and Standard & Poor’s. But Tadem said the high credit rating of the Philippines is “artificially created” by the law, which mandated the automatic appropriation of debt servicing in each year’s budget. He called on Congress to repeal such automatic appropriation to allow about one-third of the annual budget for use in other activities that can stimulate the economy, such as spending in infrastructure and promoting the social welfare of the poor. FDC National Secretariat member Malu A. Mendoza said Evasco was agreeable to the proposal to stop automatic debt servicing, but

referred the matter to the proper government agencies, such as the Department of Budget and Management (DBM) and the Department of Finance (DOF). On Monday FDC members held a rally in Malacañang and sought a dialogue with Evasco, as the antipoverty czar, to lobby for the Executive branch’s support for their call to stop the automatic appropriation for debt servicing so the money can be used instead for social programs. In the 2017 budget, some P385 billion of the budget is already allocated for interest payments alone, while more than P500 billion is allocated to service the principal debt. This brings the total budget for debt service to close to P900 billion, making debt servicing the third-biggest item in the budget, next to the budget for education and infrastructure. Automatic debt servicing is mandated by a provision under Section

26B of Book VI of the 1987 Revised Administrative Code, which was copied from Presidential Decree 1177 of former President Ferdinand E. Marcos. “This law should be repealed by Congress, and we’re asking the Executive branch to support us in our cause to make it easier to effect the repeal of the said law,” Tadem said. Tadem added that another reason the government should stop automatic debt servicing is the fact that much of the country’s debt servicing is for debts that can be considered as illegitimate because it is fraught with corruption or fraud. “ This is why our government should conduct an audit first if which debts were contracted for legitimate projects and which were contracted for illegitimate projects so that we could have a moratorium on payments for these loans the proceeds of which went to the illegitimate projects,” he said.

Pasang Masda to address the proliferation of colorum jeepneys and illegal terminals will be finally pushing through next week. Under the tripartite agreement, the city government, through the MTPB, will closely work with Fejodap and Pasang Masda members in identifying and apprehending colorum drivers and operators plying the city’s main roads and city streets. A system will be established where legitimately franchised Fejodap and Pasang Masda driver-members, acting as the city government’s “eyes and ears,” will be able to report directly to MTPB traffic enforcers any colorum vehicles they spot on the road. Alcoreza said a special unit of traffic enforcers is being formed to receive, verify and act on the reports to be submitted by the Fejodap and Pasang Masda members. He is optimistic this agreement at the grassroots level would solidify efforts to clear up major thoroughfares.

Telco. . .

Continued from A1

at Globe Telecom Inc., is that the government building a massive network of infrastructure with the sole purpose of providing telecommunications services might lead to one thing—losses. “There are obstacles to being a third player. If you want to be a third player, you have to be viable. If we cannot be viable, forget being a third player, such will lead to a money-down-the-drain scenario or a white elephant,” he told the BusinessMirror in an interview. The main obstacle to this prospect, he said, is money. “We need money for constant spending for infrastructure. We need money to train people. We need money to give reasonable salaries to these people,” Salalima said. Experts peg that launching a third-core player in the Philippines will require an initial investment of P30 billion. And given the trend

To be concluded

in the industry, wherein a technology becomes outdated in a matter of months, interested parties will have to spend almost the same amount every year to keep pace with such progression. “So my question now is this: Do we have the money to finance all these? Money is our problem,” Salalima said. Still, he added, there is room for another player in the market, although the third player will have to come from the private sector. “The trend in most country was privatization when it comes to public services, like telecommunications,” he said. But shou ld t he leadership of President Duterte decide on competing in the telco market as a core player, Salalima said he could only agree. “It is up for the leadership to decide whether we want to be a third player,” the official pointed out. San Miguel Corp. initially wanted to enter the market as a third telco provider, with a promise to deliver better Internet services than its competitors at a fraction of the cost. But the planned launch of the third player was suddenly put to a halt when it decided to sell its telco assets to PLDT Inc. and Globe for roughly P70 billion. The transaction paved the way for the two players to gain access to the coveted 700-megahertz band and a swathe of other frequencies, which they plan to fully utilize in three year’s time.

Razon. . .

Continued from A12

Razon is opting to expand domestically after dropping a bid for a gaming license in Cyprus and as he pulls out of a casino investment in South Korea. Local volumes have grown“quite strongly” and this trend should continue due to the attractiveness of the local economy and rising tourist numbers, he said. Quezon City has the biggest population of the 17 jurisdictions that make up Metro Manila. “This expansion will give Razon two properties that he can position for specific markets,” said Rommel Rodrigo, a gaming analyst at Maybank ATR Kim Eng in Manila. “Solaire will probably focus on foreigners and higher-end individuals, while this expansion could be more for locals.” The gambling tycoon, who has a net worth of $3 billion, according to the Bloomberg Billionaires Index, banned 18 Chinese gamblers from Solaire in June over their involvement in a $81-million cyber heist from Bangladesh’s central bank. The audacious theft put the spotlight on the Southeast Asian nation after it was revealed the money had been routed through a Philippines’s bank and then to local casinos. President Duterte, who took office on June 30, has vowed to “destroy” online gambling. The campaign has already harmed Roberto Y. Ongpin and his company Philweb Corp., a gaming technology provider that saw its shares plummet after it lost a contract to supply the industry regulator and Mr. Duterte said Ongpin was among businessmen that have an undue influence on the government. Bloomberg News

BusinessMirror Special Feature

www.businessmirror.com.ph

Tuesday, September 20, 2016 A3

MeRcury Drug donates school building and equipment for De La Salle’s College of Pharmacy

Dean Catabay (right most) is very hands-on with her students, here facilitating a laboratory activity at one of the laboratories being equipped by MDC.

By Leony R. Garcia

t’s a usual practice in the Philippines for patients and customers to ask pharmacists in the drugstore various concerns like alternative drugs for expensive brands, proper dispensing, or for the potency of drugs which we need. We also consult them for over the counter medications which can readily be taken for ordinary pain, cough and colds, or fever. So imagine if there are no pharmacists to guide us. We would always be lining up in

hospitals or doctors’ clinics in extreme pain before we could even buy the simplest tablet that we need. That’s why pharmacists play important roles in our lives. Pharmacists are graduates of Bachelor of

Science in Pharmacy who passed the Pharmacist Licensure Examination. They are trained healthcare professionals who perform various roles in the healthcare industry. They are competent in managing drug stores; in identifying, developing, manufacturing and dispensing of drugs; and in providing pharmaceutical care as well as counseling clients in the proper use of both prescribed and patient chosen medications.   De La Salle Health Sciences Institute (DLSHSI) will have their first batch of graduates of the BS Pharmacy program in 2018. “We, at DLSHSI feel so blessed to have the support of Mercury Drug Corporation (MDC) for this newly established college at DLSHSI,” Pharmacy Dean Dr. Alicia P. Catabay said.

“When DLSHSI President Br. Gus Boquer FSC floated the idea to establish the College of Pharmacy, MDC expressed their support. They provided us with all the equipment we needed.” This commitment of support includes donating a 5-storey building for the College of Pharmacy. DLSHSI is holding ground blessing rites on September 20 to coincide with the formal signing of the Deed of Donation to signal the start of the construction of the building. “It’s very challenging to establish a college. But Br. Gus was very earnest and sincere in his desire to have a new program here. The College was established in 2014, thanks to the support of MDC,” Catabay explained. “Now on its third year as a col-

lege, we are challenged to do our best in everything especially in making sure our graduates do well in the board exams. Among health-related courses, medicine, physical therapy and pharmacy have the hardest board exams. But more than passing the exams, we try to inculcate in our students that they are privileged to experience excellent Lasallian education. They have well-credentialed faculty, a nurturing academic community, and among the best facilities that make up their Lasallian education here,” she said. “Overall, I believe, Mercury Drug’s gift to DLSHSI is their legacy to the Filipino people – to be able to help produce excellent pharmacists. In fact, Mercury Drug also provides scholarships to other universities

that have a BS Pharmacy program. It also supports various industry organizations such as the Philippine Pharmacist Association. DLSHSI is blessed to have their support for the College of Pharmacy,” Catabay stressed. “For us, this gift from MDC is a pledge of support on our efforts to provide excellent and meaningful education to future health professionals who will be true to their oath to serve the Filipino people, who, in the future, will be catalysts in the development of our communities and ultimately, our country. Our graduates are DLSHSI’s contribution to the development of our society, and in this case, they too will become Mercury Drug’s gift to the Filipino people,” said Catabay.

BMReports BusinessMirror

A4 Tuesday, September 20, 2016

news.businessmirror@gmail.com

Experts: Keep ‘It’s more fun’ slogan By Ma. Stella F. Arnaldo

@Pulitika2010 Special to the BusinessMirror

F it ain’t broke, why fix it? This was the common opinion by most advertising veterans the BusinessMirror spoke with when asked if it was time to change the Department of Tourism’s (DOT) award-winning “It’s More Fun in the Philippines” brand and slogan.

“I think it’s a terrible idea to change a slogan that works,” said Ana Ma. Victoria Perez, who was once reputed to be the highest-paid advertising copywriter in the country. Now vice president for Creative Services for the Associated Broadcasting Corp. (TV5), Perez stressed: “A good tagline/slogan can and often work for decades! A brand that keeps changing its tagline reflects the wishy washiness of its communication team.” This was echoed by Cirio Cinco, chief creative officer of DNA720. “Can you imagine every new marketing director of Nike changing ‘Just do it’?” Cinco said of the long-running advertising campaign of the sports apparel firm. “If the slogan isn’t bro-

ken, why fix it? Maybe what the new DOT team should think about more is how to refresh the campaign.” Chiqui Lara, a 30-year advertising veteran who was coresponsible for the unforgettable “I Can Feel It” campaign of Palmolive featuring Alice Dixson, agreed. “Why change something that ain’t broke? It’s all this ‘NIH’ [not invented here] syndrome. Just from the DOT tourist arrivals data, it seems that ‘more fun’ slogan has worked and continues to do so.” Visitor arrivals in the Philippines reached 5.3 million in 2015, a 51-percent jump, from 3.5 million in 2010, just two years before the “more fun” slogan was launched by the DOT under its former Secretary

Ana Ma. Victoria Perez

Ramon R. Jimenez Jr., an advertising veteran himself. This year the DOT is targeting to increase visitor arrivals to reach 6 million. This developed as the DOT said it would consider all feedback on the proposed change in the “more fun” slogan. Tourism Secretary Wanda Corazon T. Teo has said the new DOT slogan would reflect the reforms instituted by the Duterte administration. In a text message, DOT Spokesman and Assistant Secretary Frederick M. Alegre said: “We have noted the comments of the tourism stakeholders and will consider these when we make any decision regarding the branding campaign.” Last week representatives of major tourism organizations appealed to the DOT to keep the “more fun” slogan for continuity, and to maximize its potential. (See, “Stakeholders to DOT: Let’s keep ‘It’s More Fun…’ tourism slogan” in the Busi-

Chiqui Lara

Cirio Cinco

If the slogan isn’t broken, why fix it?”—Cinco nessMirror, September 15, 2016.) Among the reasons that have been cited for a change in the Philippine brand and slogan is the country’s propensity for calamities due to natural disturbances, like earthquakes and typhoons. The DOT even had to suspend its “more fun” campaign for three months after Supertyphoon Yolanda struck Central Visayas in November 2013. While strapped with funds compared to its Asean neighbors, who have larger tourism and marketing budgets, the Philippines’s “more fun” slogan, created by BBDO Guerrero, became viral through social media. “More than the slogan—though it is one pretty fantastic line—the success I think of the campaign is its ‘virality’—and how we Pinoys love

DENR adapts science-based tack on rehab of coastal areas By Jonathan L. Mayuga @jonlmayuga

o strengthen the resiliency of coastal communities against natural calamities, the Department of Environment and Natural Resources (DENR) is mapping out plans for the implementation of mangrove and beach forests-rehabilitation program across the country. “We are now in the process of zoning areas for the implementation of the enhanced National Greening Program [E-NGP] next year,” DENR Undersecretary for Policy and Planning Marlo Mendoza said. Mangrove and beach forest rehabilitation is essential in strengthening the natural defense against storm surge and sea-level rise, he told the BusinessMirror in an interview. To recall, Environment Secretary Regina Paz L. Lopez had ordered an audit of the NGP, which aims to plant 1.5 billion trees in 1.5 million hectares of open, degraded and denuded forest. The NGP includes the rehabilitation of mangrove and beach forests.

Science-based approach

Starting next year, Mendoza said, the DENR will take a science-based approach in implementing the NGP “from ridge to reef” by planting the right species of trees, including the rehabilitation of mangrove and beach forests. The Ecosystems Research and Development Bureau (ERDB) of the DENR conducted a post-Supertyphoon Yolanda assessment in the Visayas, where most of the mangrove and beach forest were devastated. In its recommendation, the ERDB said areas targeted for rehab should be planted with the mangrove species that naturally grow in the area. Mendoza, who once led the DENR’s Forest Management Bureau (FMB) under the leadership of then-Environment Secretary Lito Atienza, said the DENR and its NGP partners planted the wrong species in most areas. “That is why the areas we rehabilitated were easily destroyed. In areas where the right species of trees were planted, although they were also destroyed, the impact is minimal and there was a greater chance of recovery,” he said.

If the forest is degraded, there will be catastrophe. Flashfloods, landslides, mudslides…all the way down to the coastal areas, destroying our marine ecosystems.”—Esguerra

Zoning coastal areas

Mendoza also said the DENR is getting help from experts from the National Mapping and Resource Information Authority (Namria) in zoning coastal areas. “This is now ongoing. With the help of Namria, we are able to get satellite images more clearly to identify which areas need rehabilitation. What we need to do is validate the satellite images provided by Namria on the ground,” he said. Mendoza explained that before, the NGP just kept on planting mangroves of any species, which proved to be the wrong approach. “Scientists say we should plant species that naturally grow in the area,” he added. “We will be now more sciencebased in implementing the NGP,” he said. DENR regional offices, he said, would be asked to identify which species they need to plant in the area starting next year.

New normal

Yolanda (international code name Haiyan) was considered as the strongest typhoon ever to hit landfall. Officials of the DENR consider Yolanda-strong typhoons as the “new normal,” which the government needs to consider in implementing its various programs, particularly the NGP. Aside from mangrove and beach forests, Yolanda also destroyed coral reefs in the Visayas. Mendoza said there are no empirical data to measure the impact of typhoons to coral reefs, but it was observed that even artificial reefs are easily destroyed. Director Theresa Mundita S. Lim of the DENR’s Biodiversity Management Bureau (BMB) said artificial reefs are also susceptible to strong ocean currents. While artificial-reef planting

or deployment promotes faster recovery, she said observation in typhoon-devastated areas reveal that artificial reefs have very low chance of recovery, unlike areas where reefs are allowed natural recovery. This also explains why the DENR opted to establish more marineprotected areas (MPAs) instead of spending limited resources through planting or deployment of artificial reefs, which costs around P500,000 to P5 million per hectare.

Post-Yolanda assessment

In Guiuan, Eastern Samar, where Yolanda made its first landfall in November 8, 2013, many coral reefs were devastated, particularly around Manican and Homonhon Island. A study commissioned by the Philippine Misereor Partnerships, Inc. (PMPI) revealed that 25 percent to 50 percent live coral cover, or the coral reefs around the two islands, were reduced to 10 percent or less after Yolanda. The assessment was based on the accounts of spear fishers in the area. The study, which is part of the Project Pagbangon of PMPI, prompted the deployment of artificial reefs in some areas to help boost fisheries production after Yolanda struck Guiuan. According to the Sentro para sa Ikauunlad ng Katutubong Agham at Teknolohiya (Sikat), which conducted the study in 2014, without fishing boats, the number of spear fishers in Guiuan, significantly increased and have been more active in near shore areas. “There is a high probability that if Sikat will conduct underwater coral assessment using photo transect survey, the result will be much lower than community estimates,” the report stated. On the other hand, Sikat estimated that sea-grass areas covered

30 hectares in Manicani Island. Seagrass mortality, in the aftermath of the typhoon, varies from one site to another, ranging from 20 percent to 90 percent. Sea grass were covered, with mud, debris and dead corals rubbles. PMPI, through its national coordinator Yoly Esguerra, supports government plan to establish more MPAs in the country. Through Project Pagbangon, 468 artificial reefs in 12 barangays were constructed and deployed.

Ecosystem-based approach

According to Esguerra, planting or the deployment of artificial reefs may be faster, but she said the plan to establish more MPAs is more laudable. “If you have the fund, artificial reef in some certain areas would allow faster recovery, hence, improve fish productivity,” Esguerra said. But she hastened to add that allowing the natural recovery of corals is still the best way to rehabilitate the country’s marine ecosystem. “Coral reefs are more resilient if the corals grew naturally. In Guiuan and Homonhon, we were fortunate to have funding and the recommended immediate solution to help the fishermen to deploy artificial corals,” she added. Esguerra said local governments should work hand-in-hand to strengthen the protection, not only of their coastal and marine environment, but the local forest cover, as well. “If the forest is degraded, there will be catastrophe. Flashfloods, landslides, mudslides…all the way down to the coastal areas, destroying our marine ecosystems,” she said. According to Esguerra, PMPI supports the plan for science-based implementation of the NGP and enhanced protection “from ridge to reef” through the implementation of the National Integrated Protected Areas System (Nipas) Act. “There should be no political boundaries. An ecosystem-based approach in protecting or enhancing our ecosystem, from the forest down to the coastal and marine areas, is really needed and we need the cooperation not only of the national government, but the local government and the communities,” she said.

putting our own spin on things,” Cinco explained. “The campaign allowed the common local travelers to create their own ‘It’s more fun in the Philippines’ memes.” He suggested that the “new DOT marketing team should try to beat that, or build on its success—and not just change the slogan.” Lara, who was president of Y&R Philippines Inc. before her retirement two years ago, underscored that the DOT’s “more fun” campaign “has so many, many executions and used a variety of touch points so it was a cohesive integrated campaign.” After it promoted the Philippines, the DOT switched gears and started marketing specific resort islands and provincial destinations in foreign markets, but still using the

“more fun” slogan. It also launched affiliate campaigns, like “Visit the Philippines” in 2015 and “Visit the Philippines Again” for 2016. So, much like the Philippines’s Asean neighbors who have kept their slogans for decades, Lara said the “more fun” branding campaign can run just as long “with different executions.” However, she underscored that a rethink of the slogan should consider the current events in the country. “Like everything else, truth in advertising is essential. Is it really still more fun in the Philippines?” Lara said. The Duterte administration has come under fire from the international community for its relentless war on drugs, which its critics have alleged, has resulted in more than 2,000 extrajudicial killings. Analysts have also claimed that aside from President Duterte’s war on drugs, Mr. Duterte’s insulting comments about the US foreign policy toward the Philippines and against the United Nations, have resulted in a massive pullout of foreign funds from the stock market, and a further weakening of the peso. The Philippine stock-market index, however, bounced by 0.29 percent on Monday, to 7,575.84 points after weeks of continued losses. The peso also strengthened on Monday, closing at P47.815 to the greenback from Friday’s close of 47.82.

PEMC data confirms WESM power-rate increase in August By Lenie Lectura @llectura

ugust power rates at the Wholesale Electricity Spot Market (WESM) shot up following seven instances of yellow alert and three instances of red alert in the supply month, data from the Philippine Electricity Market Corp. (PEMC) showed. PEMC, operator of WESM, said the so-called effective settlement spot price, or ESSP, for August stood at P4.17 per kilowatt hour (kWh) as against July’s P3.30 per kWh. For the July supply month, there was just one instance of yellow alert. ESSP pertains to the average price paid by customers for energy purchased from the spot market. The impact on consumers would depend on the distribution utility’s exposure. “It’s P4.17 per kWh. Relatively, it is still lower compared to bilateral contracts,” said Philip Adviento, PEMC’s training and communications manager. The ESSP for August is lower, compared to the same period a year ago, which stood at P4.96 per kWh. Last year’s ESSP for July was recorded at P5.59 per KWh. It can be recalled that during period July 26 to August 5, there were a total of 20 power plants that failed to deliver optimum power on those days because these were either on maintenance shutdown or forced outage. Of the 20 plants, 12 were placed on maintenance shutdown, while eight went on forced outage. The operators and owners of these plants are being probed by the Energy Regulatory Commission (ERC) on suspicion that they were engaged in anticompetitive behavior. The investigation was prompted by the recent outages that resulted in rotational brownouts in Metro Manila and nearby provinces. These 20 plants were unable to deliver more than 4,000 megawatts. The ERC will pursue the probe,

₧4.17/kWh The ESSP for August as against July’s P3.30 per kWh, according to PEMC even if power rates of the Manila Electric Co. (Meralco) went down during the August supply month, which was reflected in the September electricity bills of consumers. Meralco had said overall charges from the WESM decreased by P0.32 per kWh. PEMC had earlier said preliminary data revealed that there were surges in market prices on few intervals, but prices remain low in the weekend of July 30 and 31, 2016, due to decreased demand and lower temperature. Taking into account the several yellow- and red-alert notices issued by the National Grid Corp. of the Philippines, the secondary pricecap mechanism was not imposed as breach of cumulative price threshold was not triggered as provided in ERC Resolution 20, series of 2014. “WESM ushers in transparency in a liberalized regime where spikes in prices provide signals on tightness of supply condition due to forced and planned outages. The secondary price cap and other measures, such as lowering of offer price cap and setting of offer price floor, were instituted by the Department of Energy, Energy Regulatory Commission and PEMC to address sustained high prices and volatilities inherent in a competitive electricity market,” PEMC President Melinda L. Ocampo said. “Rest assured, PEMC remains steadfast in maintaining transparency in market processes, as it continues to reflect market prices that signal the supply-anddemand relationship,” she added. A price cap of P6.245/kWh is imposed should the cumulative price threshold of P9/ kWh be breached over a 168-hour rolling average.

news@businessmirror.com.ph

AseanTuesday BusinessMirror

Editor: Max V. de Leon • Tuesday, September 20, 2016 A5

Indonesia stocks jolted by reality as optimism over nine-month tax-amnesty program fades

s Indonesia’s tax amnesty delivers only a fraction of the hopedfor revenue, a dose of reality is worsening the nation’s growth outlook and eroding this year’s stocks rally.

Infrastructure and real-estate companies, which had been expected to benefit the most from a boost to the budget and inflows of repatriated funds, are faring the worst. As it nears the end of its first trimester, the nine-month amnesty has generated 14 percent of targeted tax revenue, and the central bank has forecast the reprieve will achieve just 11 percent of the income the government was expecting from it this year. “The weak tax-amnesty program has contributed to the drop in the Jakarta Composite Index,” said Jemmy Paul, an investment director at PT Sucorinvest Asset Management in Jakarta. “Infrastructure-related stocks are the most affected by the negative sentiment from the weak tax amnesty flows, especially after the government announced the spending cuts.” It had been hoped that the amnesty would plug a budget hole that led to Finance Minister Sri Mulyani Indrawati cutting spending and transfers to regions by 133.6 trillion rupiah ($10.2 billion) last month.

That’s delayed the building of roads, ports and rail, and dimmed the prospect that last quarter’s pickup in economic growth can be sustained. The government will now probably have to reduce outlays further or widen the deficit due to “well-below target” returns from the amnesty, said David Sumual, chief economist at PT Bank Central Asia. “I think it will affect growth, and especially the importation of capital goods and raw materials,” he said in Jakarta, adding that a disappointing amnesty would probably shave around 0.1 percentage point from gross domestic product growth this year. A gauge of Indonesian infrastructure stocks climbed 14 percent from June 28, the day the amnesty bill was passed, to this year’s highest close on August 1 before falling 12 percent through Friday. A measure of property shares rose 10 percent through August 11 and has dropped 6.8 percent since then. PT Lippo Karawaci, a property developer, and PT Wijaya Karya

Bloomberg Photo

Beton, which supplies precast concrete structures, are among the worst-hit equities, both losing 13 percent from highs in July and August. The government had derived 22.7 trillion rupiah of tax revenue from the amnesty through Friday, official figures show, compared with a target of 165 trillion over the whole reprieve. The results are more underwhelming than they look as strong returns were expected in the first

three months when the penalty rates are the lowest. Just 28.9 trillion rupiah of declared income has been repatriated, a fraction of the central bank’s May forecast of 560 trillion rupiah. The Jakarta Composite Index has fallen 3.5 percent to 5,267.769 from this year’s highest close on August 18 amid high valuations and a broader selloff in emerging markets. The gauge’s price-to-earnings ratio rose

to 18 times in early August before declining to 17.3 on Friday. The index could drop to as low as 5,000, Sucorinvest’s Paul said. “Some investors might be disappointed with the lower-than-expected tax-amnesty realization, both in the total wealth being declared and the revenue from the penalty fees,” said Jeffrosenberg Tan, director for investment strategy at PT Sinarmas Sekuritas in Jakarta. “Banking

stocks will be more vulnerable as the GDP growth will affect their performance.” The Jakarta Finance Index surged 18 percent from June 28, when the amnesty bill was passed, to this year’s closing high on August 8 and has lost 2.8 percent since then. Southeast Asia’s largest economy beat estimates to grow 5.18 percent in the second quarter from a year earlier, the fastest pace since the end of 2013, driven by a 36 percent surge in government spending from the previous three months. A disappointing amnesty will raise the chance that more tax scrutiny next year might hold back a private-sector recovery, Sean Gardiner, a managing director at Morgan Stanley in Singapore, said in a research note this month in which he advised clients to take profits in Indonesian stocks. Sinarmas’s Tan expects further declines in Jakarta stocks and says this will present a buying opportunity. Some property and automotive companies will become attractive as well as state-owned builders because infrastructure development remains a priority for President Joko Widodo, he said. Sucorinvest’s Paul is forecasting a rebound in the JCI to 6,000 to 6,200 over the next 12 months driven by a recovery in company earnings and a plan to cut corporate taxes to 20 percent from 25 percent. Bloomberg News

The W

Business

A6 Tuesday, September 20, 2016 • Editor: Lyn Resurreccion

Merkel’s defeat in Berlin election shows old parties are diminished

Election posters are on display in the capital Amman in Jordan on Sunday. AP/Raad Adayleh

Jordan election seen as small step toward democratic reform

MMAN, Jordan—Jordan’s parliament election on Tuesday is being touted as proof that the pro-Western monarchy is moving forward with democratic reforms despite regional turmoil and security threats. Officials point to new rules of voting and the participation of the opposition Muslim Brotherhood for the first time in almost a decade. But critics argue that this year’s electoral reform—ostensibly meant to strengthen political parties—has fallen short and that the revised system continues to favor King Abdullah II’s traditional tribal supporters. They expect the parliament being chosen on Tuesday to be similar to the outgoing one— largely an assembly of individuals with competing narrow interests, widely dismissed by Jordanians as ineffective in dealing with endemic unemployment and other crises. Such a legislature is still a long way from what Jordanians have long been told would be the goal of gradual reform—a strong parliament with a say in choosing the government, now the exclusive domain of the king. The new election rules are “a step forward, but it is not yet enough to create a serious breakthrough on the reform track,” analyst Oraib al-Rantawi said. The rules replace the “one man, one vote” system that was introduced in 1993 and weakened political parties. In Tuesday’s election, Jordanians will choose 130 members of parliament, w ith 15 seats reserved for women, nine for Christians and three for minority Chechens and Circassians. More than 4 million Jordanians over the age of 17 are eligible to vote, more than twice the number in the 2013 election, when voters had to preregister.

130 The number of members of parliament that are to be elected

Under the new rules, the country is divided into 23 districts, and voters choose candidates from competing lists in their district. In all, 1,252 candidates are running on 226 district lists. Voters can select one or more candidates on a list. Only 6 percent of the lists are affiliated with a specific political party, 11 percent have some party representatives, 39 percent are independent and 43 percent are based on tribal affiliations, according to the International Republican Institute (IRI), a USbased nonpartisan group that seeks to promote democracy. “The majority of voters base their voting habits on tribal affiliations, community roots and identity rather than approaches to policy,” the group said. The most organized party is the Islamic Action Front (IAF), the political arm of the Muslim Brotherhood, a veteran opposition movement linked to the regional organization of the same name. The IAF competed in 2007, but boycotted parliament elections in 2010 and 2013, arguing the electoral system was unfair. The Brotherhood has suffered setbacks in the region and in Jordan

in recent years, in part because of a backlash of various governments to the 2011 Arab Spring uprisings. In Jordan ideological arguments split the group into rival factions, with one recognized by the government as the official Brotherhood. The original group has been outlawed in Jordan, but its political arm, the IAF, remains legal. Al-Rantawi said he believes the IAF is running in this election—despite misgivings about the system—to avoid becoming irrelevant. The mood among supporters was subdued at an IAF election rally over the weekend in Sweileh, a neighborhood in the capital, Amman. The outdoor gathering on a sandy lot drew a few hundred people, but several back rows of plastic chairs remained empty. IAF Spokesman Murad Adayleh said his party would push for economic and educational reform. “Our role will be to uncover the government’s wrong policies and address any mistakes,” he said, dismissing suggestions that a vocal, but small IAF faction could inadvertently serve as democratic window dressing. Adayleh, who is also a candidate, said he expects his party will win between one-fourth and one-third of the seats. Al-Rantawi said he believes about 30 seats are in play for political parties, including about 20 for the IAF, and that the remaining 100 seats would be split among individuals. Other parties are less well known nationally, including leftists, centrists and conservatives. A debate among candidates from nine parties, held over the weekend at a hotel in Amman, rarely got beyond generalities, such as calls for lowering unemployment. One of the newcomers on the scene, the Maan List, campaigned for separation of religion and state, still a relatively provocative idea in the conservative, overwhelmingly Muslim kingdom. Candidate Mohammed Numan, a pediatrician, called for ending what he described as a culture of shaming those not considered devout enough.

Growing voter apathy may be a key factor this year. In an IRI poll in April, 87 percent of 1,000 respondents said the outgoing parliament didn’t accomplish anything worthwhile and more than half said they were somewhat or very unlikely to vote. The survey had an error margin of 3.5 percentage points. Voter turnout in 2013 was 56 percent, said analyst Ayoub AlNmour of Al-Hayat, a civil-society group that monitors elections. This year the percentage of those casting ballots will likely be lower because the pool of eligible voters nearly doubled, though turnout could be higher in absolute terms, he said. Some voters are discouraged by unequal representation. For example, the urban district of Zarqa, with 1.8 million people, including large numbers of Jordanians of Palestinian origin, gets 11 seats in parliament, the same number as the tribal Karak district, with just 300,000 residents, said Al-Nmour. Mohammed Momani, the government spokesman, said the new voting system is a significant step toward political reform. “The fact that Jordan is actually holding elections ...in a region that is full of blood and fight and weapons—that in itself is important,” he said. “It shows the strength of this country, and the credibility of its institutions and the reform process.” US-based analyst David Schenker said Jordan invests in regular elections in part to polish its image in the eyes of Western military and financial backers. “We know that the West has a special regard for Jordan, and we know that Jordan, because of this high regard...is able to charge very high rent,” said Schenker, of the Washington Institute for Near East Policy think tank. “It costs money to do these elections and there are some risks involved, but for Jordan it’s important to display that the kingdom is different from other Arab states,” he said. AP

hancellor A n g e l a Merkel’s party and its coalition partner lost support in regional elections in Berlin, as the anti-immigration Alternative for Germany (AfD) siphoned off voters, extending its challenge to the country’s political establishment. The Social Democrats, the junior coalition partner in the national government, won the election for the capital’s city council and Merkel’s Christian Democratic Union (CDU) finished second. Yet, their combined voter share declined by about a quarter, leaving the “grand coalition” of the two biggest parties without a majority to run Germany’s biggest city. AfD was projected to win about 14 percent, putting it just behind the resurgent anticapitalist Left party and the Greens. With state elections done for the year, Merkel’s next task is to halt coalition strife over her rejection of a cap on migration, a demand pushed by the AfD but also by Merkel’s Bavarian party allies. Pressure to settle the dispute is likely to grow ahead of a CDU convention in December that’s meant to set the party’s course for national elections in a year’s time. Merkel will address the Berlin result at a news conference at 1:30 p.m. local time on Monday. “The main driver for disappointment with centrist forces remains Merkel’s migration policy,” Carsten Nickel, an analyst for Teneo Intelligence in Brussels, said by e-mail. “Tonight’s result marks the starting point for intensive coordination work between Merkel’s CDU and its Bavarian sister party, the CSU.” Electoral successes by the AfD in a string of state votes are roiling politics in Europe’s biggest economy after last year’s record influx of asylum-seekers, which has dragged down poll ratings for Merkel and her party. After finishing third behind the AfD in a state vote two weeks ago,

Merkel’s party was headed for its worst showing in Berlin since the end of World War II and an exit from the city government. “It’s not a good day for the traditional parties,” Frank Henkel, the CDU’s defeated mayoral candidate, told supporters. For the Christian Democrats, “this result is absolutely unsatisfactory.” The Social Democrats won with about 22 percent of the vote to less than 18 percent for the CDU, allowing Mayor Michael Mueller to extend the party’s 15-year-old rule in Germany’s biggest city, possibly together with the Left and the Greens. After the AfD took almost 21 percent of the vote on September 4 in the rural eastern state of Mecklenburg-Western Pomerania, it found less support in the more diverse capital of 3.5 million, though it did win its first seats on the city council. “We have arrived in the capital,” Beatrix von Storch, a European lawmaker for the AfD, said on ARD television. “This is a huge success. We’ll be celebrating tonight.” T he Left, which traces its roots partly to the former East German communists, was the winner among established parties, rising about four percentage points to almost 16 percent to take third place, according to projections. The pro-business Free Democrats took about 6.5 percent, returning to the city council after a five-year absence. The electoral losses have escalated the pressure on Merkel to change course as she weighs running for a fourth term next year. The sharpest critic within her ruling coalition is Bavaria’s ruling Christian Social Union, which has contested national elections with the CDU since the end of World War II. CSU leader Horst Seehofer told Der Spiegel magazine that his party is making an annual migration cap a condition for backing Merkel as joint chancellor candidate. Bloomberg News

Putin claims victory in parliamentary vote

resident Vladimir Putin hailed the United Russia party’s victory as results showed it is on course to increase its majority in the first parliamentary elections since a disputed ballot in 2011 sparked the biggest protests of his decade-and-a-half rule. “We can already say that the party got a very good result—it won,” Putin said on Sunday at a joint appearance with Prime Minister Dmitry Medvedev, United Russia’s chairman, at its headquarters in Moscow shortly after polling ended. “The situation isn’t easy and people want stability in society, in the political system.” The pro-Kremlin party had 54 percent support with more than 60 percent of ballots counted, according to Russia’s central election commission. Three other parties that are all broadly loyal to Putin, the nationalist Liberal Democratic Party, the Communists and Fair Russia, also passed the 5-percent barrier for seats in the State Duma. Putin, 63, is widely expected to seek reelection in March 2018. Anger over ballot-stuffing in 2011 sparked huge protests that continued through his return to the Kremlin in 2012. The authorities reacted with new laws to suppress the opposition movement, including jailing activists. Putin’s popularity also hit record highs on a surge of patriotism after he annexed Crimea in 2014, even as international sanctions helped push the economy into recession. Still, the Kremlin’s concerned to prevent fraud allegations marring this contest and spurring a new wave of opposition to him.

‘Absolute majority’

United Russia “will have an absolute majority,” Medvedev said. While the party’s support was similar to the 50 percent it gained five years ago, it’s expected to emerge with more than its current 238 seats after the authorities changed the election rules. With 62 percent of the vote counted, here’s how the major parties stand: United

Russia 54 percent; Liberal Democratic Party 14 percent; Communist Party 14 percent; Fair Russia 6 percent. United Russia’s candidates are also ahead in 201 of the 225 contests in individual constituencies with more than 60 percent of votes counted, Interfax news agency reported, citing the central election commission. Half of the new State Duma’s 450 deputies will come from single-mandate constituencies, which were restored for the first time since 2003, in a change seen as favoring United Russia because of campaign support from the state apparatus and its dominant voter base.

‘Siege mentality’

“Everyone was sure of United Russia’s victory,” Igor Bunin, director of the Moscowbased Center for Political Technologies, said by phone. “Society is in a state of depression and has a siege mentality and people support Putin.” Russians are enduring the steepest decline in income in two decades, amid an economic recession provoked by the collapse in oil prices. United Russia’s support had appeared to suffer as a result, slumping in recent opinion polls to about 40 percent from 60 percent 18 months ago. The ruling party may win two-thirds of seats in the parliament, which is sufficient to change the Constitution, RIA Novosti reported, citing Alexei Zudin, a political scientist at the Moscow-based Institute of Socio-Economic and Political Studies. Turnout for the elections was relatively low at 40 percent by 6 p.m., two hours before the close of polls, according to the election commission, with fewer than a third of voters taking part in Moscow and Saint Petersburg, the two largest cities. In 2011 60 percent of the electorate voted. Putin conceded the level of participation had fallen from previous years, but said it was still “high.” The low turnout was an indication of “voters’ attitude to the ruling party,” Vladimir Zhirinovsky, the Liberal Democratic Party’s leader, told reporters in comments broadcast on Rossiya 24 television. Bloomberg News

World

sMirror

www.businessmirror.com.ph | Tuesday, September 20, 2016

Violent incidents in US considered as possible terrorism

EW YORK—A series of seemingly random, mostly amateurish, attacks in New York and Minnesota caused mostly minor injuries over the weekend, but may have added new strains to the country’s political fabric. T he most ser ious inc ident took place in a shopping ma l l i n Sa i nt C loud , M i n nessot a , where a m a n st abbed n i ne p e o ple, one c r it ic a l l y, b e fore be i ng shot to deat h b y a n of f - dut y pol ice of f icer. The Islamic State (IS) group took responsibility for the Saturday night attack through one of its news agencies, and the man was described as asking potential victims whether they were Muslim. The motivation was more baffling in a series of crude bomb attacks in and around New York City. An improvised bomb exploded on Saturday night in a trash bin on West 23rd Street in Manhattan, shattering windows and spewing glass on passersby. Twenty-nine people were lightly injured. A similar device, made out of a pressure cooker, was found unexploded a few blocks away on West 27th Street. The woman who found it told the Los Angeles Times that it “looked like a child’s science project.” Ninety miles away, in the resort town of Seaside Heights, New Jersey, a pipe bomb exploded on Saturday morning in a plastic garbage can near the route of a 5-kilometer charity run. There were no injuries, but the run was cancelled. The incidents exacerbated the country’s deep political divisions, as Republicans and Democrats bickered with each other and among themselves over the semantics of the attacks. “A bomb exploding in New York is obviously an act of terrorism,” New York Gov. Andrew Cuomo said on Sunday. But, he added, “At this time there’s no evidence of an international terrorism connection with this incident, but it is very, very early in the investigation.” New York Mayor Bill de Blasio, like Cuomo, a Democrat, was more reluctant to use the term “terrorism.” “We know it was a very serious incident, but we have a lot more work to do to be able to say what kind of motivation was behind this,” de Blasio told reporters on Sunday. “Was it a political motivation? Was it a personal motivation? We do not know that, yet.” The New York Times, citing two unidentified senior lawenforcement officials, reported late on Sunday night that authorities had identified a “person of interest” in the bombing, but did not describe the person as a suspect. Republican presidential candidate Donald Trump was chastised for announcing the explosion in New York hours before police would say anything other than that they were investigating an explosion. Conservative bloggers, mean-

while, accused the Democrats of downplaying the terrorist threat, although presidential candidate Hillary Clinton issued a statement saying the “apparent terrorist attacks…should steel our resolve to protect our country and defeat” IS.

29 The number of people injured in the explosion of improvised bomb in a trash bin on West 23rd Street in Manhattan on Saturday night Most of the clues come from the undetonated bomb, which was noticed about 10 p.m. on Saturday by a photographer, Jane Schriebman, who lives in the neighborhood. “It was a funny-looking object, like a child’s science experiment, and I thought, ‘Why would somebody have thrown this out here?’ But then again, you see a lot of junk on the streets in New York,” Schriebman said in an interview. It appeared to be a pressure cooker with wires sticking out, she said. She called 911 and police responded immediately, she said, adding: “As soon as the policeman looked at it, he said, to me, ‘Run!’ ” Both bombs in New York— the one that detonated and the one that did not—were reported to be similar to the device that turned the 2013 Boston Marathon into a bloodbath, using a pressure cooker, Christmas lights and ball bearings. The one that exploded had been placed in a trash bin in a fairly nondescript stretch of West 23rd Street, which, for Manhattan, is not particularly well-trafficked. The pipe bomb that went off in New Jersey was also a crudely made device, but of different design. New York was snarled with gridlock on Sunday, as police closed many roads and curtailed subway routes for security. The New York Police Department was planning to significantly increase its presence at airports, train stations, big public gathering places, such as Times Square and in the subway system. An additional 1,000 state police and National Guard officers were being deployed. The increased security, Cuomo said, was to “err on the side of caution.” Adding to the anxiety was the fact that President Barack

Obama and many other heads of state are arriving for the opening of the UN General Assembly on Tuesday. The city was already on edge after a ceremony the previous weekend to mark the 15th anniversary of the September 11, 2011, attacks. Then, on Thursday, a man was shot at Penn Station after attacking an off-duty police officer with a meat cleaver. The man, Akram Joudeh, was reported to be Muslim. Police said the motivation behind the attack was that his car was booted for illegal parking. No physica l ev idence, yet, connects the trash-bin blast to the unex ploded pressurecooker bomb discovered nearby, but investigators believe t he t wo a re l i kely rel ated, according to a senior counterterrorism official who discussed the investigation on the condition of anony mit y. “It had to be a bomb,” said Steven Ochs, 43, who was eating paella inside a Spanish restaurant in Chelsea when the blast hit. “There was just one big explosion, no smoke or fire, but the smell of gunpowder was present.… Then there were all these dust particles swirling around. It was a scene of chaos and madness.” The blast, Ochs said, appeared to come from street level—consistent with reports that it came from a trash bin— and it blew out the windows of passing cars and an adjacent mid-rise apartment building. Counterterrorism experts said the placement of Saturday’s explosives indicated a lack of sophistication about bombs that would point to a “ lone wolf ” terrorist, as opposed to one with extensive training. Because of their design and strength, steel trash bins tend to deflect blasts into the sky and away from people, said Patrick Skinner, a former CIA case officer and a director of the Soufan Group, a New Yorkbased security firm. The Chelsea bomb’s location suggests that whoever planted it either couldn’t find anywhere else to put it without drawing notice, wanted to cause as little carnage as possible, or didn’t understand the power of the device and thought it would turn the trash bin’s steel into shrapnel. The bomber seems to have built the devices first, then set off to figure out where to put them, he said. “Driving around with a bomb is probably pretty nerve-wracking,” Skinner said. “It points to someone who is inexperienced and didn’t build a bomb for a specific target.” So far, investigators have found no obvious links between the devices in New York and New Jersey. Skinner said he would not be surprised if they were related. “Coincidences happen,” he said. “But it’s not like these bombs are that far apart, and they happen to go off the same day.” The Minnesota stabbings occurred about half-an-hour after the explosion in New York. The suspect repeatedly mentioned Allah and asked at least one victim if they were Muslim before an off-duty police officer shot and killed the assailant, Saint Cloud Police Chief Blair Anderson said at a news conference. Los Angeles Times/TNS

Stiglitz grades Trump ‘F’ on econ

he US economy would be a big loser if Donald Trump wins the presidential election and imposes new tariffs on imports from China, according to Nobel laureate Joseph Stiglitz. The end result would be a trade war, a correction in US living standards and a net loss of American jobs, Stiglitz said on Monday in an interview with Bloomberg News in Hong Kong. On China’s economy, the Columbia University professor doesn’t expect a hard landing, though he’s concerned about the use of credit to fuel growth. And ahead of this week’s keenly anticipated Bank of Japan meeting, he isn’t expecting any fireworks. The following are edited extracts from the interview: z

If Trump wins the election and implements new tariffs on China, what would the economic impact be?

Ta r if fs on C h ina wou ld have t wo i m med i ate consequences. One, A mer ican workers who depend on low-cost Chinese good s wou ld see t heir st a nd a rd of l iv ing fa l l immed i ately. The likelihood that these industries will return to the US is very low. On the other side, there would be retaliation. China would have within the World Trade Organization the right to impose retaliation against buying all the things they buy from the US. It would be a trade war. China would only do it selectively and the probability is that there would be more jobs destroyed than would be created. The net effect on employment would be negative. I think the US would find itself the big loser.

Is Trump raising any valid concerns about trading with China, or is he exaggerating?

W hat he is identif y ing is a standard naïve concern, when I say naïve, I mean wrong, that foreigners can undersell us. Would he be any happier if they had a different exchange rate and lower wages? No, they would be selling their goods into the US. Trade is based on comparative advantage, we have lost comparative advantage, partly because we didn’t have a good manufacturing policy. We still have a comparative advantage for high tech. No economist would ever say you look at bilateral trade. This is a global trade system, we might buy manufactured goods and have a trade deficit with China, but then we sell goods elsewhere, you can’t look at it in a bilateral way. The whole framework in which he looks at it is something that would be given a student in a principles course in economics an F.

I certainly don’t think a hard landing is inevitable. They have done another impressive job. They have managed to keep the economy going on a reasonably even kilter. On the other hand, the way they have done it has added another dose of risk through credit.

Away from China, the Bank of Japan meets this week, you aren’t expecting any rabbits to be pulled from the hat. Can you explain?

So you would grade him F?

We have just reached the limits of monetary policy. Where monetary policy could have the biggest effect would be active policies to expand credit to some groups who haven’t had it before, like small businesses. I don’t think Japan is doing as badly as conventional wisdom says simply because they don’t correct for the size of the labor force in terms of growth of output-per-working-age population. I look at standards of living and they are not doing that badly, you visit Japan you feel that you don’t feel a countr y in depression.

If Trump is elected, could he push through the kind of promises he has made, such as tariffs on China?

You also say the US labor market isn’t as strong as the headlines suggest. Can you elaborate on why you think the jobless rate is between 9 percent and 12 percent?

“F.” He just doesn’t understand much about economics.

Everyone is talking about how much he would be constrained by existing rules and our democratic process. We’ve never had it tried by someone who is that far out of the mainstream. The honest answer is nobody really knows. The president has a lot of authority and a lot of inf luence.

On China’s economy, do you believe that growth is on track?

You have to look at people who are involuntarily working part time. There are people who are not searching who would normally be searching, then there are even those in disability roles who would normally not be disabled. Somewhere around 9 percent to 12 percent. There is no precision here. There is no significant inflation pressure, that’s a sign the labor market is not tight. Bloomberg News

China’s home prices rise most in 6 yrs as sales gain

hinese home prices rose the most in more than six years last month, suggesting local government efforts to avert a housing bubble are having only a limited effect. New-home prices, excluding governmentsubsidized housing, in August gained in 64 of the 70 cities the government tracks, compared with 51 in July, the National Bureau of Statistics said on Monday. Prices fell in four cities, compared with 16 a month earlier, and were unchanged in two. Average new-home prices in the 70 cities rose 1.2 percent in August from July, the biggest increase since January 2010, according to Bloomberg calculations, based on the government data. The value of home sales jumped 33 percent last month from a year earlier, the fastest pace in four months. The jump in home prices comes in spite of lending curbs, which have spread from major cities, such as Shanghai and Shenzhen, to regional hubs. That may lead to further restrictions as policymakers become increasingly concerned about averting an asset bubble, said Xia Dan, a Shanghai-based analyst at Bank of Communications Co. Hangzhou, Zhejiang’s provincial capital, on Sunday halted home sales to some nonlocal residents, adding to similar restrictions introduced last month in Suzhou and Xiamen. China’s top leaders, after a Politburo meeting led by President Xi Jinping, in July pledged to curb asset bubbles amid a renewed focus on financial stability.

China housing Bloomberg News

All-round gains

“Price growth accelerated in cities of all tiers,” the statistics bureau said in a statement released with the data. Almost half of the cities where prices increased had larger gains than in July, it added. Prices climbed a record 4.4 percent and 3.6 percent in Shanghai and Beijing, respectively, taking the year-on-year gains to 31 percent and 24 percent. Values rose 2.1 percent in Shenzhen and 2.4 percent in Guangzhou, both faster than a month earlier. Home prices climbed the fastest in regional hubs where local authorities haven’t introduced curbs. Zhengzhou, the provincial capital of central Henan province,

led gains with a 5.5-percent increase, up from a 2-percent gain in July. Prices in Wuxi, a manufacturing base in southern Jiangsu province, followed with a 4.9-percent gain, compared with 2.7 percent a month earlier.

Easy credit

However, tightening measures by local governments are unlikely to rein in prices, as long as credit remains easily attainable, said Jeffrey Gao, a Hong Kong-based property analyst at Nomura Holdings Inc. “The local curbs have limited impact as home inventory has already fallen to a low level,” Gao said. “Prices will not fall unless the government moves to tighten credit and add more land supply.” Bloomberg News

Tuesday, September 20, 2016

BusinessMirror

www.businessmirror.com.ph

The World BusinessMirror

Tuesday, September 20, 2016

Syrian truce receives blows with air strikes, shelling

B Columbus, Ohio, Police Chief Kim Jacobs displays a photo of the type of BB gun, which the police say Tyre King pulled from his waistband before he was shot and killed by a police officer investigating an armed robbery report, during a news conference in Columbus, Ohio. AP/Andrew Welsh-Huggins

Police notice uptick in imitation guns

hether they shoot BBs, pellets, paintballs or nothing at all, imitation guns can be indistinguishable from the real thing— it’s one reason some criminals gravitate toward them. Plus they’re cheap and easy to get.

As Ohio authorities investigate the fatal police shooting of a 13-year-old boy, who officers said pulled a realistic-looking BB gun from his waistband, law-enforcement agencies are grappling with the use of fake guns to commit very real crimes. “If I can’t go get a real gun, it’s easier for me to waltz into WalMart or whatever store sells these things and go get a replica. Because if I go to a store to hold it up, the guy behind the counter isn’t going to know it’s not real,” said Geoffrey Alpert, a criminal justice professor at the University of South Carolina. W hi le the federa l gover nment does not track criminals’ use of toy or replica guns, some individual police departments say they’ve noticed an uptick. In Edmonton, Canada, the police said imitation guns were involved in 1,598 incidents in 2015—up 38 percent from a year earlier. In Arlington, Texas, suspects are increasingly using lookalike guns, including an incident earlier this year in which a man carjacked a woman using an air gun that resembled a real pistol, and another case involving a teen who threatened an officer with a replica gun. The officer managed to knock it out of the teen’s hand and tackle him. Arlington police Lt. Christopher Cook said that, between March and August, nearly 20 percent of the weapons seized by the police after

1,598 The number of incidents in Edmonton, Canada, where the police said imitation guns were involved in 2015, or a 38-percent increase from 2014

they were used in crimes turned out to be lookalikes. So far, the police haven’t had to use deadly force. But Cook said that could change in an instant. “There’s no training in the world that we know of where an officer can readily distinguish a real gun from a fake gun,” he said. “That’s not realistic, because officers have to make split-second decisions to ascertain whether it’s a firearm.” A lookalike weapon is at the center of last week’s fatal police shooting of Tyre King in Columbus, Ohio. An officer responding to a report of a $10 armed robbery shot the teen after he pulled out a BB gun that looked “practically identical” to the weapon that police officers use, Columbus police said. A 19-year old who said he was the boy’s friend told a newspaper that Tyre had a real-looking BB gun, was out to rob someone and ran from the police. But an attorney for Tyre’s family has

called for an independent investigation, saying the family believes the boy’s involvement in an armed robbery would be “out of character” and the police version of events “might not be true.” However, the facts shake loose in Columbus, the use of replica guns in crime has long vexed law enforcement. In the late 1980s, after a rash of high-profile police shootings of suspects carrying toy or lookalike guns, Congress authorized a study that found thousands of robberies and assaults to have been committed with imitation weapons between 1985 and 1989. The study also identified more than 250 cases in which an officer used force—deadly or otherwise—on a suspect brandishing an imitation gun. More recently, Associated Press research found at least 25 deaths involving lookalike guns mistaken by the police for actual firearms across the country in the last two decades, dating to the 1994 slaying by a housing police officer of a 13-year-old New York City boy. “It’s horrible, it’s horrible, when these kids are displaying these firearms and a life is lost, and after the fact it turns out it’s not real,” said Allentown, Pennsylvania, police Capt. Richard London. But he added it could be nearly impossible to tell an imitation gun from a firearm that shoots real bullets. “It’s human nature to defend yourself in the face of that,” he said. At least 12 states, Washington, D.C., and Puerto Rico have laws restricting the sale or use of imitation firearms, according to the National Conference of State Legislatures, while many cities and towns have their own ordinances on lookalike guns. Federal law requires imitation guns to have orange plugs in the barrel to distinguish them from real firearms, but the tips are easily removed and experts question their effectiveness. AP

EIRUT—Syria’s fragile cease-fire started to unravel on Sunday with the first aerial attacks on rebel-held neighborhoods of Aleppo and a southern village that killed at least eight people, violations that came as tensions between the American and Russian brokers of the deal worsened following a deadly United States strike on Syrian government forces. The air raid by the US-led coalition killed dozens of Syrian soldiers and led to a harsh verbal attack on Washington by Damascus and Moscow. The US military says it may have unintentionally struck Syrian troops while carrying out a raid against the Islamic State (IS) group in eastern Syria on Saturday. The seven-day cease-fire is supposed to end at midnight on Sunday, according to a Syrian army statement issued last week. The US and Russia have said that, if it holds for seven days, it should be followed by the establishment of a Joint Implementation Center for both countries to coordinate the targeting of IS and al-Qaeda-linked militants. Despite largely holding, the cease-fire has been repeatedly violated by both sides, and aid convoys have not reached besieged rebel-held neighborhoods of Aleppo, Syria’s largest city and one-time commercial center, which has been the center of violence in recent months. Aid delivery to Aleppo is part of the US-Russia cease-fire deal. Earlier this month, Syrian government forces and their allies captured areas they lost south of the city, reimposing a siege on its oppositionheld eastern neighborhoods. More than 2,000 people were killed in 40 days of fighting in the city, including 700 civilians, among them 160 children, according to a Syrian activist group. Syrian state TV reported on Sunday that dozens of residents had left rebel-held areas in Aleppo and were taken to shelters in the government-controlled part of the city. Also on Sunday, Aleppo Gov. Hussein Diab called on insurgents in the eastern neighborhoods to turn themselves in, hand over their weapons and take advantage of an amnesty decree issued recently by Syrian President Bashar al-Assad. “We are at a new stage that requires making the decision to embrace reconciliation,” Diab said in a statement carried by the state news agency Sana. He urged insurgents to halt what he called the bloodshed and destruction and affirmed that all who turned themselves in and surrendered their weapons would be treated well and allowed to return to normal life. Moscow laid the blame for Sunday’s violence squarely on the opposition. Russian Defense Ministry Spokesman Maj. Gen. Igor Konashenkov said in an e-mailed statement that both “terrorists and the opposition” are using the truce to “boost their forces and prepare for renewed hostilities.” Konashenkov says Moscow still has not been able to contact the US-backed opposition to coordinate cease-fire efforts despite Washington’s assurances. He said the US has not even tried to get the opposition to hold its fire. US Secretary of State John Kerry fired back in an interview with CNN, saying Russia needs to stop Assad from attacking the opposition and blocking aid delivery. Kerry said Assad was a “spoiler” in the cease-fire, and called on Moscow to “stop the grandstanding, stop the showboating, and get the humanitarian assistance going.” Kerry also said it was important to set up the Joint Implementation Center in order to prevent the “terrible thing that happened yesterday, that we all acknowledge and regret but it happens when you have conflict.” He appeared to be referring to the US-led air strikes in eastern Syria. AP

100,000 deaths from Indonesia haze, study says J

AKARTA, Indonesia—Indonesian forest fires that choked a swath of Southeast Asia with a smoky haze for weeks last year may have caused more than 100,000 deaths, according to new research that will add to pressure on Indonesia’s government to tackle the annual crisis. The study by scientists from Harvard University and Columbia University, to be published in the journal Environmental Research Letters, is being welcomed by other researchers and Indonesia’s medical profession as an advance in quantifying the suspected serious public-health effects of the fires, which are set to clear land for agriculture and forestry. The number of deaths is an estimate derived from a complex analysis that has not yet been validated by analysis of official data on mortality.

The research has implications for land-use practices and Indonesia’s vast pulp and paper industry. The researchers showed that peatlands within timber concessions, and peatlands overall, were a much bigger proportion of the fires observed by satellite than in 2006, which was another particularly bad year for haze. The researchers surmise that draining of the peatlands to prepare them for pulpwood plantations and other uses made them more vulnerable to fires. The estimate of early deaths linked to respiratory illness and other causes covers Indonesia and its neighbors Singapore and Malaysia. It dwarfs Indonesia’s official toll of 19 that included deaths from illness and the deaths of firefighters. However, the possible scale of serious health consequences was indicated by a statement from the

country’s disaster-management agency in October that said more than 43 million Indonesians were exposed to smoke from the fires and half a million suffered acute respiratory infections. The study considered only the health impact on adults and restricts itself to the effects of health-threatening fine particulate matter, often referred to as PM2.5, rather than all toxins that would be in the smoke from burning peatlands and forests. The bulk of the estimated deaths are in Indonesia, by far the most populous of the three countries and the country with the biggest land area affected by haze. The fires from July to October last year in southern Sumatra and the Indonesian part of Borneo were the worst since 1997 and exacerbated by El Niño dry conditions. About 261,000 hectares of land burned. Some of

the fires started accidently, but many were deliberately set by companies and villagers to clear land for plantations and agriculture. Rajasekhar Bala, an environmental engineering expert at the National University of Singapore, one of five experts who reviewed the paper for The Associated Press and were not involved in the research, said the study is preliminary and involved a “very challenging” task of analyzing the sources and spread of fine particulate matter over several countries and a lengthy time frame. Even with caveats, it should serve as a “wake-up call” for firm action in Indonesia to curb peatland and forest fires and for regional cooperation to deal with the fallout on public health, he said. “Air pollution, especially that caused by atmospheric fine particles, has grave implications for human health,” he said. AP

A10 Tuesday, September 20, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

How should we spend P37 billion?

mong the projects being pushed by the current administration to address transportation are several bus rapid-transit (BRT) projects in major thoroughfares across Metro Manila. The projects listed are a 12.3-kilometer line from Manila City Hall to Quezon Circle, a 48-km line along Edsa that will connect Ortigas Center, the Ninoy Aquino International Airport (Naia) and Ayala Avenue, and one along the C-5 corridor.

Despite being approved by the National Economic and Development Authority (Neda) under both the Aquino and Duterte administrations, members of Congress during last week’s hearing on Metro Manila development showed opposition to these projects. Skeptical of the project are former Metropolitan Manila Development Authority Chairman and incumbent Rep. Bayani F. Fernando of Marikina and Rep. Prospero A. Pichay Jr. of Surigao. Both reasoned that, instead of spending more money on other projects, the money is better spent on improving the existing Metro Rail Transit (MRT) and Light Rail Transit lines. A BRT is a mass-transit system where buses, primarily articulated or long buses, run on a dedicated lane separated from other traffic. Just like railway systems, BRT systems have their own dedicated stations, boarding platforms and fare collection. But unlike railways, BRT systems are a fraction of the cost and are said to be more flexible. While dedicated bus ways have existed in Europe since the late 1960s, the first commercial BRT system was the Rede Integrada de Transporte (RIT) launched in Curitiba, Brazil, in 1972. Since then, over a hundred systems in 40 countries have been deployed. Since BRT system implementation has been a resounding success in the countries where it was introduced, it would make sense that we adapt the same system here. But will implementing such system give the same, if not better, results and drastically improve our public transportation system? Before implementing any system, one must first look at the existing variables and conditions in the places where these will be implemented. Among the corridors selected for implementation is Edsa. Originally designed with 12 lanes, three of which are occupied by the MRT Line 3, taking four more lanes to implement a BRT system would reduce the already crowded road to five lanes. All of which would be shared by private vehicles, city buses, provincial buses and express shuttles. It would make better sense if the P37 billion that would be spent on the Edsa BRT project be put into improving the MRT 3 system. With the procurement of new four car trains, an advanced signaling system and an upgraded power system, the line is said to be able to carry up to 1.2 million passengers per day. Then the question comes to the efficiency of the BRT system in terms of speed and number of passengers. The only BRT currently running that carries 1 million passengers per day on a single line is the Guangzhou BRT in China, which is mostly elevated. We have not seen a publicly released feasibility study as to what we will be getting for our P37-billion BRT system. Until then, it is really all theory and little substance. Since 2005

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

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

T. Anthony C. Cabangon Jun B. Vallecera

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

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

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

www.businessmirror.com.ph

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

THE Entrepreneur Continued from A1

hus, while the Philippine economy has been hailed as one of the best performers in Asia, its growth has also been described as jobless growth.

Shelter is one of the basic necessities in life, but the housing shortage in the Philippines is a very serious problem. The government estimates the housing backlog at 5.7 million units this year. In an industry road map, the Department of Trade and Industry (DTI) projects the backlog to reach 6.5 million units by 2030, even though the housing industry produces an average of 200,000 units a year. Promoting the housing industry will not only help fill the gap between supply and demand for housing, but will also benefit the economy. The contribution of

housing to the economy is huge not only by itself but through its multiplier effect. Housing is a very labor-intensive industry, so promoting it will have a significant impact on increasing employment and reducing poverty. More jobs are also generated by industries allied to housing, such as the manufacture of construction materials, like cement and steel. Based on the July 2016 Labor Force Survey, workers in the construction subsector made up the largest group of workers in the industry sector, accounting for 48.1 percent of workers in this sector. This translates to 3.508 million as of July

Shelter is one of the basic necessities in life, but the housing shortage in the Philippines is a very serious problem. The government estimates the housing backlog at 5.7 million units this year. In an industry road map, the Department of Trade and Industry projects the backlog to reach 6.5 million units by 2030, even though the housing industry produces an average of 200,000 units a year.

2016 out of the 7.293 million workers in the industry sector. I welcome measures to boost the housing industry, but we have to be sure that these will not just be additional layers of bureaucracy, which will only defeat the purpose and derail the housing program. I have to emphasize this, again, because of the magnitude of the housing shortage and the continuing increase in demand, which inject urgency in the problem. As of 2011, the housing industry had more than 3,160 real-estate companies, as estimated by the DTI. The industry is dominated by a few

The PSE: Now it’s your fault John Mangun

OUTSIDE THE BOX

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

BusinessMirror is published daily by the Philippine Business Daily Mirror

HOM

Manny B. Villar

Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug

Online Editor Social Media Editor

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

Housing boost: Addressing a socioeconomic concern

t is usually difficult to go more than a couple of days without suddenly ranting some babble about 300-year-long political cycles or the war with the political elite. But recently, the trading on the Philippine Stock Exchange (PSE) has been so exciting and interesting it is hard to look away. Last Thursday’s advancement on the PSE Composite index (PSEi) by 2.15 percent, followed by a 2.01percent drop on Friday, tells much of the story. What could have possibly happened in that 48-hour period to cause billions of pesos of difference in the value of local listed companies? The answer is, of course, nothing. However, do not think for one minute that this type of trading is done by human beings raised on mother’s milk and tales of heroic figures making sacrifices for family and country. No, in the last few months, the trading on the PSE has become

like the Game of Thrones without a sexy “Mother of Dragons” to give any hope of good that triumps over evil. But it is really all your fault. The stock market goes up after the election and people buy into the idea that it is because President Duterte was elected. Then when Mr. Duterte does his president thing, that is why the PSEi is going down. It is not just the political analysis nonsense. The US lowered base interest rates from over 5 percent in 2007 to 0.25 percent in 2009. Then in December 2015 they raised that rate and told the world to expect

Investors base their stock-market decisions on a research report from the local experts that says, “investors now expect a more than likely chance of a rate hike before the year ends”. I am not the smartest guy in the room so what is “a more than likely chance” mean? Is that like saying that if you actually buy a lotto ticket, then you have “a more than likely chance” to win than if you don’t buy a ticket?

two or three more rate increases in 2016. Local investors wait like an expectant father outside the delivery room not remembering that the mother-to-be has been pregnant for 12 months. Investors base their stock-market decisions on a research report from the local experts that says, “investors now expect a more than likely chance of a rate hike before the year ends”. I am not the smartest guy in the room so what is “a more than likely chance” mean? Is that like saying that if you actually buy a lotto ticket, then you

companies that are highly integrated and are engaged in other real-estate activities other than housing: hotels, commercial office buildings, industrial real-estate development and retail real estate. Many of the housing industry players are represented by various associations, the largest of which is the Subdivision and Housing Developers’ Association, which has 160 members throughout the country. Other industry groups include the Chamber of Real Estate and Builders’ Associations, the Real Estate Brokers Association of the Philippines Inc., the Philippine Association of Real Estate Brokers, the National Real Estate Association of the Philippines and the Organization of Socialized Housing Developers of the Philippines. I believe now is a good time to give the housing industry a much-needed boost, but such move must be guided by the new administration’s policy of eliminating red tape. Promoting the housing industry will not only address a social concern, but will also increase employment and stimulate economic activities.

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

have “a more than likely chance” to win than if you don’t buy a ticket? That makes sense, I guess. Here’s the real deal. Prices that do not go up then go down. The PSEi gave an indecision pattern—a doji—the week of July 18th. Prices did not go up. Since then, prices have gone down just enough to force the experts to have to look for reasons for the past eight weeks. That is not easy. Ayala Corp. shares tried to break and hold P900 for six weeks. BDO spent nine weeks trying to do the same thing at P115. Former favorite Double Dragon Properties has been stuck at P60 since June. But the experts never mention reasons for individual stock price movements because it would not make sense. So, in spite of the forces of darkness trying to move prices, the reason we have not gone up is the investors’ fault. It is always better to just walk away than to listen to the experts’ strategies and explanations. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Opinion BusinessMirror

opinion@businessmirror.com.ph

5 good reasons telcos oppose PCC review of buyout deal Ernesto M. Hilario

ABOUT TOWN

ere’s the latest twist in the legal wrangling over the P70-billion deal involving the joint use by the country’s two biggest telecommunications companies—PLDT/Smart and Globe Telecom—of San Miguel Corp.’s (SMC) idle 700-megahertz (MHz) band assets.

The Office of the Solicitor General is now asking the Court of Appeals (CA) to lift its injunction on the review of the deal by the Philippine Competition Commission (PCC). What happened after the two telcos acquired the 700-MHz frequencies that had been surrendered by SMC to the National Telecommunications Commission (NTC) was to start putting up long-term evolution (LTE) or 4G broadband facilities to accelerate the delivery of faster and cheaper Internet services. But not so fast, the PCC said, for it had the power to review the deal as part of its mandate to stop anticompetitive behavior. On August 30, the appellate court issued a writ of preliminary injunction stopping PCC from reviewing the deal. That should have given the two telco giants’ combined subscribers of 117 million (PLDT/Smart—68.9 million, Globe—48.4 million) ample reason to rejoice over the prospect of faster and cheaper Internet, but it proved to be short-lived. On Wednesday, September 14, the Office of the Solicitor General filed on behalf of PCC a Motion for Reconsideration (MR) asking the CA to lift the injunction order and let the PCC proceed with its review of the buyout deal. The PCC asserted that the CA had “seriously erred” in stopping the PCC probe because, first, the petitioner does not have a clear legal right requiring protection by an injunctive relief and, second, the deal is against public interest as it would have a negative impact on the telecom industry. The PCC’s Mergers and Acquisitions Office (MAO) had earlier said that its initial review of the P70-billion deal indicated that this was anticompetition because SMC, which had sold several telco units with the highly coveted 700-MHz bandwidths through Vega Telecom Inc. (VTI), had the potential to be a strong third player in the Philippine telecom industry and could have broken the duopoly of PLDT/ Smart and Globe. The two telcos are now saying the PCC review of the mega deal is illogical, for a number of reasons. One, it is not the deal itself that is anticonsumer and disadvantageous to the public. It is the PCC inquiry

that would hurt not only cellphone users, but also everybody, because the undue delay resulting from the proposed review undermines the order by the NTC for Globe and PLDT/ Smart to roll out LTE services, and also undermines the directive by President Duterte for the telcos to deliver faster and cheaper Internet services. Two, the claim that the deal has shut the door to SMC or any other entity as a competitive third player is anticonsumer on two grounds. One, SMC has surrendered its 700-MHz assets, after its planned partnership with Australia’s Telstra didn’t push through. And two, for it to become a highly competitive challenger to the two telco giants, it needs huge capital to put up a nationwide broadband network to give PLDT/Smart and Globe a run for their money. Three, a third player can still enter the picture because part of the NTCapproved buyout deal is the return by PLDT/Smart and Globe of certain frequencies that the Commission can assign to a possible telco competitor. In fact, a third player can still enter because Globe and PLDT/Smart have relinquished a total of 85 MHz across the 2G and 4G bands. Four, a duopoly does not mean absence of competition because PLDT/Smart and Globe have long been engaged in a contest for subscribers that have benefited the domestic telco market in the form of cheaper text and voice-call rates and free mobile phones for their postpaid subscribers. Five, the telcos have a legal right requiring protection, via the injunction order against the PCC review, since they have to beat the deadline by the NTC on the expedited rollout of faster broadband services as one of the conditions for the NTC’s approval of PLDT/ Smart’s and Globe’s joint use of SMC’s idle 700 MHz assets. The telcos want legal protection because the delay resulting from any PCC probe would adversely affect their ability to raise funds to put up the infrastructure needed to bring about faster and cheaper Internet speed, which is what the NTC—and President Duterte himself—had promised the electorate when he was still in the hustings.

E-mail: ernhil@yahoo.com.

Local leaders, global outlook Edgardo J. Angara

uring last August’s municipal elections in South Africa, a tectonic shift in South African politics occurred. The ruling party African National Congress (ANC) lost control of key cities—Johannesburg (the economic center), Pretoria (the administrative capital) and Cape Town (the second-most populous city)— while suffering a loss in voter support in rural townships across the country. Analysts say the upset was, in part, due to Mmusi Miamane, the young and charismatic leader of the main opposition party, the Democratic Alliance (DA). Born and raised in Soweto (one of the Johannesburg townships segregated by apartheid), Miamane first gained prominence when he ran for Johannesburg mayor in 2011 under the banner of the DA. He later emerged as the DA’s official spokesman in 2011, won a leadership contest and became DA’s leader in May 2014. Miamane grew in stature as a national politician when in 2015, he delivered a speech at the National

Assembly, calling for the impeachment of President Jacob Zuma on charges of corruption and constitutional breaches—while Zuma was present. Miamane’s hard-hitting, yet sober, style of speaking has earned him the nickname, “the Obama of Soweto.” A remarkable leader has also emerged in Tokyo. In July Yuriko Koike was elected Tokyo’s first female governor. She started serving in the House of Representatives in

BloombergView

his week, much attention will focus on the Open Market Committee of the US Federal Reserve (the Fed), the most powerful central bank in the world, whose actions have global impact. Yet, the most informative, and intriguing, policy decision could take place in Tokyo. And the outcome will not only tell us more about Japan’s daunting challenges, but could also signal more clearly what lies ahead for other central banks that continue to operate within an unbalanced macroeconomic policy mix. It is now widely recognized that, for most of the period since the global financial crisis, an enormous and excessive burden has been placed on central banks. Long used to playing a complimentary, albeit critical role, in policies,

and mostly behind the scenes, they have taken such a dominant and visible role that they have become “the only game in town.” In the process, these monetary institutions became increasingly committed to experimental measures, from negative interest rates in Europe and Japan, to outsize involvement in financial markets in many countries, as the banks deployed their balance sheets for large-scale asset purchases. Although the central banks remain willing and able to act, questions about the effectiveness of these policies will continue to increase the longer these institutions have to go it alone. Nowhere is this issue more pressing than in Japan. Under the leadership of its Governor Haruhiko Kuroda, the Bank of Japan (BOJ) has shown considerable enthusiasm for addressing decades of sluggish growth and deflationary threats. Aggressive balance-sheet operations

1993. From 2003 to 2006, she served in the cabinet of Junichiro Koizumi as minister of the environment and minister of state for Okinawa and Northern Affairs. She then had a brief stint as defense minister under Shinzo Abe— the first woman ever appointed to the position. CNN described her as a woman accustomed to breaking proverbial “glass ceilings,” which she claims are more like steel in Japan. In an interview, she said the fact that she is a woman played a very important role in her victory since voters were looking for a change in their male-dominated politics. Before getting into politics, Koike was a one-time TV anchor, an interpreter and translator of Arabic (she studied the language at the American University in Cairo) and secretary-general of the Japan-Arab Association. As Tokyo’s governor, she will help oversee preparations for the 2020 Summer Olympics and Paralympics—on top of managing one of Asia’s biggest cities, home to 13.62 million people. A unique leader was also elected in London—Sadiq Khan, who be-

Business success and longevity Cecilio T. Arillo

database

company’s success may be measured by the number of assets it has accumulated over long years of doing business. Yet, no other company asset is as unquantifiable as the people behind it. Former Xerox Corp. CEO Anne Mulcahy once said that employees are a company’s greatest assets. “If you want to attract and retain the best, provide them with encouragement, stimulus and make them feel that they are an integral part of the company’s mission.” At 71 years today, the country’s oldest, fully Filipino-owned tobacco company, employees are not just largely multibillion-peso company assets, they are a closely knit and peerless family, as well. Mighty Corp. (MC), this year’s award-winning Corporation of the Year by the Philippine Council of Management Research Institute and one of the country’s largest taxpayers, attributes its success, longevity and resiliency to its humble, prudent and dedicated employees who have endured with them through time. Oprah Winfrey once said: “Lots of people want to ride with you in the limo, but what you want is someone who will take the bus with you when the limo breaks down.” Rosario Marigomen, who has worked with Mighty for more than 51 years, said: “You could look at us as a big family than a business.” The company has certainly been

through hell and high water having been on the verge of bankruptcy a few times. Yet, persevering with strong corporate social responsibility (CSR) and core values of compassion, integrity, prudence, dedication, teamwork, piety and charity, the company inspired its people to stand mighty and mightier as time went on. The Wongchuking siblings owe it to their parents, Wong Chu King and his wife Nelia who they describe as the guiding force of both the family and MC. Their parents imbibed a culture of genuine appreciation for hardworking and dedicated employees. Among the ways the company gives back to its stakeholders, employees, distributors and tobacco farmers is by consistently supporting their livelihood and sending deserving children to school through its CSR arm, the Wong Chu King Foundation (WCKF). The foundation, among others, lives up to the family’s legacy of humility, charity and love of God and country. King’s unwavering and enduring faith in God is translated into a solid commitment to charity and compassion. The foundation

Fed meeting shouldn’t obscure BOJ’s big moment By Mohamed A. El-Erian

Tuesday, September 20, 2016 A11

have been accompanied by a surprise plunge of policy rates into negative territory. Yet, outcomes have been far from satisfactory. Rather than depreciate the yen to promote exports and import-substitution activities at home, the currency has appreciated, as the BOJ’s policies became more aggressive. Adding to the central bank’s woes, bond yields have climbed significantly in recent weeks, turning a hoped-for growth tailwind into yet another potential headwind. No wonder the Japanese central bank’s policy approach has become more controversial, including among senior officials in Japan. After all, a growing set of indicators suggest that its policies have become a lot less effective, and could even be counter-productive. This is the complex backdrop for the BOJ’s policy-making committee meeting on September 20 and 21, which has

been billed as a comprehensive review. Initial signals suggest that, despite disappointing macroeconomic outcomes so far, the bank’s officials are inclined to do even more, though there still seem to be disagreements about the mix of measures. Some are calling for rates to be pushed further into negative territory and others for expanding the asset-purchase program. But as policy-makers venture deeper into unconventional policies, the impotence of their approach could be exposed even more, triggering complex unintended economic and financial consequences, as well as inviting the risk of greater political scrutiny, interference and loss of operational autonomy. Admittedly, it is very hard for any central bank to stand on the sidelines when a country faces the risk of even greater economic malaise. Yet, the solution for the BOJ’s predicament is to

came the city’s mayor in May. With 1.3 million votes, Khan garnered the highest popular mandate enjoyed by any politician in the history of the United Kingdom. Born to working-class Pakistani-immigrant parents, Khan is London’s first ethnic minority mayor and the first Muslim to become chief executive of a major Western capital. He was elected on a broad platform that promised limits to increases in public-transportation fees, expand London airports, push for more affordable housing and, ultimately, promote unity among the diverse cultures in London. His pluralistic views put him in a word war with Donald Trump, particularly on the US presidential candidate’s proposal to ban Muslims from entering America. These three rising stars have come to power in three of the world’s grandest cities. And they represent an exciting new breed of leaders, elected by local constituencies, but espousing global values. Take note—they could be exemplars of a 21st-century political leadership.

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

great historical and cultural value to communities. Through the years, WCKF has undertaken projects that reflect the generosity and charity of Mr. Wong Chu King. These can be seen in the foundation’s outreach programs for institutions, like the Home for the Elderly (formerly Golden Acres) and the White Cross Orphanage. MC began its humble roots on September 20, 1945, with Wong Chu King and his partners, Ong Lowa, Baa Dy and Ong Pay, by setting up La Campana Fabrica de Tabacos Inc., with its first factory in Tayabas Street, Manila. The second factory was then built in 1948 in Pasong Tamo, Makati, and in 1951, it acquired the present site of its head office. In 1963 Wong Chu King founded the Tobacco Industries of the Philippines (TIP) in a 9-hectare property in Barrio Tikay, Malolos, Bulacan, which became the future site of their manufacturing operations. MC is now a fully integrated tobacco company, with its factories inside a 9-hectare property in Malolos, Bulacan. It is engaged in both tobacco processing, which includes fermentation of tobaccos for the cigar-blended cigarillos and cigarette manufacturing. The company has two cigarette-manufacturing plants and one tobacco-processing plant. It also has a complete threshing and redrying plant, which supplies the necessary requirements for the company’s cigarette-manufacturing operations. The two cigarettemanufacturing facilities answer for its two major product lines.

espouses transformation through charity work because this is how Wong Chu King envisioned his legacy to be handed down. “We saw to it that our company has a strong social relevance, believing in taking small, but necessary, steps to help the needy and provide opportunities to the deserving, but less fortunate, thereby changing the world—and doing the impossible—one small step at a time, with the help of around 5,000 volunteers of the foundation,” said Alex Wongchuking, one of King’s children and MC’s CEO. “Our company also does away with office politics. Succession is always based on who is the most qualified, even the choices of executives and managers are purely based on meritocracy,” Caesar Wongchuking, Alex’s younger brother, revealed. Geoff Gadiana is a living example, having rose from the ranks from a simple kargador, to line supervisor and, now, as Mighty’s plant manager. Founded on March 30, 1990, by the heirs, WCKF is involved in educational and apostolic charities, primarily in areas in the Philippines where tobacco farming is prevalent. The foundation provides scholarships to deserving young men and women, especially to dependents and beneficiaries of Filipino tobacco farmers. The foundation seeks to encourage and promote education and scientific research through its scholarship programs, focusing on high-school, and college and university students. As devout Catholics, the Wongchuking family has spearheaded assistance programs to parishes and dioceses in a number of provinces in the country through WCKF for restoration and rehabilitation work for churches, especially those with

To reach the writer, e-mail cecilio.arillo@ gmail.com.

make any additional policy intervention conditional on the government doing more, particularly when it comes to the third arrow of its program, structural reform. But Prime Minister Shinzo Abe, whose national popularity is among the very highest in advanced economies, faces his own set of constraints. This lose-lose situation is not unique to the BOJ. At least two other systemically important central banks—the European Central Bank (ECB) and the Bank of England (BOE)—find themselves in similar straits, albeit not yet as severe. And for them, too, this growing quandary reflects the excessive and protracted reliance that has been placed on them because politicians repeatedly failed to step up to their economic policy responsibilities. While it isn’t as far along on the road to ineffectiveness as its Japanese counterpart, the situation of the

ECB will become more uncomfortable if member governments continue to stall on four policy priorities: progrowth structural reform, better fiscal management, lifting pockets of crushing indebtedness and completing the regional architecture. The BOE could also face the risk of a similar situation if the UK government falters in designing a coherent Brexit strategy that also gains the support of European Union members. So as we continue to be obsessed with what the Fed will do at its Open Market Committee meeting this week, we shouldn’t forget to keep an eye on Japan. The actions taken, or not taken, by the BOJ could have a smaller immediate market impact than those of the Fed; but they will contain more significant information for assessing the medium-term policy risks for other central banks and, consequently, for the global economy.

2nd Front Page BusinessMirror

A12 Tuesday, September 20, 2016

www.businessmirror.com.ph

MNLF, MILF peace insiders setting up Nur, Murad meet

By Manuel T. Cayon | Mindanao Bureau Chief @awimailbox

AVAO CITY—Key staff personnel and peace negotiators of the two Moro revolutionary groups in Mindanao held their first meeting to explore possibility of getting their principals—Moro National Liberation Front’s (MNLF) Nur Misuari and Moro Islamic Liberation Front’s (MILF) Murad Ebrahim—to meet. The MILF—then led by Salamat Hashim—broke away from the MNLF in 1981. Randolph Parcasio, chief legal counsel of the MNLF, told the BusinessMirror that some panel members of both groups were joined by other “inside negotiators,” or the key persons of the MNLF and the MILF in their first unity meeting here on Sunday night. “It’s our first meeting,” he said. “And we were even joined by peace negotiators from the government and peace advocates from nongovernmental organizations.” Parcasio said the meeting was about exploring the possibility of getting Misuari and Murad together, previously left untouched in any discussion but which came out as an option to widen the chances of having a wider and unified peace settlement in the Bangsamoro areas. “We have asked ourselves to talk to our respective principals to persuade them to meet and come together,” he said. “And we hope that their historic meeting would result in better prospects of having a unity peace agreement with the administration of President Duterte,” he said.

1981

The year when the MILF broke away from the MNLF

Parcasio said, “It would be a great thing to see Misuari, Murad and Duterte together to craft a meaningful and peaceful peace settlement for Mindanao.” The gathering would expect the MILF panel members “to persuade Murad to met Misuari, while I would also talk it over with Nur,” Parcasio added. There was no timelime, but he said the prospect for peace with the Mr.Duterte administration would be faster “if the historic meeting would be held anytime before the year ends,” he said. The prospect is not far-fetched, after the two fronts have been holding meetings already since 2006 under the auspices of the Organization of Islamic Cooperation to unify their respective positions on peace in Mindanao. It was at these meetings that

Released Norwegian hostage Kjartan Sekkingstad (second from right) links arms with Moro National Liberation Front Chairman Nur Misuari (from left), Presidential Adviser Jesus Dureza and Sulu Gov. Abdu-sakur Tan, during a formal turnover of Sekkingstad in Indanan township on Jolo island, Sulu province, in southern Philippines on Sunday. Sekkingstad, who was kidnapped last year by ransomseeking Abu Sayyaf extremists, along with two Canadians and a Filipino, was released on Saturday and was turned over on Sunday to Misuari, who, in turn, turned him over to Dureza. AP

the gover nment sat dow n to explain its side of compliance with the 1996 agreement. The MILF broke off from the then-monolithic MNLF in 1981 over ideological differences, with the former treading a more religious-based revolutionary principles and the MNLF holding on to being the political organ of the Bangsamoro. From then on, each

No ‘endo’scheme to jack up business cost–Ecop By Catherine N. Pillas @c_pillas29

equiring outsourcing agencies and service providers (SP) to accord regular status to their employees would increase business cost, according to the Employers’ Confederation of the Philippines (Ecop). Industry Secretary Ramon M. Lopez made the proposal to compel outsourcing agencies to give regular status to their employees. While businessmen agree with the government’s move to end illegal contractualization or endo, Ecop President Donald Dee said the Duterte administration should use the Labor Code as a “starting point.” “We all agree to remove endo, but now, we have to look at the Labor Code. You can have contractualization, and should, because there are industries that [need] contractual workers, like construction,” Dee said. “Don’t touch the Labor Code. Just follow what’s in it, including the provision on contractualization. The government should weed out those who are not following the law, but it shouldn’t stop issuing registration to SPs,” he added. Heeding the President’s directive to stop endo, the Department of Labor and Employment has ordered its regional offices in July to stop receiving applications for third-party SPs. Last week Lopez put forward his proposal to keep outsourcing agencies in business.

Ecop noted that contractualization is considered a legitimate practice in the Labor Code used by employers to outsource a certain noncore activities in their business. Currently, employees of a principal employer hired through an SP will receive benefits only until the duration of a particular project and enjoy no security of tenure. In Lopez’s proposal, contractualization will be allowed but the workers tapped by SPs would have to be given regular employee status and benefits. The Department of Trade and Industry chief had also proposed to make the retirement and separation pay mandatory as opposed to the current practice wherein the grant of these benefits would depend on the principal. Dee said this would increase the outsourcing fee to as much as 40 percent, from the current 10 percent of the cost of contract, between a principal and service provider. The increase in cost, he said, could force employers to resort to direct hiring, which is more expensive. “If they’re telling us that we can use agencies, that’s good. But they’re also telling the [outsourcing] agencies that they have to guarantee the separation pay. That would increase cost,” said Dee, who is also honorary chairman of the Philippine Chamber of Commerce and Industry. The ECOP president said a “win-win” solution should also make sure that both the SP and the principal are jointly and severally liable over the employees as the proposed setup would shift too much control and responsibility on the SP.

group maintained separate camps and territories, although local units would occasionally figure in gun battle over clan differences waged through local fighting called rido. In September 1996 the MNLF agreed to a negotiated peace settlement in exchange for government promise that they would follow a Marshall Plan-type of

economic assistance and development activity in the Bangsamoro areas, which were supposed to be under the Special Zone of Peace and Development. The Autonomous Region in Muslim Mindanao leadership was handed over to the MNLF as part of the concession to agree to the peace agreement. The MILF agreed to work with the government to

establish its own political settlement after signing in March 2014 the Comprehensive Agreement on the Bangsamoro. Midway though, the MNLF warned its compatriots in the MILF to be wary of government intention after it griped over years of alleged government remiss of its commitment to the 1996 peace agreement.

Razon plans casino amid Duterte admin’s gambling crackdown

hilippine casino mogul Enrique Razon is pushing ahead with plans to build a P20-billion ($418-million) resort in Manila, undeterred by President Duterte’s crackdown on gambling. The chairman and founder of Bloomberry Resorts Corp. said construction of the company’s second casino, in Quezon City in the northern part of metropolitan Manila, may start midnext year and could be finished in 2019. Mr. Duterte’s campaign is focused on electronic gaming parlors that have been loosely regulated and could actually help companies, like Bloomberry, Razon said in an interview in Manila on Friday. “I think cracking down on this, looking at it from our perspective, helps the licensed casinos,” Razon said. Bloomberry’s Solaire Resort and Casino on Manila Bay is operating at “full capacity” and there’s been an increase in visitors from China since President Duterte was elected in May as the new President seeks to improve relations between

the two countries, he said. Manila is aspiring to become the next Asian casino hub as highstakes Chinese gamblers increasingly abandon Macau amid their government’s crackdown on corruption. Chinese and South Koreans are the two biggest groups of foreign visitors at Solaire, and Mr. Duterte’s plans to upgrade the airport and open a new toll road to the area, where Solaire is, should be good for business, the billionaire said.

Tourism bet

“Razon is making a bet that President Duterte will deliver on his promises on infrastructure,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. “Tourism has far more to go if only we have the right infrastructure.” Tourist arrivals rose 14 percent to 2.98 million in the first six months of 2016 from a year earlier, with South Korea, the US and China as the three largest sources, government data show. Bloomberry’s gross gaming rev-

RAZON: “I think cracking down on this, looking at it from our perspective, helps the licensed casinos.”

enues climbed 17 percent in the first half to a record from a year earlier, while net income swung to a profit from a loss. The company’s share price surged 52 percent this year through July 11 before declining 23 percent, as Philippine stocks retreated amid high valuations and a broader emergingmarket selloff. Bloomberry shares rose 4.3 percent as of 10:29 a.m. in Manila, compared with a 0.4percent decline in the Philippine Stock Exchange Index. Total gaming revenue in the nation rose 24 percent in the first half of 2016 from a year earlier, according to data from the industry regulator. See “Razon,” A2