Businessmirror september 25, 2017

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Monday, September 25, 2017 Vol. 12 No. 347

NFA shoots for overhaul of rules on rice imports

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By Jasper Emmanuel Y. Arcalas

@jearcalas

he National Food Authority (NFA) is seeking to have the exclusive right to import rice from Asean member-countries at lower tariffs to boost its buffer stock after the quantitative restriction (QR) on the staple is lifted by Congress.

Govt to finish 37 flagship projects by 2022–DOF

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he Department of Finance (DOF) said around half of the 75 f lagship projects that the government plans to roll out will be completed by the time President Duterte steps down from office in 2022. According to Finance Secretary Carlos G. Dominguez III, about 37 projects under the “Build, Build, Build” (BBB) program will be completed by the year 2022. “Obviously, not all [will be completed], like the subway. It can’t be finished by 2022,” Dominguez said in a forum held recently. “But the rest will be ongoing, because they are not projects that you can do immediately,” he added. Dominguez said he expects the expansion of the Clark International Airport, the ClarkManila railway and the Mindanao railway to be among the f lagship projects that would be completed in five years. “No. 1 is the Clark airport that will be finished. A good portion of the Clark to Manila railway will be finished, and the third one will probably be a good portion of the Mindanao railway,” he said. The Mindanao railway project—span-

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Questions from Dentons, Beijing Alberto C. Agra

ead

PPPC.LAgra Alberto

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The food agency attached to the Office of the President made this proposal in a position paper it submitted to the House of Committee on Agriculture and Food chaired

his columnist had the privileged of speaking about the Future of public-private partnerships (PPPs) in the Philippines before lawyers and clients of Dentons in Beijing on September 22. Dentons, a global law firm that has around 600 lawyers in its Beijing office, recently bagged the International Firm of the Year at the Lawyer Awards 2017. Aware of the opportunities in the Philippines and the favorable PPP climate in the country, China state-owned and private corporations, and law firms, such as Dentons, would want to explore these. But like in any other investment venture, knowing the legal environment is a must. The seminar on PPP had this in mind.

See “NFA,” A2

Continued on A15

Despite ‘complex’ regulation, PHL tax system seen effective By Rea Cu

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@ReaCuBM

Part One

ning from Tagum, Davao and Digos—requires a budget of P31.544 billion, while the Clark International Airport Expansion (Phase 1) costs P12.55 billion. The Philippine National Railways’s (PNR) North 1 project, which is a 38-kilometer m a ss-t ra nspor t at ion railway that will connect Bulacan with the National Capital Region (NCR), costs P105.31 billion. As for the P227-billion Mega Manila Subway project, Dominguez said it would take time for boring machines to dig a tunnel underground. The DOF chief Continued on A16

Continued on A2

PESO exchange rates n US 51.0860 n japan 0.4543

business news source of the year

BMReports

HE ta x system of t he Ph i l ippi nes h ave seen improvements in terms of generating revenues for the national government over the years, with data for 2016 pointing to a 4.2-percent increase in collections compared to that of collections generated in 2015. According to data from the National Tax Research Center (NTRC), the country has generated revenues amounting to P2.206 trillion for the year 2016 alone, which saw an expansion of 4.2 percent, compared to the P2.117 trillion recorded in 2015. Of the total, P1.991 trillion came from tax revenues, while P215. 524 bi l l ion c a me f rom nontax revenues. Abrea Consulting Group President Raymond A. Abrea pointed out that the country’s tax-collection efforts have improved year after year. Adding that the Philippines

The number of huge infrastructure projects that the Duterte administration will undertake

AQUINO: “The NFA should still be given the ‘exclusive’ authority to import and manage the country’s food-security and buffer-stock requirements.”

2016 ejap journalism awards

in this September 23 photo, fishermen alight from their boats moored at Bacoor, Cavite. Revenue generated by the government through direct and indirect taxes from citizens and entities operating within the border is also allocated for the improvement of the country’s agricultural production. NONIE REYES

n UK 69.3799 n HK 6.5460 n CHINA 7.7494 n singapore 37.8555 n australia 40.5163 n EU 61.0120 n SAUDI arabia 13.6230

Source: BSP (22 September 2017 )

A2 Monday, September 25, 2017

BMReports BusinessMirror

www.businessmirror.com.ph

Despite ‘complex’ regulation, PHL tax system seen effective Continued from A1

tax-effort ratio has improved to reach 10.83 percent in 2015, from the 10.02 percent in 2012. “It has continuously increased or improved from 10.02-percent tax effort ratio in 2012, to 10.83 percent in 2015, or P1.441 trillion collection in 2015,” Abrea told the BusinessMirror. “[This] translates to 8-percent year-on-year growth, or 5.24 percent higher than P1.334 trillion in 2014.” He explained that tax collections from the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) are from voluntary payments, with only 0.23 percent coming from delinquent accounts. “We have to take note that 97.83 percent of these collections are voluntary payments, while only 1.94 percent is collected from audit and investigation of BIR examiners, and 0.23 percent from delinquent accounts,” he added.

Types

I T EMS t hat compr ise t he

NFA. . .

government’s tax-revenue section include direct taxes and indirect taxes. Direct taxes are made up of income and transfer taxes, among others. Indirect taxes are made up of excise tax, license and business tax and taxes from import duties. For 2016, collections by the government reached P946.371 billion for direct taxes, with the bulk coming from income taxes amounting to P924.585 billion. The direct tax collections showed an improvement of 9.4 percent compared to the recorded direct tax collections in the previous year of P864.979 billion. Indirect taxes comprised the bigger chunk of the total tax revenues of the government for 2016 at about P1.044 trillion, which expanded by 8.9 percent, from the P958.766 billion recorded in the previous year. Bulk of the collections under indirect taxes came from revenues stemming from license and business taxes, which amounted to P687.081 billion. Excise taxes

Continued from A1

by Party-list Rep. Jose T. Panganiban of Anac-IP. The committee is currently reviewing a draft bill that would amend Republic Act (RA) 8178, or the Agricultural Tariffication Act. NFA Administrator Jason Laureano Y. Aquino said the proposed bill should contain a provision retaining the food agency’s power to manage the country’s rice imports. “However, even with the lifting of the QR, the NFA should still be given the ‘exclusive’ authority to import and manage the country’s food-security and buffer-stock requirements, which is the volume of rice requirement that cannot be served by the NFA with locally produced palay/rice”, Aquino said in the position paper, a copy of which was obtained by the BusinesMirror. “Such authority should include the country’s commitments under Asean trade agreements,” he added. Aquino said the government should be in charge of addressing the food-security

col lected by t he gover nment for the same year amounted to P208.791 billion, import duties accounted for P48.958 billion. Other indirect taxes comprised P99.804 billion of the total. According to Malou P. Lim, president of the Tax Management Association of the Philippines (TMAP), the average tax collections of the Philippine government have increased by at least 9.67 percent annually, from 2000 to 2015.

Projects

BASED on the 2015 annual report, the BIR collections have increased at an average of 9.67 percent annually from years 2000 to 2015, Lim told the BusinessMirror. She added that the BIR collections in 2015 amounted to P1.42 mil lion, or 10.83 percent of the GDP as compared to P1.33 million, or 10.56 percent of GDP in 2014. For the taxes collected by the government that comprises the non-tax revenues section, this mainly includes fees and other

requirement of the country, particularly in times of calamities and emergencies, as the private sector could be “unreliable in critical situations”. “We cannot rely solely on the private sector to operate for ‘humanitarian reason’, or social responsibility more than their business/profit concern,” he said. “ T he NFA has avai lable log istics strategically located nationwide, hence it can immediately address food security concerns and respond to emergency situations,” Aquino added. The NFA chief said the food agency should have the “exclusive” authority to import the annual in-quota minimum access volume (MAV) of rice, particularly from Asean. Under the Asean Trade in Goods Agreement (Atiga), rice is slapped a tariff of 35 percent. “The NFA shall have the exclusive authority to import the in-quota MAV and its Asean commitments at 35-percent tariff, at volumes equivalent to its bufferstock requirement of at least 15 days, at any given time and 30 days, by July 1 of

charges, income from the Bureau of the Treasury (BTr), revenues from privatization and other sources. For 2016, the government registered collections amounting to P215.524 billion, which saw a contraction of 26.5 percent, from the P293.481 billion recorded in 2015. Of the total, the BTr income had the biggest share amounting to P101.737 billion, other sources at P73.311 billion, fees and other charges comprised P39.819 billion of the total and P657 million from privatization efforts. According to the TMAP, some of the growth drivers that continue to support the growth in terms of the collection of taxes can be attributed to government programs, such as the BIR’s Run A f ter Ta x Ev aders prog ra m , among others. “The BIR has attributed its yearly performance to the continuing implementation of projects such as Run After Tax Evaders prog ram, Oplan Kandado, increased collection from delinquent

each year,” he said. “Any excess volume after satisfying the buffer requirement, under the MAV inquota rate of 35 percent, may be allocated to the private sector, subject to NFA rules and conditions,” he added. Aquino also said the agency supports the proposal to allow the NFA to import rice at any given time sans a recommendation from the NFA Council (NFAC). “The NFA agrees with the proposal to remove the need for a certification of shortage from the NFAC after consultation with the Office of the President to warrant importation,” Aquino said. The NFAC is the highest policy-making body of the NFA. Under Presidential Decree 4, the NFA could only conduct statefacilitated rice importation upon the recommendation of NFAC whenever there is a foreseen “shortfall in domestic production, a critical demand-supply gap, a state of calamity or other verified reasons that may warrant the need for importation”. In a separate position paper submitted to Panganiban, the Department of Agriculture

accounts, and intensified audit program. Additionally, an increase in the expected collections from excise taxes due to the implementation of the Sin Tax Reform act has contributed to the increase in tax collections for 2015,” she added.

Factors

MEANWHILE, the NTRC noted that the improved growth in revenues for the government over the years can be attributed to a number of reforms instituted by the different administrations, except for 2009 when the slow growth of the economy also slowed the revenue collections of the government. “A s noted, tota l collection has been increasing through the years except in 2009, this is the year when economic growth slowed down, which translated into lower collection. It is also noted that certain tax laws were enacted during the years under review which affected the collection performance of the BIR and the BOC,” the NTRC said.

(DA) supported the proposal of the NFA to let the food agency handle the government’s rice-importation scheme. The DA said the importation of rice within the MAV from members of the World Trade Organization (WTO) and out-MAV from Asean member-countries should be exclusive to the NFA or whichever government agency is concerned. The private sector may only import rice at the MFN outquota rate, currently pegged at 50 percent, subject to the rules and conditions of the NFA, according to the DA. The DA also proposed that the President, upon the recommendation of the NFAC, shall have the power to adjust tariff rates as a measure to address the country’s food security requirements. This power, the DA noted, could be exercised by the President without consultations and even when Congress is in session. “The President, upon the recommendation of the NFAC, is empowered to increase or decrease tariff rate to meet emergency requirements, to secure the government’s rice-buffer stocking and distribution pro-

In 2006 there was an increase in the collection of value-added tax (VAT) due to increase in its rate from 10 percent to 12 percent. Two years later, a law was also passed exempting minimum wage earners from income tax and increasing the personal and additional exemptions of individual income taxpayers. “In view of this, collection in personal income tax declined during its full year implementation in 2009,” the NTRC said. “Also, during the same year, collection from corporate income tax declined due to lowering of the tax rate from 35 percent to 30 percent. Collections on excise tax on petroleum products also declined due to exemption of diesel, bunker fuel oil and kerosene from the said tax.” The NTRC added that factors, such as political events, contributed to the country’s revenue performance during the period, with elections held in 2004, 2007, 2010 and 2013 helping propel economic growth in terms of increased election-related spending.

gram, and to meet the country’s trade commitments,” the DA’s position paper read. The DA also said the bill amending Republic Act (RA) 8178 should include a provision that may authorize the NFA, upon the recommendation of the NFAC and approval of the President, to import rice at zero tariff rate. “The NFA may be authorized to import rice tariff-free upon recommendation of the NFA Council and approval of the President,” the position paper read. “In the event that the NFA imports rice at zero tariff, half of the net income earned from the said importation shall be used to augment the Rice Competitiveness Enhancement Fund. For this purpose, the NFA must have a separate accounting for its tariff-free rice imports,” it added. Under RA 8178, the NFA is the sole government authority mandated to regulate the importation and export of agricultural goods, particularly rice and corn. The NFA implements the MAV commitment of the Philippines to the WTO. The NFAC determines whether it will be the private sector or the government that shall utilize the MAV allocation. The Philippines’s MAV for rice will revert to 350,000 metric tons (MT), from the current 805,000 MT, once its QR on the staple is abolished, according to Agriculture Undersecretary for Policy and Planning Segfredo R. Serrano. The NFA and the DA also said in their respective position papers that the agriculture secretary must be reinstated as a member of the NFAC. But the heads of the Bangko Sentral ng Pilipinas, Land Bank of the Philippines and Development of Bank of the Philippines (DBP) should be removed from the council, according to Aquino. Aquio said the NFAC must be chaired by a representative from the Office of the President with the rank of Cabinet secretary, while the food agency’s administrator would still serve as vice chairman. The rice and corn sectors should also be represented in the NFAC, according to Aquino. At present the NFAC is chaired by Cabinet Secretary Leoncio B. Evasco Jr., with Aquino serving as vice chairman.

Govt. . .

Continued from A16

round of talks, following the CPP’s issuance of an order to the NPA to heighten offensives and accelerate recruitmetnt in the face of the President’s martial-law declaration in Mindanao. Backchannel efforts to revive the peace negotiations failed after the NPA attacked in August a convoy of the Presidential Security Group (PSG) in Arakan, Cotabato, killing five PSG units and one militiaman. On the other hand, the Philippine Left severed ties with the government after its nominees in the Cabinet were rejected by the powerful Commission on Appointments (CA): first, former Social Welfare Secretary Judy M. Taguiwalo and, second, former Agrarian Reform Secretary Rafael V. Mariano. The CA’s rejections of Taguiwalo and Mariano was considered a sign of insincerity on the part of the administration in its alliance with the Philippine Left. This prompted the Makabayan bloc, the seven-member coalition of militant lawmakers, to leave the House majority.

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Military officers lead symbolic crossing of two Marawi bridges

Editor: Vittorio V. Vitug • Monday, September 25, 2017 A3

DENR seeks AFP, PNP help to enhance security protocol against illegal loggers

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By Rene Acosta

@jonlmayuga

enouncing recent attacks by suspected illegal loggers against forest-protection officers, Department of Environment and Natural Resources (DENR) Secretary Roy A. Cimatu bared plans to strengthen the agency’s community environment and natural resources offices with the help of the military and the police forces.

@reneacostaBM

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ilitary officials managed to cross last Sunday two bridges in Marawi City that have been occupied and held by members of the Maute-Islamic State (IS) Group, highlighting the importance of the two bridges in the heart of the city. Maj. Gen. Rolando Bautista, commander of the Joint Task Force Marawi, and Maj. Gen. Danilo Pamonag, commander of the Joint Special Operations Task Force Trident, together crossed the Bayabao Bridge and Masui Bridge for the first time after the two bridges were recaptured from the terrorists. The symbolic crossing, which underscored the importance of the two bridges, happened at around 10 a.m. last Sunday as the military pushed on with its assault in the hope of completely clearing Marawi City from the terrorists by the end of October. Brig. Gen. Melquiades Ordiales, commander of the Joint Task Group Tiger, met the two military officials at the end of Masui Bridge. Both the Bayabao and Masui Bridges have been held by the Maute-IS Group since the Marawi siege on May 23. Bautista said the recapture of the two bridges were a significant progress in the efforts of the Armed Forces of the Philippines and the Philippine National Police to neutralize the terrorists, rescue the hostages and regain control of the whole city. “The terrorists are becoming desperate as our soldiers and police are closing in on their defensive positions. We are continuing our appeal to the terrorists to release their hostages and for them to surrender to the government,” Bautista added. The terrorists, the military said, were still holding around 40 hostages as they fight it out with soldiers within an area of 10 hectares. Last Sunday, military officials reported that 151 soldiers and policemen have been killed since May, while at least 694 terrorists have also been neutralized. During his fifth visit to Marawi on Thursday last week, President Duterte declared “the end of the combat operation is just around the corner”. He said that once the firefight is over, the task of rehabilitation will proceed in full blast.

By Jonathan L. Mayuga

BOTTLENECK

Vehicular traffic slows down to a crawl along Marcos Highway recently when construction-filling materials were spilled along this busy road. NONOY LACZA

Lacson to file economic-sabotage, rice-smuggling cases against Faeldon By Butch Fernandez

@butchfBM

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en. Panfilo M. Lacson Sr. last Sunday said he has obtained incriminating evidence that will be used to file economic-sabotage and rice-smuggling charges against beleaguered former Bureau of Customs (BOC) Chief Nicanor N. Faeldon, who earlier filed an ethics case against Lacson who linked him and other Customs officials to alleged rampant corruption at the BOC. Lacson added he is already in possession of the damning documents to be submitted as evidence that will pin down Faeldon. “I am ready to file the cases against Faeldon anytime next week,” the senator said in a radio interview over the weekend. “We flagged the evidence.... He [Faeldon] asked for it, I will give it to him.” Lacson added a key witness, Customs broker Mark Taguba, also provided “new information” to Senate probers conducting the BOC corruption inquiry involving the so-called Tara payoffs given by brokers to facilitate release of uninspected cargoes at Customs. “Even Faeldon’s people

admitted there is Tara, so what more evidence does he [Faeldon] want?” Affirming they have unearthed proof directly linking Faeldon to economic sabotage and rice smuggling, Lacson said Faeldon cannot wash his hands because “he is the Customs Commissioner, the only one who can order the release of cargoes”. He added the Senate probers reviewing the evidence and other documents turned over by Taguba also asked the Philippine National Police cybercrime unit to also conduct forensic tests to authenticate the broker’s phone messages “for evidentiary value”. “I asked him to retrieve more documents to trace the money trail of Tara,” Lacson said, adding that “if Taguba is allowed to testify, Faeldon will get his wish…. The witness will provide bank records, phone logs incriminating Customs officers”. At the same time, Lacson assured he was “ready to apologize if he was given the wrong info” even as the senator quickly added they “build up the case, and we collected and studied documents and other evidence” on BOC anomalies.

He added that Taguba’s testimony will reveal the Tara racket of Customs men. “He has new information” to reveal at the Senate hearing, hinting it includes “documented proof he will share” with the Blue Ribbon committee probers. In the same interview, Lacson said: “For emphasis, because we cannot tackle everything he revealed, we picked a representative sample of a case where Taguba’s cargo breezed through the BOC Green Lane because he already paid Tara.” However, Taguba said the cargo was still placed on hold, and he was told to fork over an additional P50,000 “for the Commissioner of BOC”. “Since Faeldon is asking for evidence, that is what he will hear at Monday’s inquiry if Taguba is allowed to answer my questions. I hope Taguba’s testimony affirming the documentary evidence will be allowed to proceed without distraction or intervention. Everything will be based on documents, bank statements, SMS record, call logs,” Lacson said, adding, “Some names will be dragged into that, and this will go all the way up to the Commissioner.”

“We will ask the military and police to train our foresters in security protocol and proper way of carrying firearms. We are also studying if we can arm them while patrolling or when they are out to conduct arrest to protect and defend themselves if necessary,” Cimatu said in a statement. DENR Forest Management Bureau chief Director Nonito Tamayo earlier bared plans to arm over 2,000 forest-protection officers after recent attacks by suspected illegal loggers that led to the death of one and injury to another forestprotection officer. He said forest-protection officers who will be armed will have to undergo training and secure the necessary permits, such as license and permit to carry firearms from the Philippine National Police (PNP). Cimatu, a former chief of staff of the Armed Forces of the Philippines (AFP), has ordered DENR Mimaropa Regional Director Natividad Bernardino and provincial environment officials to hold a meeting with Maj. Gen. Galileo Gerard Kintanar of the AFP Western Command (Wescom) and Palawan Police chief Senior Supt. Gabriel Lopez to discuss cooperation in addressing the issue of illegal logging. “Wescom will help the DENR conduct regular aerial patrol and strengthen joint operations against timber poachers, illegal loggers and kaingeros,” Bernardino said. “Apart from this, the Wescom will train our forest rangers and foresters on basic security measures, including the use of firearms for self-defense,” she added. The DENR chief visited the wake of slain barangay captain Ruben Arzaga in El Nido, Palawan, last Friday and honored him as a “Bayani ng Kalikasan”.

“I salute Kapitan Ruben. He sacrificed his life to protect our environment. Because of this, we consider him a Bayani ng Kalikasan,” Cimatu said. The 49-year-old Arzaga, an active member of the El Nido-Taytay Managed Resource Protected Area Management Board, was shot dead by suspected illegal loggers whom he and a team of local environmental law enforcers were about to apprehend in Sitio Batbat, Villa Libertad, on September 14. Two of the suspects were later arrested and charged with murder and four counts of attempted murder. Arzaga’s killing was the second attack on forest-protection officers by illegal loggers and timber poachers in Palawan in three weeks’ time. To recall, on August 23, a suspected timber poacher shot DENR forester Lito Eyala while he and his team were on patrol in the mountains of Barangay Bacungan in Puerto Princesa City. Eyala sustained two gunshot wounds in his back and nape. He underwent a surgery to remove the bullet lodged in his right jaw. Meanwhile, Palawan provincial environment and natural resources officer Felizardo Cayatoc deplored the attacks against forest protection officers, noting that illegal loggers have become more aggressive. “Before, they only have bolos. Now, many of them are armed with shotguns or homemade firearms. We cannot allow our foresters and forest rangers to be sitting ducks amid the brazen attacks of those who destroy our environment,” Cayatoc said. “It would be impossible to accomplish our task of protecting the environment if our protectors are being killed; we need to equip them,” he added.

Amnesty for NPA rebels eyed Solon wants telcos penalized for poor mobile-data services

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AVAO CITY—President Duterte said he will ask Congress to pass a general amnesty for the New People’s Army (NPA) rebels who will surrender to the government. “If Congress will agree with me, I might just declare for general amnesty,” Duterte told the media in Davao City last Friday night. He said rebels, who will surrender, will not be held accountable even if they killed many soldiers. However, the President added he will not accept NPA rebels who have criminal cases because these people must face the charges. “Those rebels who only want to topple the government, just surrender so that there will be no more conflict. Anyway, you have been there for 50 years,” he said. Duterte added that, if the rebels will still insist to fight the government for more years, they will get nothing since the people do not want communism in this country. “You cannot get what National Democratic Front (NDF) founder Jose Maria Sison wants. If you fight for 50 years or 100 years, you have nothing to get from the government,” he said. The president added if the NDF will say they will follow a democratic way of resolving the peace problem in the country, the people will not believe it because of the brutal killings of soldiers and police perpetrated by the rebels. “You killed soldiers who just went home visiting the wake of their comrade. The police officers who have families, all for nothing,” the president said. Duterte added that if the rebels will refuse to give up the armed struggle, the military will always be there ready to fight and defend the country. PNA

By Jovee Marie N. dela Cruz @joveemarie

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vice chairman of the House Committee on Appropriations last Sunday urged the leadership of Congress to pass a pending measure slapping stiffer penalties against telecommunications companies (telcos) that fail to improve their services. In seeking the bill’s approval, Rep. Luis Raymund Villafuerte of Camarines Sur cited data from London-based crowdsourcing company Open Signal, which showed that the average speed of Smart Communications’s LTE service was only at 10.6 Mbps, and Globe Telecom at only around 8 Mbps. He said both speeds are below the global average of 16.2 Mbps. “Both telcos averaged 2.5 mbps for 3G download speeds, or barely half the global speed average of 4.4 Mbps,” Villafuerte added. Villafuerte said the National Telecommunications Commission (NTC) should crack the whip on the country’s telcos and order them to upgrade their services in the wake

of the latest industry findings that their mobile-data speeds remain among the world’s slowest in the first half of 2017. Open Signal ranked the Philippines at the bottom 10 of the 75 countries included in its study. “We do not know why our major telecom firms continue to post disappointing global averages when it comes to broadband speeds when smaller companies and start-ups have the capacity to match the average speeds in other countries at even cheaper prices,” Villafuerte added. “For the umpteenth time, we are calling on our telcos to shape up and improve their services. The NTC should crack the whip on these telcos that have billions of pesos to pay for their multimedia- advertising campaigns but apparently continue to allocate insufficient funds for their capex buildup to upgrade their facilities and services,” he said. The lawmaker added this crowdsourced data reflect the actual speeds that consumers get because they are measured from end-user devices rather

than from servers. Meanwhile, Villafuerte’s House Bill 4695 seeks to punish telcos that are guilty of “horrendous” complaints by subscribers, such as poor network signals, overcharging, interrupted or dropped voice calls, vanishing prepaid loads, surge of spam messages and lousy customer-care service. In his bill, Villafuerte also sought to require the NTC to come up with a comprehensive and efficient system for subscribers to report their complaints of substandard services by their respective Telco providers. He said HB 4695 seeks to protect the interests of Filipino mobile-service consumers by regulating prices, requiring proper detailed billing of both prepaid and postpaid subscriptions and providing full mobile-number portability. Other service improvements specified in the bill include offering consumers insurance for their mobile devices, protecting their right to privacy and prohibiting unsolicited commercial advertisements unless allowed by them and that must be sent only during business hours.

We do not know why our major telecom firms continue to post disappointing global averages when it comes to broadband speeds when smaller companies and start-ups have the capacity to match the average speeds in other countries at even cheaper prices.” —Villafuerte

Economy

A4 Monday, September 25, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

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Recto revives bill mandating caps on govt debts

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By Butch Fernandez

@butchfBM

eviving efforts to compel the government to “exercise prudence in spending and strengthen its fiscal management”, Senate President Pro Tempore Ralph G. Recto is bent on pushing passage of a long-awaited law imposing caps on foreign and domestic debts.

In filing Senate Bill (SB) 858 in July, Recto proposed to set limits to borrowings, saying this will provide opportunities for better prioritiza-

tion of programs and projects as it has to spend within available resources. Recto’s SB 858 seeks to set a ceiling to government’s indebt-

edness in a bid to “ensure macroeconomic stability and sustainable growth ”, among others. The senator recalled that the Philippines’s total outstanding debt as of 2015 added up to P5.9 trillion, of which P3.88 trillion is domestic and P2.07 trillion is foreign. He explained that the rising total outstanding debt is attributable to increasing domestic and foreign obligations, as well as the impact of foreign exchange fluctuations. According to Recto, the huge budget deficit results in “seemingly relentless borrowings” to cover expenditures for needed infrastructure and services. He noted that an International Monetary Fund study affirmed the hypothesis that higher debt service crowd out public investments.

Recto aired concerns that “left uncontrolled, the public debt can balloon to a magnitude that can wreak havoc on the fiscal balance.” “This can have a negative impact on the economy as a whole and with grave consequence on the quality of life of the people,” the senator warned. To avert this scenario, Recto’s bill proposes a cap on government debts at 50 percent of the GDP. He pointed out that the Philippines’s debt-to-GDP ratio from 2010 to 2015 stood at 52.41 percent, 51.0 percent, 51.5 percent, 49.2 percent, 45.4 percent and 44.8 percent, respectively. The senator noted that, although the debt-to-GDP ratio went down to 44.8 percent in 2015, “the proposed cap will simply secure the prevention

of potential negative impacts of high public debt on economic activity.” Recto suggested that the debt ceiling may be breached “only when there are extraneous events beyond the control of the government subject to presidential certification and approval of Congress”. He said fiscal managers, historically, never met original program targets set forth in the annual national budget. “Every year, they propose to Congress a formula on how they would finance the proposed expenditure program for the incoming year. but at the year, the actual revenue collection fall short of numbers in the Budget of Expenditures and Sources of Financing,” Recto said. The senator added the remedial legislation proposed in SB 858 will

also put a cap on the borrowings of the national government by mandating Malacañang to go back to Congress and seek authority to borrow more in the event government’s fiscal deficit target submitted by the President is breached before the end of the fiscal year. “It is essential that Congress should be closely guided by a borrowing program developed by the President to restore fiscal discipline before the country falls into another debt trap,” Recto said. The Senate leader said the bill, once enacted into law, also aims to compel economic managers to be more accurate and prudent in their revenue targets and expenditure programs. “Likewise, this bill will allow Congress to assert its powers of the purse.”

Fresh grads quit first jobs Vessel monitoring promotes transparency in fishing–group due to bad bosses—survey By Jonathan L. Mayuga @jonlmayuga

By Cai U. Ordinario

@cuo_bm

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ifficult bosses were among the top reasons nearly half of all fresh graduates left their first jobs in less than a year, according to the results of a survey released recently by Monster.com. In a statement, Monster.com said around 32 percent of new graduates said issues with their bosses were the reason they left their jobs before they reached their first year in the company. Monster.com said around 42 percent of all fresh graduates in the Philippines quit their jobs within the first year of being employed. “Employers must be mindful of young talents’ keen desire for leadership support to upskill. Fresh graduates are aware that being given the opportunity to expand their responsibilities and competencies can lead to bigger and better-paying roles, which will help employers to retain and develop talent in the long term,” Monster.com-Asia Pacific and Middle East Managing Director Sanjay Modi said. The data also showed 41 percent of work force neophytes who quit their jobs said they lacked industry knowledge and 30 percent said they were unprepared for work life. While these indicate an apparent lack of leadership support to help young talent transition into working life, Monster.com said 80 percent of employers across the region believe they provide sufficient support for fresh graduates to succeed. In their defense, employers said fresh graduates were too concerned about money, are often late and did little research on the firm before applying. Of the biggest interview mistakes made by fresh graduates, Monster.com data showed that 26 percent of fresh graduates focused too much on the money; 24 percent were often late; and 21 percent did not do sufficient research on the company they are joining.

“Money is obviously a key concern for fresh graduates, and this makes sense—they are finally embarking on their career journey and will be excited about earning their first full-time wage. But young talent would be smart to play down their salary hopes, and instead focus on what they can gain from experience in their first job,” Modi said. Meanwhile, Monster.com said they also asked job seekers and employers about the biggest mistakes made during job interviews and what hiring managers actually care about reading on a curriculum vitae (CV). Across the region, 67 percent of employers said they spend less than three minutes reading any given CV. Half of the employers spend one to three minutes scanning CVs, while 17 percent will only glance at resumés for less than 60 seconds. When considering a CV, 68 percent of employers care most about any experience a seeker might have that is relevant to the role followed by qualifications and education at 58 percent, and ensuring the resumé is well-written and easy to read at 45 percent. Monster.com said, however, 11 percent of employers don’t care much about proper spelling and grammar; 8 percent, links to portfolio of work; or 5 percent the volunteer experience of applicants. Around 23 percent of Filipino job seekers said the hardest part of writing a CV is the career summary. When it comes to job-interview mistakes, 51 percent of applicants said not asking questions was their biggest regret, followed by not doing enough research on the company. Monster.com surveyed 1,115 fresh graduates and employers in the Philippines to uncover insights, challenges and expectations related to the recruitment process for young local talent. The survey was conducted to understand the unique challenges and barriers for both fresh -graduate job seekers and employers looking to hire and retain young talent.

ADB to expand private-sector investments in developing countries

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he Asian Development Bank (ADB) aims to extend its nonsovereign lending operations (NSOs) to agribusiness, health, education, manufacturing and tourism. In a recent ADB Town Hall meeting, ADB President Takehiko Nakao said the move will prepare ADB for the graduation of developing member-countries (DMCs) from sovereign borrowing. Nakao added most of ADB’s DMCs will become either upper middleincome countries, or graduate from sovereign lending by 2020, which have a strong private-sector base. “NSOs should be guided by a dual mandate of development impact and profitability. For ADB to be a catalyst for private-sector investments,

our NSO interventions must be profitable. Such profits contribute to building up our capital, which, in turn, will increase our lending capacity both for sovereign and nonsovereign operations,” Nakao said. Nakao added, however, this expansion will not disrupt the Manila-based multilateral development bank’s current NSO investments in clean and renewable energy, sustainable transport and financial inclusion. In its 2016 Annual Report, the ADB reported that its total approvals in its NSOs reached $8.34 billion. Loans obtained from the bank’s Ordinary Capital Resources reached a total of $2.41 billion for these projects. Cai U. Ordinario

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cean-conservation advocacy group Oceana Philippines backed the implementation of the Amended Fisheries Code, which requires fishing companies to install a vessel monitoring device in their fishing vessels. The group said in a statement that “proper” vessel monitoring can save lives and make fishing in the Philippines more sustainable. Oceana Philippines cited the case of the drowning of seven sailors when a Filipino merchant ship crashed into the USS Fitzgerald in the Sea of Japan on June 17. The American destroyer turned off its Automated Identification System (AIS), making it difficult for the Filipino merchant ship to spot and avoid it. On August 21 the USS John McCain crashed into a commercial tanker near Singapore, leaving 10 dead. For safety and fisheries transparency, Oceana Philippines said all Philippine commercial fishing vessels must comply with the Amended Fisheries Code by installing AIS, or other vessel-monitoring measures (VMM) by 2020. Larger vessels having started AIS installation since 2015. T he Europea n Union est imates that about 26 million metric tons of seafood—15 percent of global yields—are caught via illegal, unreported and unregulated (IUU) fishing. The Philippines was issued a yellow card in June 2014 for previously failing to curb IUU fishing, serving to warn the country that unless it addressed IUU fishing, its seafood products would be banned in Europe, our biggest market for

A fisherman installs a vessel-monitoring device in his boat in Negros Occidental. Candeze Mongaya/Oceana

fish and fish products. The Philippines acted swiftly by amending its antiquated Fisheries Code, with VMM identified as the “best” method to ensure that fishing vessels operate only in designated zones, enhancing transparency and traceability. VMM systems can use satellite, GSM or radio waves to plot the location and course of vessels. Oceana, which is working to promote sustainable fisheries, is helping pilot-test VMM measures in the Visayas and Mindanao. “We’re looking for ways to bet-

ter implement our environmental and fisheries laws—so we welcome solutions offered by service providers, such as FAME [Futuristic Aviation and Maritime Enterprise Inc.] and other innovators,” Oceana Philippines Vice President Gloria Estenzo Ramos said. Around 15 transponders were pilot tested in the Visayas’s Tañon Strait, Siquijor, Estancia in Iloilo, Negros Occidental, plus the waters of General Santos in Mindanao. These areas are among the top fishing grounds in the Philippines which comprise almost 10 percent

of the country’s wild-fish catch, frequented by commercial fishers. Over 50 commercial fishing vessels will be fitted out with the device before the year ends. Fisheries law enforcer Jose Tajonera from Negros Occidental said they are using vessel monitoring to detect illegal and commercial fishers in their area. “Vessel monitoring will greatly help us find and deter illegal fishers as we patrol our municipal waters. Our home waters need to be protected as they give us the food and livelihood needed to survive.”

Insurance Commission urged to probe Marsh operations

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N a letter addressed to Commissioner Dennis B. Funa and Jose Marie F. Tolentino of the Insurance Commission (IC), lawyer Jose Bernas urged the agency to look into the supposed illegal operations of Marsh UK in the Philippines. Specifically, Bernas emphasized the foreign company’s self-admitted use of “fronting insurers” to bypass Philippine laws, and conduct business in the country without a license. “While Marsh Philippines is a licensed insurance broker, Marsh UK is not. Marsh UK is a reinsurance broker that may only tender brokerage services to an insurer, and cannot tender insurance brokerage services nor insurance services to an insured or potential insured [client],” the letter stated. Bernas referred to a particular case wherein Marsh UK sent the head of its Singapore office, David Jacob, to meet with the top executives of Cebu Air Inc. Interestingly, it was this same case where a complaint was filed against Marsh UK before the UK High Court, for

allegedly disclosing highly confidential and proprietary information. Before a final ruling could be reached, Marsh chose to settle the matter out of court. During the meeting, Jacob allegedly presented a predetermined reinsurance package to the aviation company, wherein Marsh would assume all the insurance risks under a special arrangement with a “fronting insurer”. In an earlier letter they sent to the IC, Marsh UK acknowledged that their intention was to solicit the insurance business of Cebu Air Inc., stating that “Marsh was now able to compete” with other local insurance companies, and that the purpose of the meeting was to “invite Cebu Air to consider giving Marsh Philippines and Marsh UK an opportunity to tender for the Cebu Air account”. “I don’t think it gets any clearer than that,” Bernas noted. “They practically admitted their violation to the IC, which is to solicit local clients and take full responsibility for their insurance needs.

First of all, a reinsurer can’t do that, much less a foreign reinsurer with no license to operate in the country,” he added. Based on the terms of Marsh UK’s deal with its “fronting insurer”, the latter would only be paid a nominal fee, while Marsh would be paid a fee amounting to five times or more that amount. “Effectively, Marsh UK pays a local company to use their name, while they handle every aspect of the business—including the primary and legal risk of liability. Apart from being prohibited, that’s a very risky proposition for any local company,” Bernas emphasized. Under Section 100 of the Amended Insurance Code, “the original insured has no interest in a contract of reinsurance.” In an article written by Funa himself, the commissioner explained that this means the original insured would have no cause of action to recover insurance proceeds from the reinsurer. Conversely, the reinsurer is not liable to the original insured, since they are not a cosigner of the policy issued. Consequently,

an insurer may not raise the defense to an insurance claim that it had obtained reinsurance from other companies to cover its liability. “The good commissioner is absolutely correct in pointing out that an insured party can only move for enforcement of its insurance contract with its insurer. So what happens if a reinsurance company using a ‘fronting insurer’ refuses to pay a claim?” Bernas asked. “Since the insurer was only a front, they did not receive enough money to cover the risk. On the other hand, the real insurer can evoke Section 100 of the Insurance Code, on top of the fact that they are not located in the Philippines,” he underscored. The letter concluded by reiterating the need for an evidentiary hearing, to determine whether Marsh UK, Marsh Singapore and Marsh & McLennan Companies Inc. are indeed doing business in the Philippines, and whether the license issued to Marsh Philippines should be canceled for conspiring in illegal acts.

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Monday, September 25, 2017

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Amendments to food-safety law sought

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By Jasper Emmanuel Y. Arcalas @jearcalas

he National Meat Inspection Service (NMIS) is urging Congress to amend Republic Act (RA) 10611 to revert the regulation of prepackaged food and processed-meat products to the Department of Agriculture (DA). NMIS Executive Director Ernesto S. Gonzalez said allowing the attached agency of the DA to again have supervision over all meat products would boost efforts of the government to ensure the safety of these food items. “It [reversing transfer of supervision of meat products] makes common sense. Monitoring of meat products would also improve,” Gonzalez told reporters in an interview on the sidelines of a forum held in Pasay City last Friday. He said the NMIS sought the support of Sen. Cynthia A. Villar, who chairs the Senate Committee on Food and Agriculture, for the amendment of RA 10611, or the Food Safety Act of 2013. “She [Villar] is really in favor of reverting the regulation of processed-meat products to the NMIS,” Gonzalez said. In October last year NMIS Deputy Executive Director Beata Humilda O. Obsioma said a draft Executive Order (EO) authorizing the reversal of regulatory power transfer was submitted to the President in September last year. The draft EO, which was prepared by Agriculture Secretary Emmanuel F. Piñol and Health

Secretary Paulyn Jean B. RosellUbial, sought the suspension of Joint Administrative Circular (JAC) 2 released on June 29. The circular transferred the supervision and regulation of processed and prepackaged-meat products from the NMIS to the Food and Drug Administration (FDA) under the Department of Health (DOH). Gonzalez said, however, that amending RA 10611 would be a better option. Under Section 15 of RA 10611, the DOH “shall be responsible for the safety of processed and prepackaged foods, foods locally produced or imported under this category and the conduct of monitoring and epidemiological studies on food-borne illnesses”. With this transfer of regulatory supervision, the DA is left to ensure the “food safety in the primary production and postharvest stages of food supply chain and foods locally produced or imported”. Earlier, Obsioma said meat processors belonging to the Philippine Association of Meat Processors Inc. (Pampi) have complained that the FDA is not “competent enough” to handle the processing of meat permits.

Processed-meat products, such as Chinese sausages, are popular in the Philippines. WIKIMEDIA COMMONS

Pampi also said companies would incur additional costs if JAC 2 is not rescinded, as they would have to coordinate with two departments to secure permits. The group noted that companies pay an average of P2,000 to register a product with the NMIS. Pampi said major meat-processing companies have anywhere from 500 to 800 product lines. Permits issued by the government to processors assure consumers that their meat products are safe. Pampi Vice President Jerome D. Ong said his group would submit a position paper expressing sup-

port for the NMIS’s call to revert the supervision of processed meat products to the DA. Ong, who is also president of CDO Foodsphere Inc., added his group would also seek an audience with lawmakers familiar with the issue to raise their concerns over meat regulations. “The fact remains today that the two departments have separate jurisdiction over our business interest in different phases or stages of our business models. Our sector is now reporting to two cabinet departments, in effect doubling our costs for compliance,” he said.

NFA’s rice-procurement program gets P7-B budget By Jovee Marie N. dela Cruz @joveemarie

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member of the House Committee on Appropriations said last Sunday the national government has allocated P7 billion to enable the National Food Authority (NFA) to buy 388,889 metric tons (MT) of unhusked rice from farmers next year. Rep. Johnny T. Pimentel of Surigao del Sur said the P7 billion is included in the 2018 P3.7-trillion national budget, which is set to be approved on Tuesday by the lower chamber. “The fresh subsidy will allow the NFA to buy an extra 388,889 MT of unhusked rice, or palay, from local growers at P18 per kilogram. The supply will then form part of the country’s Strategic Rice Reserve,” Pimentel said in a statement. Pimentel, also a chairman of

the House Committee on Good Government and Public Accountability, added the new funding is in accordance with President Duterte’s directive for the NFA to buy more locally produced rice. Under the Strategic Rice Reserve, the NFA is mandated to keep stockpile rice equal to at least 15 days of national consumption at any given time, and equal to at least 30 days consumption by the start of the lean season on July 1 of every year. After serving its purpose as stockpile, the lawmaker said the NFA then sells the rice to accredited outlets at P30 per kg to help keep retail prices down. Next year Pimentel said the NFA intends to procure up to 1.2 million MT (MMT) of palay from local planters and distribute up to 1.35 MMT of rice. Based on documents submitted to Congress, he said the NFA also

indicated it may import another 580,050 MT of rice next year, if needed. “Under the law, obtaining additional rice supplies from abroad is always an option, in case of calamities, fortuitous events, or shortfall in local production,” Pimentel said. “But we would really prefer that the NFA buy as much palay as possible from local farmers, who are under tremendous pressure owing to the flood of rice supplies from abroad due to trade liberalization, as well as outright smuggling,” he added. The NFA is targeting to purchase some 1.2 MMT of unmilled rice from farmers in 2018. The volume is significantly higher than the 255,000 MT the food agency is targeting to buy this year. “Palay is a better buffer stock than milled rice because the NFA can store it longer and we can schedule the

milling whenever we need to. Plus, we want to support our farmers,” NFA Spokesman Marietta J. Ablaza earlier told the BusinessMirror. Citing NFA data, Pimentel said only 31 of the country’s 81 provinces are actually producing more rice than they are consuming. In Luzon, he said, the “rice surplus” provinces are: Abra, Ifugao, Kalinga, IIocos Norte, Ilocos Sur, La Union, Cagayan, Isabela, Nueva Vizcaya, Quirino, Aurora, Nueva Ecija, Tarlac, Oriental Mindoro, Palawan and Camarines Sur. He added the surplus provinces in the Visayas, include: Antique, Capiz, Guimaras, Iloilo, Biliran and Leyte. “In Mindanao, the surplus provinces are Zamboanga del Norte, Zamboanga del Sur, Zamboanga Sibugay, Bukidnon, Compostela Valley, North Cotabato, Sultan Kudarat, Agusan del Sur and Maguindanao”, Pimentel said.

More surveillance needed to curb misuse of antimicrobials

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stronger global effort, including larger investments and improved surveillance measures, is required to ensure that antimicrobials are used responsibly and in ways that do not threaten public health and food production, Food and Agriculture Organization (FAO) Deputy Director General Maria Helena Semedo told participants at a United Nations General Assembly side event on antimicrobial resistance (AMR). “Good health, good productivity and good economies depend on safe and nutritious food. Prudent use of antimicrobials in public health and agriculture is essential to achieve this,” Semedo said during the side event held on September 21. “We need surveillance on an-

A farmer and her cattle in Cambodia, which is sharing with other countries its successful experience in dealing with AMR. FAO Photo

timicrobial use and the spread of AMR­—not only through hospitals, but throughout the food chain, including horticulture and the environment for more com-

prehensive risk assessments,” she added. The world needs to stave off the risk of having less-efficient medicines to treat deadly infections

due to the fact that more bacteria are becoming immune to antimicrobials. But this challenge posed by AMR is also “an opportunity to unite health, agriculture and environmental concerns in collaborative global action”, Semedo said, citing the FAO’s experience in Cambodia. “One-and-one-half years ago [in Cambodia], there was little awareness of AMR in agriculture. There was little surveillance and few links with human-health officials. By strengthening collaboration between health and agriculture ministries; helping draft rules to regulate the sale of veterinary medicines; and assisting animal-health labs—we helped increase awareness and greater cooperation in dealing with AMR,” she added. FAO

Agribusiness

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uring the Arangkada Forum on September 14, there was much focus on sectors with substantial growth potential—including agriculture, creative industries, information and communications technology, manufacturing, mining, logistics and tourism. Although the Philippines is becoming a majority urbanized country at a fast rate, close to half of its citizens still live in rural areas. Significantly from the vantage of development and inclusive growth, 73 percent of the poor are rural residents. Over 12 million Filipinos, close to one-third of the total work force, rely on agriculture for their livelihood. Despite its size and importance to the economy, the overall agriculture sector contributed less than 10 percent to GDP in 2016; the last year in which it produced more than 20 percent of GDP was 1969. Among the main challenges to agriculture growth: (1) ability to utilize overseas market access; (2) poor logistics and supply chain; (3) poor access to finance; (4) inadequate crop insurance; (5) land market inefficiencies; and (6) poor extension services. Philippine agricultural exports are the lowest of the Asean-6 and below 5 percent of the total from the region. A country, such as Vietnam—with a population size close to the Philippines but with less land available for agriculture—exports four times that of the Philippines. Exports of agricultural goods from the Philippines were $6.9 billion in 2014, while imports were $8.7 billion. Vietnam—at $26 billion—has become a leading exporter of rice, coffee, fish, fruits and nuts. Top actual and potential Philippine exports include banana, cacao, coconut products, coffee, mango, marine products, pineapple and sugar. Quite a number of recommendations were made at the Arangkada Forum to drive agribusiness (I selected a few): 1. There is a need to review government programs that distort market competition for land and that potentially affect small farmers’ access to credit and preclude their ability to benefit from economies of scale; 2. Create an irrigation master plan to set the direction for irrigation development; 3. New agriculture, forestry and fisheries enterprises should be developed, while existing ones will be encouraged to increase production and to go beyond producing merely raw materials through increased value adding of products with higher market value. 5. Facilitate the use of appropriate farm and fishery machinery and equipment; 6. Strengthen the extension system through the engagement of a pool of professional extension workers that will provide technical and business advisory services; 7. Diversify into commodities with high value adding and market potential. Commodities that can be developed based on vulnerability, suitability, and value-chain analyses of the De-

Henry J. Schumacher

europe Beat partment of Agriculture (DA) include mango for coffee, dairy cattle, abaca, rubber, banana and cacao; 8. Expand agribusiness enterprises through new and innovative production and marketing schemes. New forms of linkages, such as contract farming and corporate farming, that will connect farms to markets and other upstream services should be established; 9. Farm-to-market roads, bridges, and railways should be constructed to connect small farmers to the agricultural value chain. Interisland water transport (e.g., roll-on roll-off nautical highway); 10. Raise investments in research and development for production and postharvest technologies; 11. Pursue bold initiatives on crop insurance that reaches a large swath of an underserved market segment; 12. Improve market information, technology transfer, marketing, export promotion and broader trade facilitation measures. 13. Give priority to high-value, export-winner crops, such as avocado, banana, cacao, coffee, mango, marine products, mongo beans, peanuts, pineapple, red hot chilli, squash and tobacco. 14. Integrate small farmers into larger enterprises, such as cooperatives; and 15. Improve agricultural support infrastructure and services, such as farm-to-market roads, cold storage and irrigation, to facilitate the distribution of agricultural products and increase farmer income. In other words, we need to deliver support services to farmers and fishermen, such as financing, incentives, technology, irrigation, postharvest facilities, farm-to-market roads, improved logistics and integration in the supply chain to fully develop the potential of the agricultural industry to develop rural areas and the countryside. What would justify a heavy budget allocation for agricultural productivity and profit? There will be more investments in agriculture, farmers will get easier access to finance, there will be lower unemployment and supply/ value chains will be created. As a consequence, some 20 million rural Filipinos can be lifted out of poverty. And the children of farmers will stop moving from rural areas to urban centers, or become overseas Filipino workers. Isn’t this what the 10-point socioeconomic agenda of the Duterte administration had in mind? Fighting poverty in agriculture? If the DA budget allocation is properly implemented, millions can be given dignified lives. For more information, contact Schumacher@mcasia.org.

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Banking&Finance

Monday, September 25, 2017 • Editor: Jun B. Vallecera

BusinessMirror

news@businessmirror.com.ph

Govt bares plan to withdraw NG deposits in UCPB

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By Rea Cu

DOF unwilling to forego VAT worth ₧100 billion

@ReaCuBM

he government is winding down its support for the United Coconut Planters Bank (UCPB) and should soon set in motion a likely phased withdrawal of some P40 billion worth of national government deposits as its two-year support commitment lapses by year’s end.

This was learned last Friday from Finance Secretary Carlos G. Dominguez III who told financial reporters the restraining order preventing the sale of government-owned shares in the bank finally lapsed earlier this month. With the temporary restraining order (TRO) lifted, the sale of governmentowned shares in the bank to private investors has to proceed without fail as the government has no intention to remain a shareholder for long. “I told them [management] we are not planning to extend it, so that gives us our own internal deadline,” Dominguez said of the anticipated phased withdrawal by national government deposits. Such withdrawal should now compel the selling government shareholder to privatize the lender quickly while

ensuring the potential buyer or buyers have the wherewithal to inject fresh equity. Officials said time and again the potential private investors should not only have pockets deep enough to purchase the government’s 73.9-percent UCPB shareholdings but have plenty more for fresh capital injection estimated to cost at least P15 billion. The fresh capital infusion requires the purchase or subscription to 37.2 million UCPB common shares to bring the bank on even footing with existing universal lending peers in the industry. “We have a bank that is about to be in play for privatization. We will have a price for the bank without any of the support. We are supporting the bank at the moment with deposits in excess of

P40 billion,” Dominguez said and he told financial reporters the restraining order had lifted just days earlier. Freed from the Supreme Court (SC)issued restraint, Dominguez said the UCPB recapitalization program should be quickly pursued as national government support expires at the end of the year. According to Dominguez, the government is evaluating the widom of injecting public funds as equity for a commitment that will expire at the end of the year. “The capital program does not mandate anything. The capital program says that by 2018 whether [government support] will continue,” he said. In 2015 the Privatization and Management Office suspended activities leading to the sale of the government’s controlling stake in UCPB. The SC, following a petition by the Coconut Farmers’ Organizations of the Philippines, issued a restraining order that effectively halted all efforts at selling or reprivatizing UCPB.

Small-scale retailers appeal for Malacañang intervention

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ore than 1 million small-scale retailers grouped under the Philippine Association of Stores and Carinderia Owners appealed to President Duterte for intervention and stop the plan to impose punitive excise tax rates on a number of sugar sweetened beverages (SSBs). “We, the members of the Philippine Association of Stores and Carinderia Owners, humbly appeal to you on behalf of the 1.3 million sari-sari store owners all over the Philippines. We are one in our continued support of your administration’s efforts to alleviate the lives of the poor, as well as fight the war on drugs and criminality in our society”, the group told the President in a public appeal for intervention. “We are also one in our fight against the inclusion of the SSB tax in the Tax Reform for Acceleration and Inclusion Act (TRAIN). “This bill proposes to add an excise

tax of up to P10 on SSBs, which include our fast-moving goods, like powdered juices, energy drinks and softdrinks. Forty percent of our store’s daily sales are from these products—a huge part of our daily income for subsistence. If this bill is passed into law, our sales w il l surely drop and we can lose a

Perspectives The automated actuarial

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ew analytics technologies are continuing to transform the actuarial function. Led by advances in automated loss reserve analysis, many insurers are now thinking carefully about the value of integrating cognitive computing capabilities into their actuarial processes. Massive value is on offer. But first, insurers will need to overcome their (somewhat understandable) fear of the analytics “black box”. Let’s face it: not much has changed in the field of traditional actuarial science over the past century. Pencils and paper have given way to calculators and computers. In the 1980s basic reserving software was introduced, helping to drive incremental improvements. But, with few exceptions, the function remained largely untouched by the technological advances of the past decade. More recently, however, the status quo has started to shift. New analytics technologies are beginning to permeate the actuarial function. And initial prototypes and projects are already showing great promise, particularly in the field of actuarial loss reserve analysis. Indeed, data scientists are now using established algorithms to produce estimates that out-perform traditional approaches while also standing up to rigorous “back testing”.

Automating for advantage

The automation of loss reserving could solve a number of key challenges currently

facing most property and casualty (P&C) insurers. For one, automation can improve business flexibility, decision-making and capital management. Reports can be developed in hours rather than weeks; decision makers can spot trends and respond in real-time; business performance and efficiency can be tracked to uncover improvement opportunities; and, as a result, the pace of business can be dramatically improved. Automation may also remove many of the traditional challenges inherent in the actuarial discipline. Many actuaries tend to support their reports with insights based on their view of the data in comparison to prior conclusions. But this creates a risk of a bias toward stability rather than a focus on change—a form of “anchoring” where prior information is given greater weight than newer information. But, when automated, the same weight is given to each piece of data, thereby helping to remove this natural bias. Similarly, many actuaries suffer from a lack of current, in-depth analysis, preferring to perform a more detailed analysis of their liabilities only annually. But these long intervals (particularly given today’s pace of business) raise the risk that underperforming businesses could be hidden for several years. Automation, on the other hand, allows actuaries to view current, in-depth analysis in near real time, helping them to better

viable source of additional income for our household. We are saddened to think that most of us will be forced to close our stores because we will not be earning income from it to help our families. “We understand and support our government’s need to raise money for its various social and infrastructure programs to help improve the lives of the Filipino people and sustain the country’s economic growth. But we appeal to you, please do not let this bill pass. This bill is anti-poor. Please do not let our small microretailers, consumers, sugar and coffee farmers, and manufacturing plant workers carry the burden. “President Duterte, we appeal to you, together with all of our members and all of the sari-sari store owners, please listen to our plea and help us in our fight against the SSB tax,” the group said in their letter to the President.

manage their risks and respond to emerging trends. Reserve automation can help actuaries focus on creating real value for the insurance organization by, for example, examining trends, patterns and unexpected results in the analysis; by providing higher level-analysis of data; and by applying their deep actuarial judgement to the insights being generated.

Facing fears

Automated loss reserving clearly offers P&C insurers a new way of thinking and working. But to achieve its full benefits, executives will first need to overcome lingering concerns about the transparency of the so-called black box of analytics. The reality is that most management teams and their boards rely heavily on the insights and analysis offered by their actuarial teams. And their trust in those insights is largely based on their historical human interaction. Few are willing to place the same level of trust in a machine they don’t understand and can’t relate to. At the same time, the actuarial function also needs to build trust in the tools at their disposal. More sophisticated analytics capabilities will almost certainly be required. But the bigger barrier will be cultural: actuaries need to understand that automation is there to help them become more productive, not to replace them. A computer may

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[IRR],” Dominguez said of his apprehension at a recent public forum. He told financial reporters the DOF will make sure the IEFs will be reinvested only in the Philippines and not elsewhere before the legislation is implemented in full. The REIT, enacted in December 2009, exempts from tax the transfer of real assets into qualified structures, but its IRR have yet to be finalized. The transfer of assets into REITs is slapped a 12-percent VAT plus a 6-percent transfer tax, or a total 18 percent, effectively freezing a legislation with the lofty goal of expanding the domestic capital market. “No, it’s not dead in the water. I haven’t figured out a way [yet] to make sure that what we give up is worth it for our country,” according to Dominguez. Apart from questions on reinvestments, the legislation is also wracked by disharmony of rules, with the IRR mandating a 40-percent public ownership of REITs even as its IRR says no more than 33 percent may be sold to the public. Securities and Exchange Commission Chairman Teresita J. Herbosa said the SEC may issue a new IRR but needs to coordinate with the Bureau of Internal Revenue on taxation issues of the product. Rea Cu

ome P100 billion worth of valueadded tax (VAT) would escape the tax net under a legislation creating the real-estate investment trust (REIT) program and the government seriously doubts that most, if not all, that much funds will even be reinvested in the Philippines, according to the Department of Finance (DOF). Finance Secretary Carlos G. Dominguez III came up with the estimated value of real-estate assets seen transferred tax free to so-called special purpose vehicles, or SPVs, last Friday in the hope the funds, more accurately called incentives-eligible funds (IEFs) will be plowed right back and not invested outside the industry or worse, abroad. “The problem is you are giving away a tax incentive in the hope that the yield will be reinvested in the real-estate business. But it’s a hope, not a certainty,” Dominguez said. This lack of clarity as to where the IEFs will be deployed has cause the DOF to pause long and hard as to whether the provisions carried by the REIT legislation is worth pursuing. “I am not ready to say unless I am sure that the money is going to be recycled back, that we will give up potentially P100 billion. I don’t think it’s fair to the Filipino public to pass a legislation or to write the implementing rules and regulations

Case clippings

By Justice S J Ranada Jr. LABOR–when quitclaim binds employee Generally, a deed of quitclaim and release cannot bar an employee from demanding benefits to which he is legally entitled, or from contesting his dismissal, as quitclaims are frowned upon as contrary to public policy. However, when the employee is not an illiterate person who needs special protection, as he holds a responsible position at a bank as an IT officer, the quitclaim will be deemed a binding and valid undertaking. PNB v. Dalmacio 05 Jul 2017

process information more rapidly than a human, but a human using a computer can be more powerful still. However, most efforts to improve trust in technology are usually underpinned by proof. Much like model validation approaches, the path to improved trust in reserve model automation is an ongoing process. It will require continuous end-to-end consideration of the data, the assumptions, the calculations and the resulting value. And, as value is generated and results are validated, the level of trust will improve. By leveraging trusted analytics to capitalize on new methods and technology, analysts have an unprecedented opportunity to improve actuarial analysis of loss reserves—similar to the wave of value that was unlocked 25 years ago through the adoption of predictive modeling in pricing. Indeed, reserve automation offers similar potential advantages of reduced costs, improved business flexibility and market share gains.

The Four Pillars of Trust

While trust may currently be low, we believe that P&C insurers can help raise the level of trust by applying key concepts that we often refer to as the Four Pillars of Trusted Analytics. n Quality n Resilience n Effectiveness n Integrity

GR 202308 Tijam, J

Practice makes perfect

As actuaries, we recognize the dramatic efficiency and efficacy gains that could be achieved by taking full advantage of today’s computing power, automation tools and algorithms. But to realize the benefits of automation, management will first need to learn to trust increasingly complex systems. However, over the coming year, we expect this perceived loss of transparency to be replaced by the confidence that can be gained through the rapid feedback created by automated systems. And, with continuous feedback of actual results, we believe that acceptance and adoption of automation will quickly start to rise. We firmly believe that the P&C sector is on the cusp of an exciting new wave of actuarial innovation. Those that recognize and respond to the opportunity will likely see significant competitive advantage. The article “The automated actuarial” is written by Scott Shapiro, KPMG in the US. © 2017 R.G. Manabat & Co., a Philippine partnership and a member-firm of the KPMG network of independent memberfirms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. For more information on KPMG in the Philippines, you may visit www.kpmg. com.ph.

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Editor: Lyn Resurreccion • Monday, September 25, 2017

A7

As U.S. President Donald Trump and the North Korean foreign minister trade sharp messages

US warplanes flies close to N. Korea

A U.S. Air Force B-1B Lancer, assigned to the 37th Expeditionary Bomb Squadron, deployed from Ellsworth Air Force Base, South Dakota, prepares to take off from Andersen AFB, Guam, on September 23. The Pentagon says B-1B bombers from Guam and F-15 fighter escorts from Okinawa, Japan, have flown a mission in international airspace over the waters east of North Korea. Staff Sgt. Joshua Smoot/U.S. Air force via AP

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EOUL, South Korea—US warplanes flew close to North Korea’s coast last Saturday, the same day that the North’s foreign minister told the UN General Assembly that President Donald J. Trump’s threats against the country were “making our rocket’s visit to the entire US mainland inevitable all the more.”

On Twitter, Trump responded to Foreign Minister Ri Yong-ho’s speech with yet another threat. Saying he had heard Ri’s speech, and using his recently coined nickname for the North’s leader, Kim Jong Un, Trump wrote: “If he echoes thoughts of Little Rocket Man, they won’t be around much longer!” Earlier last Saturday, the Pentagon said the Air Force had sent B-1B

bombers and F-15C fighters over waters north of the Demilitarized Zone separating the two Koreas, in response to what it called the North Korean government’s “reckless behavior.” It was the farthest north “any US fighter or bomber aircraft have flown off North Korea’s coast in the 21st century,” Dana W. White, the Defense Department’s chief

spokesman, said in a statement. “This mission is a demonstration of US resolve and a clear message that the president has many military options to defeat any threat,” White added. Although B-1B bombers have flown near the Demilitarized Zone over land several times, this flight seemed intended to underscore US military strength to Kim, who has been engaged in a war of words with Trump. At the General Assembly last Saturday, Ri said North Korea intended to have a “nuclear hammer of justice” against its rivals and boasted that it was “a few steps away” from becoming a nuclear power.

Referring to Trump’s threat— in his General Assembly address last Tuesday—to “totally destroy” North Korea, Ri said the US president had “committed an irreversible mistake.” “None other than Trump himself is on a suicide mission,” he added. But Ri also said the North’s nuclear program was a deterrent intended to avert an invasion, with the ultimate goal being “balance of power with the US.” “We do not have any intention at all to use or threaten to use nuclear weapons against the countries that do not join in the US military actions against” North Korea, Ri said. Over the years, as Pyongyang

We do not have any intention at all to use or threaten to use nuclear weapons against the countries that do not join in the US military actions against North Korea.”­—Ri

raced to build a nuclear arsenal, the world has often turned to its neighbors for help: China, because of its economic leverage over the North, and South Korea, because it would suffer the most in any military confrontation. Now, China and South Korea have been left squirming on the sidelines, with Kim having been essentially granted his wish: dealing directly with the US, which the North believes has the most to give. To the North Koreans, the US can offer a peace treaty, diplomatic recognition, the easing of sanctions and the withdrawal of US troops from South Korea, which the North considers its existential threat. Since Kim came to power nearly six years ago, North Korea has accelerated its nuclear and missile tests to grab Washington’s attention and to force negotiations on terms favorable to the North, according to South Korean intelligence officials and analysts who study Kim’s motives. When Trump made his threat last Tuesday it gave Kim a perfect chance to square off directly against the US, they said. In an unprecedented personal statement last Friday, Kim called Trump a “mentally deranged US dotard,” and Ri raised the prospect of exploding a hydrogen bomb over the Pacific. To back up such talk, Kim will probably carry out more weapons tests, analysts said. A tremor detected last Saturday near North Korea’s underground nuclear-testing site raised fears of another detonation, but South Korean experts said it appeared to have been a natural earthquake. “We now can’t avoid the military tensions on the Korean Peninsula further escalating,” said Cheong Seong-chang, a North Korea expert at the Sejong Institute, a think tank near Seoul, the South’s capital. The standoff is intensifying partly because “South Korea lacks capabilities to confront North Korea while the North ignores

the South and insists on dealing only with the United States,” Cheong added. As the crisis spiraled over the last few days, China found itself a bystander—an uncomfortable role for President Xi Jinping, who was most likely seething about Kim and about the North Korean government’s criticism of China’s most vaunted institution, the Communist Party, as its leadership prepares to meet, analysts said. The North’s Korean Central News Agency referred to a coming party congress in Beijing in unflattering terms last Friday. The quiet in Beijing illustrated China’s almost complete lack of influence in controlling the North and its unsuccessful efforts to persuade Trump to tamp down his language, they said. Fearful of failing and of losing face in a peacemaking role, Xi would be reluctant to make any diplomatic or strategic moves before the party congress opens on October 18, analysts said. Xi was left merely humoring Trump by agreeing to tougher sanctions at the United Nations this past week. “I think China’s diplomatic leverage over North Korea is zero,” said Feng Zhang, a fellow at the Australian National University’s department of international relations. “North Korea doesn’t want to see Chinese envoys and is not interested in Chinese views.” President Moon Jae-in of South Korea has also found room for diplomacy shrinking, as North Korea and the US locked themselves in what he called an escalating “vicious cycle” of provocations and sanctions. North Korea has not responded to Moon’s calls for dialogue as it accelerates its missile and nuclear tests. When he came to power in May, Moon found little leverage left over North Korea: Under his conservative predecessors, South Korea had cut off all trade ties and pulled out all investments in North Korea. “We need a breathing room, an easing of tensions,” Moon said last Friday. New York News Service

Trump names, shames GOP senators as health bill hangs by thread

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ith the latest Republican-only Obamacare repeal proposal hanging by a thread, President Donald J. Trump took to his favorite bully pulpit last Saturday to chide lawmakers who’ve announced their opposition or are on the fence. Trump directed tweets at Sens. Rand Paul of Kentucky and John McCain of Arizona. Both have said they’ll oppose the bill, meaning one more committed “no” will sink the legislation. “I know Rand Paul and I think he may find a way to get there for the good of the Party!” Trump told his 39 million followers. He also targeted Lisa Murkowski of Alaska, who hasn’t committed to a position so far but voted no on a previous replacement measure. “Alaska had a 200-percent plus increase in premiums under Obamacare, worst in the country. Deductibles high, people angry!” Trump said, adding inscrutably, “Lisa M comes through.” The president saved the most animus for McCain, who provided the third “no” vote to doom the previous Obamacare repeal bill in July, in a dramatic return to the Senate floor after being diagnosed with an aggressive form of brain cancer. “John McCain never had any intention of voting for this Bill, which his Governor loves,” Trump tweeted. “He campaigned on Repeal & Replace. Let Arizona down!” Last Friday McCain said in a statement that he “cannot, in good

conscience, vote for the GrahamCassidy proposal.” Republicans and Democrats could do better by working together “and have not yet really tried,” McCain said. McCain was the second Republican to oppose the measure, joining Paul. Sen. Susan Collins said last Friday she’s leaning against it, according to a newspaper in her home state of Maine. Senate Republicans can afford to lose no more than two members of their 52-48 majority and pass the bill. The health bill under discussion was introduced by Sens. Bill Cassidy of Louisiana and Lindsey Graham of South Carolina. Graham is a close friend of McCain—an element of the drama that Trump didn’t leave untouched: “McCain let his best friend L. G. down!” Graham wrote on Twitter last Friday, “My friendship with @SenJohnMcCain is not based on how he votes but respect for how he’s lived his life and the person he is.” In contrast to the senators’ friendship, the president and McCain have been at odds since thencandidate Trump insulted the former Vietnam War prisoner during a campaign event in 2015: “McCain is a war hero because he was captured, and I prefer people who weren’t captured, okay?” The Republican drive to gut the Affordable Care Act is using a dramatically short-circuited process that seeks to replace Obama’s landmark health law with another

Sen. John McCain, Republican-Arizona, speaks to reporters on Capitol Hill in Washington. McCain says he won’t vote for the Republican bill repealing the Obama health-care law. AP/Cliff Owen

introduced just two weeks ago. Hospital and health insurance stocks moved upward after McCain’s announcement. The S&P 500 Managed Health Care Index of insurers pared earlier losses and closed down about 0.5 percent. A Bloomberg Intelligence index of hospital stocks gained 1.1 percent. Senate Majority Leader Mitch McConnell has said he intended to hold a Senate vote next week before a September 30 deadline to use a fast-track procedure allowing a simple majority vote. David Popp, a spokesman for McConnell, didn’t immediately respond to a request for comment about McCain’s decision. Trump warned on Twitter on Friday that “Rand Paul, or whoever votes against Hcare Bill, will forever [future political campaigns] be known as ‘the Republican who saved ObamaCare.’”

The president is working the phone on the issue and is “open to having face-to-face meetings,” adviser Kellyanne Conway said on Fox News. “The president is leaning in all the way.” The White House “just wants a legislative victory, they’re not as concerned with the policy” in the bill, Paul told The Associated Press after Trump’s tweet. The Brookings Institution estimated last Friday that the GrahamCassidy plan would reduce the number of people with health coverage by about 21 million a year from 2020 through 2026. The number may be larger, it said, because of difficulties in setting up state health systems by 2020 and possible market turmoil in the final years. “What is clear, however, is that the legislation would result in very

large reductions in insurance coverage,” Brookings said. The Center on Budget and Policy Priorities said Medicaid funding cuts would equal 16 percent of projected state budgets in 2027. “That’s more than what states provide for higher education,” it said. Collins criticized the bill because among other things it undermines protection for people with pre-existing medical conditions, the Portland Press Herald reported last Friday. “The premiums would be so high they would be unaffordable,” she said. Collins may say more in two scheduled political talk show appearances on Sunday. Murkowski has no immediate plan to announce her position, her office said. Collins and Murkowski were the other two Republicans who opposed McConnell’s bill in July; Paul voted in favor of the earlier legislation.

Lightning-speed path

Democrats have denounced the lightning-speed path to a vote, with only one committee hearing on the bill scheduled. Senate Minority Leader Chuck Schumer of New York praised McCain in a statement last Friday and said, “I have assured Senator McCain that as soon as repeal is off the table, we, Democrats, are intent on resuming the bipartisan process.” After the July defeat of McConnell’s plan, Senate Health Chairman Lamar Alexander and top Democrat Patty Murray of Washington worked

on a bipartisan plan to shore up Obamacare’s insurance exchanges. Alexander of Tennessee said this week that the effort had failed. Murray said in a statement that the pair had “identified significant common ground,” but that Republican leaders decided to “freeze” the bipartisan effort and push the party’s own plan. The Graham-Cassidy proposal would turn Obamacare funds into block grants for the states, which would create their own health-care plans for residents. States that expanded Medicaid under Obamacare would be hardest hit by spending cuts, losing $180 billion from 2020 to 2026, according to the Kaiser Family Foundation. States that rejected the Medicaid expansion, many with Republican leadership, would gain $73 billion. The measure would end the Affordable Care Act’s requirements that individuals have insurance and that most employers provide it. It also would end the guarantee that people with pre-existing medical conditions can’t be charged more for insurance. A public dispute between TV comedian Jimmy Kimmel, whose infant son has a congenital heart defect, and the Senate sponsors took on bitter personal terms this week and demonstrated how little is understood about the legislation. “Thank you @SenJohnMcCain for being a hero again and again and now AGAIN,” Kimmel wrote on Twitter last Friday after McCain’s announcement. Bloomberg News

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A8 Monday, September 25, 2017 • Editor: Lyn Resurreccion

BusinessMirror

May breaks impasse in Brexit talks

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ritain and the European Union are set to resume Brexit negotiations next week after United Kingdom Prime Minister Theresa May broke the stalemate in the hope that the real arguments can now begin.

In a major speech last Friday that drew guarded praise from Brussels, May signaled for the first time that she’ll be ready to discuss the amount of money the UK will owe to the EU when it departs the bloc in 2019. German Chancellor Angela Merkel’s party offered a skeptical response. At the end of the day, the UK’s credit rating was cut by Moody’s Investors Service. May’s goal is the opportunity to push talks nearer to the future trading relationship between the UK and the EU, and her offer is a two-year transition phase. The coming round of negotiations will test May’s ability to keep both the EU and her own euro-skeptic Conservatives on side. “Theresa May’s offer on the divorce bill was probably more generous than anticipated, by hinting at an inclusion of historic liabilities, as well as current budget commitment,” said Mats Persson, head of international trade at EY and a former adviser to Prime Minister

David Cameron. “We’re now in the landing zone of the ‘significant progress,’” he added. That’s what EU’s chief negotiator Michel Barnier is looking for: progress on the issue of money, citizens’ rights and the Irish border. May gave her most detailed road map yet for the divorce in a speech in Florence. In it, she said Britain would pay to smooth its departure from the bloc until the end of the current EU budget in December 2020. That buys her some time. Just hours after May spoke, Moody’s trimmed the UK’s credit rating by one notch to Aa2, blaming doubts it had over the government’s ability to land a trade pact and a likely weakening in the public finances. The UK rating had been Aa1 since February 2013. The government called the company’s analysis “outdated.” S&P Global Ratings and Fitch Ratings downgraded the UK by one notch the week after the June 2016 Brexit referendum.

Praise, caution

May’s words were immediately welcomed by key leaders she was trying to reach. French President Emmanuel Macron said May had made “advances,” and Barnier praised her “constructive spirit.” He also warned the prime minister to craft a “a precise negotiating position” for when talks resume in Brussels on Monday. “The UK will honor commitments we have made during the period of our membership,” May said in a much-anticipated speech in the Italian city. The government official later clarified that meant she was open to discussing financial commitments beyond the scope of the EU budget, and that the UK would honor its dues more broadly. Striking a negative tone, Michael Stuebgen, the lead lawmaker on European affairs for Merkel’s Christian Democrats, said May’s speech “still hasn’t explicitly committed Britain to all of its financial obligations in the EU budget.” May also failed to break new ground on EU citizens’ rights and the issue of Ireland’s border with the UK, he said in a statement. “Unfortunately, this speech won’t lead to the new dynamic in the talks that’s so badly needed,” making progress on Brexit unlikely in the run-up to an EU summit in October, Stuebgen said.

Transition period

She made the promise while also proposing to pay money and accept

the EU’s rules for two years after Brexit takes effect in March 2019, in return for a transitional period that mirrors the status quo of tariff-free, regulation-light commerce—and freedom of movement. Britain’s access to the EU single market and vice versa would remain unchanged during the transition, according to May’s plan. A word analysis of May’s last two speeches and what the change means what remains unclear is what May’s ultimate goal is. She’s eschewed language about a “bespoke” deal, but also rejected the so-called Norway or Canada models that have been offered as inspiration. The cost of such an implementation phase could run to about €20 billion ($24 billion), but the so-called Brexit bill could stretch to five times that in gross terms. EU governments say, while they don’t need to see a final sum yet, Britain must help find a way to calculate it before they sign off on trade talks. The Times, citing two people in Brussels it didn’t identify, said May agreed to pay £40 billion: about £20 billion from March 2019 through year-end 2020 and “other liabilities” of £20 billion “negotiated separately and paid over many years.” However, May will know that Conservative hardliners won’t tolerate repeatedly delaying Brexit or signing up for vast financial liabilities.

Some ardent “Leave” campaigners are already unhappy about her plan for a two-year transition, during which free movement migration rules, budget payments and the rule of the European Court of Justice will continue to apply largely unchanged. “The British people are patient, but more than two years for a transition period would test that patience,” Tory lawmaker Andrew Bridgen said in an interview. “We don’t want to do that in the next general election in 2022.” Fellow Tory Jacob Rees Mogg told the BBC that effectively delaying Brexit is “disappointing” and that May hadn’t made clear if the European Court of Justice will have jurisdiction in the UK during the transition. “To my mind that is a red line,” he said.

Companies rejoice

Many businesses welcomed May’s talk of a transition that would keep trading conditions unchanged, having previously warned of a rupture in 2019. May said companies should only have to make one change—taking on board an idea first floated by Chancellor of the Exchequer Philip Hammond. She also won the endorsement of Foreign Secretary Boris Johnson, seven days after he warned her against going soft on the EU and appeared to be on the brink of resigning. He tweeted: “PM speech was positive, optimistic & dynamic.” Bloomberg News

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Merkel seeks 4th victory as Germans vote

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ermans headed to the polls last Sunday in a federal election that will determine whether Angela Merkel scores a record-equaling fourth victory, with the big question being which other party or parties will join the chancellor’s Christian Democratic Union in her new government. Merkel’s bloc, which includes her Bavarian allies in the Christian Social Union, has the support of about 36 percent of voters, the final opinion polls during the campaign indicated. That’s about 14 percentage points ahead of its main challenger and current coalition partner, Martin Schulz’s Social Democrats. Four other parties—the pro-business Free Democratic Party, the Greens, the anticapitalist Left and, for the first time ever, the populist Alternative for Germany, are poised to win seats in the lower house of parliament, the Bundestag. Victory would crown a remarkable comeback for Merkel from a plunge in her popularity amid the 2015-2016 refugee crisis that saw 1.3 million migrants flood into Germany. Early this year, she was equal in the polls with Schulz, a fresh face in German domestic politics, but the Social Democrat’s challenge has faded in recent months and his party threatens to post its worst result since World War II. Merkel, 63, and chancellor for 12 years, has portrayed herself during the campaign as a beacon of stability in a world buffeted by crises. Bloomberg News

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Monday, September 25, 2017

A9

Trump tax plan targets 20% corporate rate

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epublican tax negotiators are targeting a corporate-tax rate of 20 percent, according to two people familiar with the matter. That would be higher than President Donald J. Trump wants—setting up a key decision for the president on a top legislative priority.

Trump has called for cutting the corporate rate to 15 percent, down from the current 35 percent. The plan he’ll see this week is also expected to recommend cutting the top individual-tax rate to 35 percent, down from 39.6 percent, two people familiar with the matter said. Trump will travel to Indiana on Wednesday for a speech on tax issues that’s expected to be more substantive than recent rallies that were intended to raise enthusiasm for an overhaul, a person familiar with the planning said. While members of Trump’s own administration have suggested that Trump’s position on the corporate rate might be subject to compromise, the president may yet resist a plan with a rate higher than 15 percent, one person familiar with the matter said. The people asked not to be identi-

fied because details of the tax plan and Trump’s schedule have not been publicly announced. Trump said last Friday night during a campaign rally in Huntsville, Alabama, that a tax plan would be released this week, and described it as “massive tax cuts.” The White House and congressional Republican leaders are preparing for a push in the next few months to pass tax legislation, after a series of defeats since Trump’s inauguration, including their continuing failure to repeal Obamacare. Cutting the corporate-tax rate is one of Trump’s core principles for an overhaul.

20 percent to 24 percent

House Speaker Paul Ryan and other congressional leaders have discussed a corporate-tax rate in the low to mid-20s. Based on recent discussions, the GOP will probably aim for a rate in the range of 20 percent to 24

35%

The percentage of the individualtax rate is planned to be cut to this level, down from 39.6 percent

percent, said Ryan Ellis, a Republican tax lobbyist who previously worked as chief tax policy director for Grover Norquist’s Americans for Tax Reform. Ellis said he also expects the socalled “Big Six” negotiators to seek a top individual rate of 35 percent. The Big Six are Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Ryan, Senate Majority Leader Mitch McConnell and the chairmen of the congressional tax-writing committees. Ellis also said he expects the framework will call for doubling the standard deduction claimed by many middle-class tax filers, and for repealing the estate tax, which applies only to estates worth more than $5.49 million. It’s unclear how detailed the framework will be—or whether it will represent the unified approach that the president and GOP leaders have sought.

No ‘rubber stamp’

Senate Finance Chairman Orrin

Hatch, a member of the Big Six, has said he’ll regard the document as a guide, but his panel won’t be bound by it. Nor will his panel be a “rubber stamp” for any particular plan, Hatch added. The Washington Post reported that Republicans were “targeting” a corporate rate of 20 percent, citing three unnamed people. But the plan remains fluid, those people told the paper. The news web site Axios reported last Saturday that the Big Six had already agreed to a 20-percent rate. House Republicans plan to hold a conference meeting on Wednesday, and public information about the plan is expected shortly afterward. Spokesmen for Ryan and for House Ways and Means Committee Chairman Kevin Brady declined to comment last Saturday when asked about the reported details of the emerging plan. While the corporate-tax rate will be one of the key decisions, Trump and congressional Republicans have also proposed condensing the existing seven tax rates to three, and cutting the top rate to 35 percent from 39.6 percent. In recent weeks, Trump had suggested that he might abandon the plan to cut the top individual rate, and focus instead on a middle-class tax cut. Brady and others, however, have said they’d prefer to see across-the-board tax cuts. Bloomberg News

Maria lays bare income divide in Puerto Rico

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humanitarian crisis began to take hold in Puerto Rico last Saturday, three days after Hurricane Maria hammered the commonwealth, and its most vulnerable citizens were the most exposed. Health-sector workers said the island was nearing a critical moment as some care organizations ran low on fuel for generators. Maritza Lamoso, executive director at Residence Senior Living in the Puerto Nuevo section of San Juan, said she’d put out 20 calls for emergency diesel and been visited by the Federal Emergency Management Agency, (Fema). But as of Saturday afternoon, she still had no fuel. “If the diesel doesn’t arrive today, I’m going to have to start removing people,” she said from the lobby of the center, adding that two other facilities in the same network were in similar circumstances. Gov. Ricardo Rossello, who met with mayors and state and federal officials in San Juan last Saturday, said agencies were rushing to deliver fuel to hospitals, bring water, food and other aid to isolated communities, and evacuate families living near a failing dam in the northwest. The government couldn’t begin to estimate the financial toll, he said, but it would be more than the billions of dollars in damage caused by

Hurricane George in 1998. “This is, without a doubt, the biggest catastrophe in modern history for Puerto Rico in terms of the damage to infrastructure and in terms of damage to the island as a whole,” he said. “Our consideration is not a fiscal consideration. It’s restoring people’s security and restoring normalcy.” On an island marked by sharp income disparities, there was a notable ratcheting up of private security by those at the top. At billionaire hedge fund manager John Paulson’s hotels in hip Condado, workers turned away nonguests trying to get into the lobby for a burst of cool air or to charge a phone. An employee at the Vanderbilt said the hotel had withstood the storm. At La Concha, several men could be seen tossing apparently ruined carpets from top floor windows, and they landed with a thud in a massive pile. Paulson’s organization noted La Concha was being used as a Fema headquarters and that the Vanderbilt had been used as a Fema-approved bunker. “Both hotels weathered the storm very well, with minor water damage which is currently being fixed,” according to a statement. “The hotels are open to all guests and doing their best to provide services during this challenging time.” Bloomberg News

A4 A10 Monday, September 25, 2017

The World

Conservative theologians say pope spreading heresy

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ATICAN CITY—Several dozen tradition-minded Roman Catholic theologians, priests and academics have formally accused Pope Francis of spreading heresy with his 2016 opening to divorced and civilly remarried Catholics. In a 25-page letter delivered to Francis last month and provided last Saturday to The Associated Press, the 62 signatories issued a “filial correction” to the pope—a measure they said hadn’t been employed since the 14th century. The letter accused Francis of propagating seven heretical positions concerning marriage, moral life and the sacraments with his 2016 document The Joy of Love and subsequent “acts, words and omissions.” The initiative follows another formal act by four tradition-minded cardinals who wrote Francis last year, asking him to clarify a series of questions, or dubbia, they had about his 2016 text. Francis hasn’t responded to either initiative. The Vatican spokesman didn't immediately respond to an e-mail seeking comment late last Saturday. None of the signatories of the new letter is a cardinal, and the highest-ranking churchman listed is actually someone whose organization has no legal standing in the Catholic Church: Bishop Bernard Fellay, superior of the breakaway Society of Saint Pius X. Several other signatories are well-known admirers of the old Latin Mass, which Fellay’s followers celebrate. But organizers said the initiative was nevertheless significant and a sign of the concern among a certain contingent of academics and pastors

over Francis’s positions, which they said posed a danger to the faithful. “There is a role for theologians and philosophers to explain to people the church’s teaching, to correct misunderstandings,” said Joseph Shaw, a spokesman for the initiative, signatory of the correction and senior research fellow in moral philosophy at Oxford University. When it was released in April 2016, The Joy of Love immediately sparked controversy because it opened the door to letting civilly remarried Catholics receive Communion. Church teaching holds that unless these Catholics obtain an annulment—a church decree that their first marriage was invalid—they cannot receive the sacraments, since they are seen as committing adultery. Francis didn’t create a churchwide pass for these Catholics, but suggested—in vague terms and strategically placed footnotes— that bishops and priests could do so on a case-by-case basis after accompanying them on a spiritual journey of discernment. Subsequent comments and writings have made clear he intended such wiggle room, part of his belief that God’s mercy extends in particular to sinners and that the Eucharist isn’t a prize for the perfect but nourishment for the weak. Shaw said none of the four cardinals involved in the initial dubbia letter, nor any other cardinal, was involved in the “filial correction.” Organizers said the last time such a correction was issued was to Pope John XXII in 1333 for errors which he later recanted. AP

Spain rebuffed in boosting control over Catalonia’s police

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HE police in Spain’s rebel region of Catalonia rejected giving more control to the central government in defiance of authorities in Madrid who are trying to suppress an independence referendum on October 1. The largest trade group for t he 17,0 0 0 - me mb e r Mos sos d’Esquadra regional force said it would resist hours after prosecutors last Saturday ordered that it accept central-government coordination. The rejection echoed comments by Catalan separatist authorities. “We don’t accept this interference of the state, jumping over all existing coordination mechanisms,” the region’s Interior Department chief Joaquim Forn said in brief televised comments. “The Mossos won’t renounce exercising their functions

in loyalty to the Catalan people.” The disobedience may fuel speculation the Mossos aren’t committed to work with the national Civil Guard in Spain’s largest regional economy. The standoff came a day after Prime Minister Mariano Rajoy’s government acknowledged it’s sending more reinforcements to help control street demonstrations and carry out a separate court order to halt the vote. Officials in Madrid have quietly rented cruise ships, including the Rhapsody, and moored them in Catalan ports as temporary housing for riot police and other security officials being sent to the region in what El Correo newspaper said may ultimately exceed the number of Mossos by the referendum date. Bloomberg News

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Pentagon tests technology to fight Islamic State drones

AN MQ-9 Reaper unmanned aerial vehicle prepares to land after a mission in support of Operation Enduring Freedom in Afghanistan. The Reaper has the ability to carry both precision-guided bombs and air-to-ground missiles. USAF Photographic Archives/Wikimedia Commons

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ASHINGTON—At the vast, windswept White Sands Missile Range in New Mexico earlier this year, nearly a dozen military contractors armed with laser guns, high-tech nets and other experimental systems met to tackle one of the Pentagon’s most vexing counterterrorism conundrums: how to destroy the Islamic State’s (IS) increasingly lethal fleet of drones.

The militant group has used surveillance drones on the battlefield for more than two years. An increase in deadly attacks since last fall—mostly targeting Iraqi troops and Syrian militia members with small bombs or grenades, but also threatening United States advisers—has highlighted the terrorists’ success in adapting off-the-shelf, low-cost technology into an effective new weapon. The Pentagon is so alarmed by this growing threat—even as it routs the IS from its strongholds in Mosul, Iraq and Raqqa, Syria—that it has launched a $700-million crash program overseen by two senior

Army generals to draw on the collective know-how and resources of all branches of the armed services, Silicon Valley and defense-industry giants, like Boeing and Raytheon, Challenge, to see which new classified technologies and tactics proved most promising. The results were decidedly mixed, and underscore the longterm problem confronting the Pentagon and its allies as it combats the IS and al-Qaeda in a growing number of hot spots around the world beyond Iraq and Syria, including Yemen and Libya. “Threat targets were very resil-

$700M

The budget of the Pentagon program to draw on the collective know-how and resources of all branches of the armed services, Silicon Valley and defense-industry giants to devise tactics and technology to thwart the IS menace ient against damage,” the Pentagon agency assigned to help crack the problem, the Joint ImprovisedThreat Defeat Organization, said in response to questions from The New York Times about how the contractors fared against mock enemy drones. “Bottom line: Most technologies still immature.” The agency said some of the technology might work well with “adjustments and further development.” In the meantime, the Pentagon has rushed dozens of technical specialists to Iraq, Syria and Afghanistan to help protect US troops and to train and, in some cases, equip local allies against the drone threat, which has killed more than a dozen Iraqi soldiers and wounded more than 50. The aircraft, some as small as model airplanes, conduct reconnais-

sance missions to help IS fighters attack US-backed ground forces. Other drones drop bombs or are rigged with explosives to detonate on the ground. “These things are really small and hard to detect and, if they swarm in groups, they can overload our ability to knock them all down,” said J.D. Johnson, a retired three-star Army general who previously commanded the threat-defeat agency, and now heads Army programs for Raytheon. “The threat is very resilient and wellresourced, and we have to be looking one or two moves ahead to defeat it.” US troops are using an array of jammers, cannons and other devices to disrupt, disable or destroy the enemy drones, often quadcopters rigged with explosives. And the military has increased air strikes against IS drones on the ground, their launch sites and their operators. “This isn’t just an Iraq and Syria problem; it’s a regional and global problem,” Lt. Gen. Michael Shields, director of the threat-defeat organization and one of the two generals overseeing the effort, said in a telephone interview. “These are airborne IEDs [improvised explosive devices].” Indeed, the drone threat is going global. Iranian drones have buzzed US Navy ships more than a dozen times in the Persian Gulf this year. In Europe, US and allied soldiers accustomed to operating from large, secure bases in Iraq and Afghanistan now practice using camouflage netting to disguise their positions and dispersing into smaller groups to avoid sophisticated Russian surveillance drones that could potentially direct rocket or missile attacks against personnel or command posts. In the US, authorities voice increasing concerns about possible ISinspired drone attacks against dams, nuclear power plants and other critical infrastructure. Over the summer, the Pentagon issued classified guidance to base commanders around the country to warn local communities to keep commercial drone hobbyists away from installations. Earlier this month, an Arabic publication offered guidance from the IS to its followers on how to evade US drones. This past week, the IS released through its Amaq news agency a video of an operation in which its fighters tracked what it identified as a Syrian news media vehicle and then dropped a munition on it. “There’s a DIY [do it yourself] aspect to this,” said Don Rassler, a researcher at the Combating Terrorism Center at West Point, which has studied IS drones. NewYorkTimesNewsService

New 6.1-magnitude quake shakes jittery Mexico M

EXICO CITY—A strong new earthquake shook Mexico last Saturday, killing at least two people, toppling already-damaged homes and a highway bridge, and causing new alarm in a country reeling from two even more powerful quakes that together have killed more than 400 people. The United States Geological Survey said the new 6.1-magnitude temblor was centered about 11 miles (18 kilometers) south-southeast of Matias Romero in the state of Oaxaca, which was the region most battered by an 8.1-magnitude quake on September 7. It was among thousands of aftershocks recorded in the wake of that earlier quake, which was the most powerful to hit Mexico in 32 years and killed at least 96 people. The government of Oaxaca state reported that some homes collapsed. A woman died when a wall of her home fell on her in the town of Asuncion Ixtaltepec, and a man died after

a wall fell on him in San Blas Atempa. Four people were injured in Juchitan and three in Tlacotepec, but none of their lives were in danger. Another person suffered a broken clavicle in the town of Xadani. Three hotels and two churches were damaged and a highway bridge collapsed. The Federal Police agency said the bridge already been closed due to damage after the September 7 quake. Bettina Cruz, a resident of Juchitan, Oaxaca, said by phone with her voice still shaking that the new quake felt “horrible.” “Homes that were still standing just fell down,” Cruz said. “It’s hard. We are all in the streets.” Cruz belongs to a social collective and said that when the shaking began, she was riding in a truck carrying supplies to victims of the earlier quake. Nataniel Hernandez said by phone from Tonala, in the southern state of Chiapas, which was also hit hard by the earlier quake,

Rescue workers and volunteers stand in the middle of the street after an earthquake alarm sounded and a small tremor was felt during rescue operations at the site of a collapsed building in Roma Norte in Mexico City, on September 23. All rescue workers atop the rubble were able to evacuate safely via an adjacent building. AP/Rebecca Blackwell

that it was one of the strongest aftershocks he has felt. “Since September 7 it has not stopped shaking,” Hernandez said.

US Geological Survey geophysicist Paul Caruso said the new temblor was an aftershock of the 8.1-magnitude quake, and after a

jolt of that size even buildings left standing can be more vulnerable. “So a smaller earthquake can cause the damaged buildings to fail,” Caruso said. “At the moment, the greatest damage has been to the Ixtaltepec bridge, which should be rebuilt, and structures with previous damage that collapsed,” President Enrique Peña Nieto tweeted. He said government workers were fanning out in Juchitan to provide help to anyone who needs it. Jaime Hernandez, director of the Federal Electrical Commission, said the quake knocked out power to 327,000 homes and businesses in Oaxaca, but service had been restored to 72 percent of customers within a few hours. Buildings swayed in Mexico City, where nerves are still raw from Tuesday’s 7.1-magnitude temblor that has killed at least 307 across the region. Many residents and visitors fled homes, hotels and businesses, some in tears.

And the Popocatepetl volcano near Mexico City spewed a cloud of vapor with some ash about a mile (2 km) into the air last Saturday, but experts said it was not related to the quakes. The 17,797-foot (5,426-meter) volcano has been periodically erupting since 1994. And late last Saturday, Tropical Storm Pilar formed close to Mexico’s western Pacific coast. Pilar was expected to remain a tropical storm and brush the coast near the resort of Puerto Vallarta, according to the US National Hurricane Center. Pilar had winds of 40 miles per hour (mph) (65 kilometers per hour [kph]) and was about 70 miles west-southwest of the port city of Manzanillo. It was moving north at about 5 mph (7 kph). At Mexico City’s Xoco General Hospital, which is treating the largest number of quake victims, workers ordered visitors to evacuate when seismic alarms began to blare last Saturday. AP

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Fires continue at Rohingya villages in Myanmar–A.I.

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ANGKOK—Amnesty International (AI) said new satellite images and videos taken as recently as Friday afternoon in Myanmar’s Rakhine state show smoke rising from Rohingya Muslim villages, contradicting Aung San Suu Kyi’s claims that military operations there have ended. The London-based group said its sources in Rakhine claim the fires were started by members of the Myanmar security forces and vigilante mobs. The latest violence in Myanmar has sent an estimated 429,000 Rohingya refugees fleeing to Bangladesh in less than a month. “This damning evidence from the ground and from space flies in the face of Aung Suu Kyi’s assertions to the world,” Tirana Hasan, Amnesty director of crisis response, said in a statement late-Friday. “Rohingya homes and villages continue to burn, before, during and after their inhabitants take flight in terror. Not satisfied with simply forcing Rohingya from their homes, authorities seem intent on ensuring they have no homes to return to.” The top US diplomat for Southeast Asia said America remains deeply troubled by the ongoing crisis and allegations of human-rights abuses in Rakhine. US Deputy Assistant Secretary of State for Southeast Asia Patrick Murphy, speaking last Friday in a conference call from Bangkok, said that, while the US condemns August attacks by Muslim Rohingya militants, the response from Myanmar’s security forces has been “disproportionate”. He called on security forces to end the violence in Rakhine, stop vigilantism there, protect civilians and facilitate humanitarian assistance in the area. Murphy also called on the security forces to work with the civilian government to implement the recommendations of a committee headed by former United Nations SecretaryGeneral Kofi Annan. Most of those fleeing have ended up in camps in the Bangladeshi district of Cox’s Bazar, which already had hundreds of thousands of Rohingya refugees who had fled prior rounds of violence in Myanmar. “The situation in the camps is so incredibly fragile, especially with regard to shelter, food and water and sanitation, that one small event could lead to an outbreak that may be the tipping point between a crisis and a catastrophe,” Robert Onus, emergency coordinator for the medical relief agency Medecins San Frontieres, said last Thursday. “Hundreds of thousands of refugees are living in an extremely precarious situation, and all the preconditions for a public health disaster are there,” Onus said in a statement, calling for a“massive step-up of humanitarian aid”. Another danger was highlighted by the International Campaign to Ban Landmines, a cowinner of the Nobel Peace Prize in 1997, which condemned Myanmar’s use of antipersonnel mines along its border with Bangladesh. “According to eyewitness accounts, photographic evidence and multiple reports, antipersonnel mines have been laid between Myanmar’s two major land crossings with Bangladesh, resulting in casualties among Rohingya refugees fleeing government attacks on their homes,” the group said. It demanded that Myanmar immediately cease using such weapons and accede to the 1997 Mine Ban Treaty, to which 162 other nations are parties. Rohingya have faced persecution and discrimination in majority-Buddhist Myanmar for decades and are denied citizenship, even though many families have lived there for generations. The government says there is no such ethnicity as Rohingya and that they are Bengalis who illegally migrated to Myanmar from Bangladesh. Murphy said the US welcomed Suu Kyi’s decision to speak publicly about the problem this week. He also said the US realizes that Suu Kyi has limited control over the security forces due to the nation’s“flawed constitution,”which allows the military to remain politically powerful and guarantees it control of key ministries including those related to security and defense. AP

Editor: Max V. de Leon • Monday, September 25, 2017 A11

Bangladesh coastal town a place of Rohingya hope and tragedy

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HAH PORIR DWIP, Bangladesh— From a distance you can see elegantly carved wooden boats bob gently in the waters that surround this coastal town at Bangladesh’s southern tip. Across a sliver of the shimmering waters of the Bay of Bengal is Myanmar. These boats and this place can mean both hope and tragedy for the Rohingya Muslims who are desperate to escape the violence that has engulfed their lives in Myanmar’s Rakhine state. High tide or low, day or night, rough waters or calm, when they can find a boat, the Rohingya take their chance to flee to Bangladesh. More than 430,000 have left Myanmar in less than a month. Not everyone makes it. Mounds of earth in the cemeteries of this little town are the only reminders of Rohingya who drowned as their boats capsized, often just a few heartbreaking meters away from the safety of the shore. “Ten children are buried in that grave,” said Nur Islam, the imam of the town’s main mosque, pointing to a large mound covered in thorny branches to keep dogs and other animals from disrespecting the graves. “Here, there are nine women buried,” he added, pointing to another large mound. A solitary pile of earth, away from the other graves, holds an infant

whose body washed ashore days after the boat carrying him capsized. “They get off the boat. The water looks shallow. They don’t know how deep it is and they drown,” Islam said. “It’s very painful...such small children.” The persecution that the Rohingya Muslims face in Myanmar is not new and neither is their presence here. They’ve been coming in smaller waves since the 1980s when Myanmar stripped them of their citizenship rights. But never has the influx been as massive as the one that started on August 25 when a Rohingya insurgent group staged deadly attacks on dozens of police posts in Myanmar. The reprisal has been swift and brutal. Myanmar officials describe is as a clearance operation aimed at militants. The United Nation calls it ethnic cleansing. Bangladesh, an impoverished nation too small for even its own population, is struggling with the sheer number of refugees and is trying to put all of them in one place. In Shah Porir Dwip loudspeakers announce that no one should shelter

IN this September 21 photo, newly arrived elderly Rohingya man Son Ali pauses for a rest overcome with exhaustion after making the boat trip from Myanmar to Shah Porir Dwip, an island by the Bay of Bengal at Bangladesh’s southern tip. AP

refugees in their homes. There is no room for them in this crowded and dirt-poor town. They need to go to refugee camps further up the coast in Cox’s Bazar, but first they must find the money to pay for the nearly 60kilometer journey. The Rohingya who can afford it try to bring a cow or a few goats with them. There’s a thriving market in buying livestock at throw away prices from these desperate people. A cow bought from a newcomer can be sold for twice as much in the markets of nearby Teknaf.

On a recent day, only one tiny boat was able to make its way to Shah Porir Dwip. It dropped off three emaciated and exhausted men some ways from the shore. They walked over kilometers (miles) of sand at low tide, under the scorching sun. Their bodies were bent under the weight of their belongings and their lips were cracked and parched from thirst. They said many others were waiting to cross but were being stopped by soldiers. “Myanmar army is shooting at them. They are not letting them go,” Mohammad Amir said as sweat

poured down his face. Abdul Haq watches such desperation play out daily. Since fleeing Myanmar in 2012 he’s lived in a row of shanties near a jetty in Shah Porir Dwip that’s home to Rohingya who came here during earlier waves of violence. They do menial jobs here— day labor or pulling cycle rickshaws. On a clear day he can look across the water and see the coast of Myanmar. But he also sees the smoke from burning villages. He knows the dangers that lurk there. “My soul cries for my home,” he said. AP

UN exec: Global community Fearing eruption, thousands in Bali must step up Rohingya aid flee from Mount Agung’s activity

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United Nations High Commissioner for Refugees Filippo Grandi gives an interview standing on a newly made bamboo bridge at Kutupalong, Cox’s Bazar, Bangladesh, on September 23. AP

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OX’S BAZAR, Bangladesh—The United Nations High Commissioner for Refugees said last Sunday that the exodus of Rohingya Muslims from Myanmar to Bangladesh is “the most urgent refugee emergency in the world” right now. Filippo Grandi told reporters in the Bangladeshi town of Cox’s Bazar that the needs of the more than 430,000 people who have fled terrible violence in Myanmar over the last month are enormous and that the international community must step up financial and material aid to Bangladesh if the South Asian nation is to be able to help the refugees. The latest round of violence in Myanmar’s Rakhine state erupted when a Rohingya insurgent group launched deadly attacks on security posts on August 25, prompting Myanmar’s military to launch “clearance operations” to root out the rebels. Those fleeing have described indiscriminate attacks by security forces and Buddhist mobs. The government has blamed the Rohingya, saying they set fire to their own homes, but has provided no proof. The UN and others have described the

violence as ethnic cleansing. Rohingya have faced persecution and discrimination in majority-Buddhist Myanmar for decades and are denied citizenship, even though many families have lived there for generations. The government says there is no such ethnicity as Rohingya and that they are Bengalis who illegally migrated to Myanmar from Bangladesh. Grandi toured the parts of the massive refugee camps that have sprung up to accommodate the new refugee. Cox’s Bazar also has a large Rohingya camp that has housed Rohingya fleeing persecution over the decades. Another 300,000 older refugees make their home in these camps. “This has been since the 25th of August the fastest and most urgent refugee emergency in the world,” Grandi said. “I was struck by the incredible magnitude of their needs. They need everything. They need food, they need clean water, they need shelter, they need proper health care,” he said. Grandi said he was thankful that Bangladesh’s government had kept its borders open for the terrified Rohingya “in a world that has often turned hostile to refugees”. AP

ALI, Indonesia—Thousands of villagers on the Indonesian resort island of Bali huddled last Saturday in temporary shelters, sports centers and with relatives, fearing Mount Agung will erupt for the first time in more than half a century. Authorities raised the volcano’s alert status to the highest level last Friday following a “tremendous increase” in seismic activity. Its last eruption in 1963 killed 1,100 people. Villager Made Suda said he left overnight with 25 family members and as much food, clothes, cooking equipment and bedding they could carry to stay in the Klungkung sports center. “I feel grief and fear; feel sad about leaving the village and leaving four cows because it’s

empty. Everyone has evacuated,” he said last Saturday. The National Disaster Mitigation Agency said no one should be within 9 kilometers of the crater and within 12 kilometers to the north, northeast, southeast and south-southwest where lava flows, lahars or rapidly moving white-hot ash clouds from an eruption could reach. National Disaster Mitigation Agency Spokesman Sutopo Purwo Nugroho said more than 15,000 villagers have been officially evacuated. Officials have said there is no current danger to people in other parts of Bali, a popular tourist island famous for its surfing, beaches and elegant Hindu culture. In 1963 the 9,944-feet Agung hurled ash as high as 20 kilometers, according to volcanologists, and remained active

for about a year. Lava traveled 7.5 kilometers and ash reached the capital, Jakarta, about 1,000 kilometers away. “I hope the eruption is not too big and, hopefully, not many houses are destroyed,” said Wayan Yuniartini, who left his village last Friday night with family members. “I was very worried last night,” he said. “At 11:30 p.m. we said ‘we have to leave’ and many other people in our area were also leaving.” The mountain, 72 kilometers to the northeast of the tourist hotspot of Kuta, is among more than 120 active volcanoes in Indonesia. The country of thousands of islands is prone to seismic upheaval due to its location on the Pacific “Ring of Fire”, an arc of volcanoes and fault lines encircling the Pacific Basin. AP

Chinese vice premier lauds 14th China-Asean Exposition organizers

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EIJING—Chinese Vice Premier Zhang Gaoli lauded the successful holding of the 14th ChinaAsean Expo (Caexpo) and the China-Asean Business and Investment Summit in Nanning, China, last week. “[The Caexpo] is becoming better and better each year. The expo is very successful,” Zhang told the 300 foreign journalists whom he met at the Great Hall of the People in Beijing on Thursday. The Caexpo was cosponsored by ministries department of commerce or industry

and trade of China and the 10 Asean member-states, as well as the Asean Secretariat, and was organized by the People’s Government of Guangxi Zhuang Autonomous Region. Asean, which is celebrating its 50th anniversary, stands for Association of Southeast Asian Nation that includes Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Singapore, Thailand, Vietnam and the Philippines, this year’s rotating Asean chairman. Zhang attended the opening of the China-Asean Expo where

he announced the signing of the protocol on upgrading the ChinaAsean Free Trade Area (FTA). He said the upgraded FTA will inject new impetus to bilateral economic and trade between China and 10 Asean countries that has reached $185 billion. “China and Asean countries are learning from each other, exchange experiences, technologies and solutions through the Expo,” Zhang informed the 300 foreign journalists, including 35 from 10 Asean countries, who attended the fourth Media Cooperation Forum. PNA

Green Monday BusinessMirror

A12 Monday, September 25, 2017

www.businessmirror.com.ph • Editor: Lyn Resurreccion

To fight wildlife crime–‘Follow the money’

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ANGKOK—In most cases, the conviction of a Thai man trafficking rhino horns through a bizarre scheme that involved hiring prostitutes to pose as trophy hunters would have marked the end of the story. But investigators took an unusual, next step—deciding to “follow the money” that helped bankroll the South African operation. That led to a court order last year to seize Chumlong Lemtongthai’s Thai bank accounts and other assets, including a house worth $142,000, to shut him down. It was one of an increasing number of cases illustrating how nations are shifting tactics in fighting a global wildlife-trafficking market worth up to $23 billion, after decades of relying on headline-grabbing police raids that have had little overall effect in halting illicit trades. The idea is “to pick the pocket of the wildlife traffickers and try to freeze them in their tracks,” said Steve Galster, founder of the antitrafficking Freeland Foundation. The approach is quickly becoming mainstream. The UN General Assembly this week urged the world’s nations to adopt laws that allow wildlife crimes to be investigated as potential money-laundering crimes. T hat a l lows law-enforcement agents to use actions against traffickers, such as seizing assets, monitoring of financial transactions and red-flagging suspicious accounts or individuals. With crime gangs increasingly turning to wildlife smuggling as a lucrative trade, experts say customs agents and the police need to begin adopting these tools commonly used to fight drug

$23B

The estimated monetary value of the global wildlife trafficking market

lords and other crime kingpins. “We’ve gone beyond kicking down the door and looking for animals in the back room, to looking at who’s the kingpin, who’s the transportation coordinator, who ultimately is the vulnerable node in the syndicate without whom the syndicate wouldn’t work,” said Galster, whose group has teamed up with law-enforcement agencies to bring down several trafficking rings in recent years. A new report this week calls this effort “urgent,” given how quickly crime gangs are evolving. A genc ies f ight i ng w i ld l i fe crime need to conduct financial investigations after every bust—to identify broader crime networks and uncover criminal proceeds that can be frozen or confiscated, says the report by the Royal United Services Institute, a British think tank. Suspicious transactions and bank clients can be “red flagged” for agencies, including financial intelligence units to monitor and investigate, it says. Watch lists of

A customs official displays one of the 136 illegal pangolins it seized, during a news conference at the Customs Department headquarters in Bangkok, Thailand, on August 31. With wildlife trafficking escalating worldwide, some countries are starting to “follow the money” in an effort to track down the kingpins financing crime rings. AP/Sakchai Lalit

alleged poachers can be shared. “We’ve been very slow to recognize wildlife crime as serious transnational organized crime,” said Cathy Haenlein, one of the report’s authors. The trafficking epidemic has surged in recent years as incomes in Asia have risen. Tons of carved ivory, ivory tusks, rhino horns, live pangolins and pangolin scales have been seized in just the last few months in Malaysia, Thailand, Vietnam and Indonesia. Hong Kong seized its biggest ivory haul in three decades—a shipment worth nearly $10 million. But most arrests still only involve low-level smugglers. For too long, Haenlein said, nations saw wildlife trafficking as an issue for conservationists. That’s allowed traffickers to flourish— using crypto-currency markets to

make illicit bulk trades, or stockpiling durable animal parts like pangolin scales or elephant tusks in an attempt to corner the market. That gives traffickers perverse incentive to drive down a species’ population so that the value of their stockpile goes up even further. But international investigators and countries’ crime units are catching on. Now, “it’s very clear that it is about the money,” Haenlein said. Focusing investigations on the connections between poachers, smugglers and those financing the operations “could have the potential to change the game.” Interpol recently said it was now going after high-prof i le Asian traffickers sourcing wildlife from Africa with help from anticorruption crime units and digital forensics, to extract data

from seized electronic equipment. Some investigators are tracking sea shipments in an attempt to identify if they are booking suspicious cargo transports around the globe. “A large seizure often has interesting facts around it,” said Julian Newman of the Environmental Investigation Agency. “Money has been moved somewhere to book a container [for the smuggled goods].” Only by following the money will investigators track down the kingpins and financiers, who “never touch the stuff, they handle it through proxies,” Newman said. But countries still aren’t moving fast enough to follow the financial breadcrumbs, said a July report by the Asia-Pacific Group on Money Laundering and the UN Office on Drugs and Crime (UNODC). Only a dozen or so govern-

ments, out of 45 surveyed, said they were using financial investigation techniques, seizing assets or pursuing money-laundering charges for wildlife cases, the report said. Many struggle with lack of funding or little political will. “Financial investigations don’t come for free or cheap,” said Chris Batt, a UNODC adviser who led the study. “You’ve got to train and commit [investigators] for the cause.” Seizing assets can work to spook criminals into avoiding the wildlife racket, experts say. They can also offer incentives for governments, who might invest seized assets in the law-enforcement agencies working to bring down wildlife crime. But the case examples underscore how much work is left to be done. Three years ago Thailand froze $37 million in assets linked to a tiger trafficking ring in the country’s northeast, after investigation helped by Freeland. But the alleged ringleader remains free, and the case stalled. The case of Chumlong, the Thai rhino horn trafficker, marked a small but rare victory. But that case, also, is not yet over. Chumlong was imprisoned in 2012 after being sent by the Southeast Asian trafficking syndicate called the Xaysavang network to take advantage of South Africa’s permit system for professional trophy hunts. He hired prostitutes to pose as hunters, and organized sham expeditions during which 26 rhinos were killed, according to court documents. Customs papers were then doctored for shipping the rhino horns to Lao PDR. The decision to go after his assets was made only in 2016, after agents received training in asset recovery. Still, the alleged Laotian kingpin of the Xaysavang network, Vixay Keosavang, remains at large with a US bounty of $1 million on his head. AP

Unpredictable human factor in climate change A

s Hur r icane Har vey bore down on the Texas coast, few people in that state seemed to understand the nature of the looming danger. The bulletins warned of rain falling in feet, not inches. Experts pleaded with the public to wake up. J. Marshall Shepherd, head of atmospheric sciences at the University of Georgia and a leading voice in US meteorology, wrote before the storm that “the most dangerous aspect of this hurricane may be days of rainfall and associated flooding.” Now we know how events in Texas turned out. Shepherd and his colleagues have spent their careers issuing a larger warning, one that much of the public still chooses to ignore. I speak, of course, about the risks of climate change. Because of atmospheric emissions from human activity, the ocean waters from which Harvey drew its final burst of strength were much warmer than they ought to have been, most likely contributing to the intensity of the deluge. If the forecasts from our scientists are anywhere close to right, we have seen nothing yet. In their estimation, the most savage heat waves that we experience today will likely become routine in a matter of decades. The coastal inundation that has already begun will grow worse and worse, forcing millions of people to flee. The immense wave of refugees that we already see moving across continents may be just the beginning. Scientists urged decades ago that we buy ourselves some insurance by cutting emissions. We yawned. Even today, when millions of people have awakened to the danger, tens

of millions have not. So the political demand for change is still too weak to overcome the entrenched interests that want to block it. In Washington progress on climate change has stalled. The administration has announced its intent to withdraw from the global Paris climate accord. And top Trump appointees insist that the causes of climate change are too uncertain and the scientific forecasts too unreliable to be a basis for action. This argument might have been halfway plausible 20 years ago—or, if you want to be generous, even 10 years ago. But today? Today, salt water is inundating the coastal towns of the United States, to the point that they are starting to put giant rulers in the intersections so people can tell if it is safe to drive through. The city leaders are also posting “no wake” signs—not on canals but on the streets, to stop trucks from plowing through the water so fast as to send waves crashing into nearby homes. We all see the giant storms, more threatening than any in our lifetimes—and while scientists are not entirely comfortable yet drawing links between the power of these hurricanes and climate change, many people are coming to their own common-sense conclusions. As the challenges in the real world worsen, some senior Republicans continue to question the link between human-caused emissions and rising temperatures. Scott Pruitt, the head of the Environmental Protection Agency, said this on CNBC in March: “I think that measuring with precision human activity on the climate is something

Arlene Estle stands outside her home, which was damaged by floodwaters from Hurricane Harvey, in Houston on September 11. Victims of Harvey, desperate to rebuild their homes and lives, are facing the harsh reality that it may take months for an overwhelmed construction industry to address their needs. AP/David J. Phillip very challenging to do and there’s tremendous disagreement about the degree of impact, so no, I would not agree that it’s a primary contributor to the global warming that we see.” Note that he acknowledges the planet is warming. Note that he offers no alternative hypothesis about the cause of that warming—nor will he ever, for the simple reason that there is no plausible alternative. But still, he clings to uncertainty as a reason to do nothing. To be sure, fair-minded people can and should ask: What are the real uncertainties? They exist in climate science, and

despite claims to the contrary made by climate denialists, nobody hides them. You can spend long days at conferences, as I have, hearing from the scientists themselves about all the error bars of their studies and all the weak points of their computer models. We are not entirely sure, for instance, how much the planet will warm in response to a given level of emissions. That is a pretty basic question, and the inability of climate science to narrow it down has been one of the great frustrations of the field these past few decades. In the 1970s the experts made a

best guess about how sensitive the Earth would be to greenhouse gases, and as evidence accumulates, that early estimate is holding up pretty well. Forecasts from the 1980s and 1990s about the rate of warming have proved fairly accurate, too, give or take 20 percent. In fact, to the degree our scientists have made a systematic error, it has been to understate how quickly things would unravel. The sea ice in the Arctic is collapsing in front of our eyes. Even more ominously, land ice is melting at an accelerating pace, threatening a future rise of the sea even faster than that of today. Huge forest die-offs are beginning, even as the remaining forests work overtime to suck up some of the carbon pollution that humans are pumping out. We are already seeing heat waves surpassing 120 degrees Fahrenheit, sooner than many experts thought likely. Yet, it is true, the list of uncertainties is still long and vexing. Scientists have trouble, for instance, turning their broad global forecasts into specific predictions for a given locality. Want to know what the average temperature is going to be in Athens, Georgia, in 2050? Wonder how the Asian monsoon, whose rains feed billions, will hold up in the 2070s? Those forecasts exist, but even the scientists who made them are not going to advise you to put much stock in them. Yet, here is the crucial point, and one you never hear the climate denialists own up to: the uncertainties cut in both directions. Every time some politician stands up and claims that climate science is rife with uncertainties, a more honest person would add that those uncer-

tainties could just as easily go against us as in our favor. And if they do go against us? We might be looking at, oh, 80 or 100 feet of sea-level rise in the long haul, a direct result of the failures of this generation to get emissions under control. What kind of shape do you think Miami—or for that matter, New York—is likely to be in after 80 feet of sea-level rise? The truth is that the single biggest uncertainty in climate science has nothing to do with the physics of the atmosphere, or the stability of the ice, or anything like that. The great uncertainty is, and has always been, how much carbon pollution humans are going to choose to pump into the air. In fact, calculations have been run on this. If you want, say, a forecast for global temperature in 2100, the uncertainty about how much pollution we will spew out is at least twice as large as any uncertainty about the physical response of the climate to those emissions. So despite arguments like Pruitt’s, a century of climate science has brought us to the point where we can say this definitively: We are running enormous risks. We are putting nothing less than the stability of human civilization on the line. And yet most of us have still not bestirred ourselves to care, much less to march in the streets demanding change. We are like the people in Texas who did not take those flood warnings seriously enough, except that the stakes are so much larger. Is this failure to act the legacy our generation wants to leave for the generations yet to come?

Justin Gillis/New York Times News Service

Biodiversity Monday BusinessMirror

Asean Champions of Biodiversity Media Category 2014

Monday, September 25, 2017 A13

Editor: Lyn Resurreccion • www.businessmirror.com.ph

Is there life after mining?

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By Jonathan L. Mayuga @jonlmayuga

am especially fond of gardening, taking care of plants at home,” said Melita Cuaton, a 44-year-old mother of six from Sitio Campandan, Barangay Talavera, Tagana-an, Surigao del Norte. At home, she would water the plants every day, to make sure they survive. At work, she basically does the same thing—only a little bit challenging. An environmental aide, Cuaton would make her rounds to pick up dried leaves or branches, pick up litters, water trees when the soil is too dry and when the leaves are starting to wilt to make sure the trees will not die. For that, she earns a basic pay of P260 and an allowance of P380 a day. “It’s all good. I am able to make both ends meet,” Cuaton, a single mother, told the BusinessMirror in an interview on September 15 during a mine tour organized by Hinatuan Mining Corp. (HMC) for agriculture and mining beat reporters based in Manila. Speaking in her native tongue, Cuaton, who started working at HMC as a laundr y woman in 2005, said she is happy with her current work because it is what she really loves to do and she is able to send her children to school.

‘Green thumb’

Cuaton is not alone. At HMC, women mine workers are the certified “green thumb,” who produce the planting materials, transplant and nurture the trees they planted as part of the company’s rehabilitation effort. B esides i mplement i ng pro g ressive rehabilitation of mined- out a reas, t he compa ny l au nc hed l a st yea r a prog ra m to nu rse bac k to hea lt h t he m a r i ne env i ron ment. “Perhaps, because women are inherently caring, they are good at their job here [reforestation],” said Marichu Calungsod, 24, who super v ises t he care-and-maintenance personnel in the reforestation area. A forester, Calungsod said most women love to plant and they are good at it. As part of its reforestation, HMC initially planted native trees—particularly aguho—followed by other species. She said because of the success of the reforestation, some portions of the rehabilitated mines now have tall trees and lush vegetation. “ T here are now birds, lizards and snakes in the a reas,” C a lu ngsod sa id.

Environmental destruction

Accused of causing massive environmental destruction on Hinatuan Island, HMC is stepping up its efforts to prove that ecosystems damaged by open-pit mines can be rehabilitated and become productive again after mining. President Duter te a nd for me r Env i ron me nt S e c re t a r y Reg ina Pa z L . Lopez have cited the massive env ironmental dest r uct ion caused by m ining in Su r igao a nd Dinagat Isl a nd s as reason for “t ightening t he screw” on m ining. Lopez, who launched a campaign against irresponsible mining, documented the destruction, taking photos and videos when she and a production crew flew over the area. Lopez a lso ordered to stop t he remov a l of stoc k pi le by HMC on the nearby Manicani Island ow ing to repor ts and prodding of environmental and antimining advocates. Before stepping down as Department of Environment and Natural Resources (DENR) chief after her rejection by the power f u l bic a mera l Com m i ssion on Appointments, Lopez had issued closure and suspension orders affecting over two dozen active mining operations, canceled 79 minera l product ion shar ing ag reements (MPSA s) of inactive mines and financial and/or technical assistance ag reements (F TA A), and imposed a ban on open-pit mining for future projects that targets the extraction of gold, copper, silver and mercury—with nickel not included on the list.

World-class mine

A wholly owned subsidiar y of publicly listed Nickel Asia Corp. (NAC), HMC operates the Tagana-an Nickel Project on Hinatuan Island within the jurisdiction of Barangay Talavera in the town of Tagana-an, Surigao del Norte province, a mineralreservation area. With its MPSA covering a total of 773.77 hectares, the company’s annual ore extraction is estimated at 6 million wet metric tons with an annual production rate of 4 million metric tons, supplying clients in Japan, Australia and China. The HMC has one of the largest active nickel mine areas in

Women work as environmental aides as part of care and maintenance activities in a rehabilitated part of the mining area. Jonathan Mayuga

“Prov iding jobs and livelihood ma kes the communities more v i br a nt . T he y b e come more productive members of societ y,” Ger ida said.

Progressive rehabilitation

Artificial reef installed by Hinatuan Mining Corp. and partners in Barangay Talavera, Tagana-an, Surigao del Norte. HMC

the world. Its active mine areas in Barangay Talavera is estimated at 219 hectares, more than half of the total 423 hectares are developed or disturbed areas. The company maintains engineered settling ponds to prevent siltation in coastal areas.

Open-pit mining

HMC ma kes use of su r face or open- pit m ining— one wh ic h env ironment a l ists deplore as t he most dest r uct ive m ining , met hod. It requ ires t he shaving of forest veget at ion, re mov ing t he topsoi l to e x t ract t he t a rget m inera ls. Open-pit mining is the fastest and safest way to extract nickel because they are found near the surface. In the Philippines the only way to mine nickel is through the open-pit method, explained Gerard H. Brimo, president and CEO of NAC. Besides, he said mined-out areas can be rehabilitated and can be converted into

other uses, such as ecotourism or for agricultural production.

Corporate responsibility

The company has three host communities—Barangay Talavera, and sitios Campandan and Bagong Silang, said Peterson B. Gerida, community organizer for livelihood development of HMC. “We target the poorest of the poor and women,” he said. The company hires workers from communities who are willing and able to work as ore breaker, safety aide and environmental aide. The company organizes the people in the community to form associations to partner with it. HMC’s community partners include the Talavera Multipurpose Cooperative, which manages its own sewing business and operates its passenger boat; Association of Bakers and Beauticians of Talavera; and Talavera Women’s Association with over 120 members who will soon have their own water refilling station.

HMC Resident Mine Ma nager Fr a nc i s co A r a ñe s Jr. s a id H MC i mple me nt s prog res s ive r e h a b i l it a t i o n . “We continuously rehabilitate mined-out areas,” he said. Records show that the company has reforested 79 hectares, or 14 percent of the total “ disturbed areas,” while another 59 hectares are scheduled for massive tree planting. Since 2008, the company has planted a total of 881,344 assorted native trees. HMC maintains its own treenursery and implements a community output-based seedling program to involve people in its host communities.

‘Greening the ocean’

Besides reforestation, HMC is also into coastal and marine rehabilitation. Bren it t B. Simo, Coa st a l R esou rce Ma n agement tec hnician, said HMC launched in 2015 its f irst-ever A r tif icia l Coral Reef and Coral Transportation Project in partnership w ith the host communities T hrough communit y-based prog rams, HMC a ims to improve the health of the marine e cos y ste m a nd i nc re a se t he ma r ine biod iversit y, spec if ically through the installation of concrete modules and coral transplantation. A s of May 2016, one year a f ter t heir inst a l l at ion, t wo artificial coral reef complexes have recr u ited 17 species of

coral-reef fishes, like damself i sh, but ter f ly f i shes, w ra ss es, parrotfishes, lizardfishes, threadfin breams, rabbitfishes, cardinalfishes and lionfishes. A project report also added that six associated benthic macro algae were also observed in the complex where 150 concrete corals reef were installed. The artificial reefs or the concrete modules have depression holes on top where coral fragment taken from a healthy donor coral were introduced. A total of 100 fragments of a species of coral was introduced with 50 fragments per complex. As of February this year, the artificial reef housed an endangered species, a juvenile giant clam, which indicates the success of the rehabilitation effort, the report said. “We want to prove that even when there’s mining, we can take care of the coastal and marine environment,” said Michael C. Arlan HMC environmental specialist, and project assistant. HMC’s host communities are basically farming and fishing communities, with people whose way of life has slowly changed because of mining. With various environmental programs, hopefully, there will be life after mining.

Violation of ECC

Th e A ly a n s y a Ti g i l M i n a ( A ll i a nc e t o St o p M i n i n g ), ho w e v e r, s a id t he DEN R M i n i n g A u d it i n 2016 i nd ic at e d t h at t he Hi n at u a n Mi n i ng v iol ated it s o w n e nv i ron me nt a l com pl i a nce cer t i f ic ate cond it ion s 1 a a nd 9. “ This was the main reason their operations were suspended in February,” said Jaybee Garganera, national coordinator of Alyansa, told the BusinessMirror in e-mail and cell-phone interviews. He said, “The visual evidences also captured by the aerial surveys and video documentation of the media in the area support the observations that Hinatuan Mines failed to comply in regulating their pollution discharge.” He sa id t hat whi le t he company’s ef for t in prov id ing employment to local community is a “good step,” it is “ inadequate and fails to address the broader env ironmenta l and socia l issues sur round ing t heir mine operations.” “ We wonder how m a ny f a r mers a nd f i shers lost t he i r l ive l i ho o d s due to d i s pl ace me nt a nd coa st a l p ol lut ion ,” Ga rg a ne r a s a id . “ T he jobs being of fered by Hinatuan Mines are good op por tunities for t he poor in t he mine sites. But t hat on ly tel ls ha lf of t he stor y of t he miserable legacies t hey brought to Sur igao del Nor te,” he sa id.

ACB, Japan hold taxonomy planning workshop for biodiversity

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o update the Global Taxonomy Initiative Regional Action Plan (GTI RAP) 2010-2015, the Asean Centre for Biodiversity (ACB), with support from the Japan-Asean Integration Fund (JAIF), held a planning workshop on the GTI RAP for Southeast Asia 2017-2025 last week in Kuala Lumpur, Malaysia. The GTI was developed by various governments through the Convention on Biological Diversity (CBD) to remove or reduce knowledge gaps on taxonomy, decline in taxonomic expertise and the negative impacts of these taxonomic impediments in the ability of humans to conserve and protect biological resources. “Human activities, including unsustainable production, increased development and infrastructure, pollution among fac tors that threaten the increasingly fragile biological resources in

Southeast Asia,” ACB Executive Director Roberto V. Oliva said. “The first step in biodiversity conservation is knowing what to conserve. This is why taxonomy is very important. The insufficient scientific information on biodiversity in the region is a crucial issue in the assessment and prediction of biodiversity changes, caused mainly by the lack of taxonomic capacity in data collection and analysis,” he added. Through the three-day workshop, the Center aimed to provide the Asean member-states (AMS) with an assessment of the first phase of the GTI RAP 2010-2015; provide the AMS with a background on events leading to the development of the first phase GTI RAP for better understanding of the current updating activity; Provide a platform for discussion wherein taxonomy and related experts can share their experiences and life work with other

regional experts; and chart the course of the GTI in Asean for the next eight years in accordance with the Asean Vision 2025, the CBD GTI Program of Work and CBD Capacity Building Framework of the GTI. “With the Asean Vision 2025, alignment of activities under the environment sector has been ongoing since 2016 and it was deemed necessary for the GTI in Asean to follow suit since the GTI RAP 2010-2015 has become obsolete,” said Clarissa C. Arida, director of the ACB Programme Development and Implementation unit. It is in this context that the project, titled Development of the GTI RAP for South East Asia 2016-2020 and Capacity Development on the Taxonomy for High Elevation Vascular Plants, was conceptualized and proposed by ACB and was approved by the Japan-Asean Integration Fund in November 2016. One of the project

activities is this workshop, Arida added. In 2009 the first Asean Plus-3 meeting workshop on the GTI for Southeast Asia was conducted in response to the call of the CBD for greater attention to the GTI. The output of this workshop was a GTI RAP for Southeast Asia 2010-2015. The RAP was implemented by ACB in support of the AMS, and a series of training courses and internships were conducted on taxonomy with funding support from Japan for the period 2010-2015. The ACB is an intergovernmental organization that facilitates cooperation and coordination among the AMS and with relevant national governments, regional and international organizations on the conservation and sustainable use of biological diversity, guided by fair and equitable sharing of benefits arising from the use of such natural resources.

A14 Monday, September 25, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Lessons from Luneta and other places

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he newspaper headlines told the story: “Protesters Seen with 2 rifles, 1 shotgun, a pistol”. “Protests: Journalists say they were beaten and arrested by police”. “Police Shut Down Protest: 120 Arrested”. “Protests Turn Violent”. “Twenty-eight thousand Demonstrators March”. “Activists light up, carry candles”. “Max tolerance for protesters, say cops”. “Peaceful Day of Protest”. “A day for protests, a prayer for healing”. The events behind these headlines happened recently in two different countries. Citizens took to the streets in protest of what is seen as abusive and unjustified use of force by law enforcement. In one place, potentially thousands have been killed; in the other, perhaps several hundred. One nation has a score of 89 out of a possible 100 on the “Freedom in World Index” for 2017. This nation has the highest possible rating of 1 out of 7 (Most Free) for both “Political Rights” and “Civil Liberties”. This nation places at number 18 out of 113 countries on the Rule of Law. The other country scores a total score of 63 out of 100. For both “Political Rights” and “Civil Liberties”, it receives a score of 3 out of 7 and is considered “Partly Free”. This nation places at number 70 out of 113 countries on the Rule of Law. In the 2016 “Human Freedom Index”, a joint project of the Cato Institute, the Fraser Institute and the Liberales Institut at the Friedrich Naumann Foundation for Freedom, the United States ranked number 23 out of 159 nations and territories with a score of 8.27 out of 10. This index measures both personal and economic freedom. The Philippines came in with a ranking of 101 out 159 and a score of 6.53 out of 10. Based on all these measures of basic freedoms, it would seem that the right and ability to openly protest against the government and its leaders would be most severely curtailed in the Philippines, not in the US. If the government is repressive about the people’s freedom of expression, it would make sense to assume that there would be crackdowns on the protests in the Philippines and not in America. If conditions are so dreadful and the abuse of the human right to free expression so prevalent, an observer might expect Filipinos and not Americans to wake up the morning after the protest march to this headline: “Twenty-three businesses were damaged, with dozens of windows broken”. For the past several decades, Filipinos have become accustomed to taking their grievances against the government to the streets. No matter which side to an issue they may stand, it is undeniable that this has been an effective way to get the government’s attention. Freedom of expression by the people is alive and well in the Philippines. These protests are good reminders to both government and the people that government was created by the people to serve the people. What we find both interesting and reassuring is that—unlike in the US—mass-action protests by Filipinos have rarely seen the kind of destruction and damage turned against the businesses and property of other ordinary Filipinos. Perhaps, Filipinos—even as they object to and fight against what they see as wrongdoing from successive governments—also respect each other’s rights. Maybe we are a better people than we give ourselves credit for.

Crucial components of TRAIN Atty. Jose Ferdinand M. Rojas II

RISING SUN

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he Tax Reform for Acceleration and Inclusion Act (TRAIN) is expected to be passed by the Senate in October and then signed into law by the President before Christmas. Senate Bill 1592, the Senate’s version of the proposed bill, is expected to raise the government’s revenue by P134 billion. This as the Bureau of Treasury reported a fiscal surplus of P28.8 billion for the month of August in 2017, due to stronger tax-collection measures. One of the provisions in the said bill is the tax exemption to be granted on the first P150,000 annual taxable income, and the first P82,000 in 13th month pay and other bonuses. Needless to say, many taxpayers are waiting for the approval of the bill because of these popular com-

Never again! Atty. Lorna Patajo-Kapunan

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ponents. Those who have up to four dependents will also enjoy an additional P100,000 exemption in their annual taxable income, pushing their possible tax exemption to P250,000. As for entrepreneurs, TRAIN will raise the value-added tax (VAT) threshold to P3 million,

legally speaking

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epublic Act (RA) 8049, or An Act Regulating Initiation Rites in Fraternities, Sororities and Organizations and Providing Penalties thereof, otherwise known as the AntiHazing Law, was enacted on June 7, 1995. Twenty years since its enactment, there has been only one conviction—two members of the Alpha Phi Omega fraternity who were sentenced for the death of Marlon Villanueva.

There must be something wrong with the law, or if not the law, then its implementation, as it is honored more in its breach than in its observance. Under RA 8049, “hazing” is defined as an initiation rite or practice as a prerequisite for admission into membership in a fraternity, sorority or organization by placing a recruit, neophyte or applicant in some embarrassing or humiliating situation, such as forcing him to do menial, silly, foolish and similar tasks or activities or otherwise subjecting him to physical or psychological suffering or injury. (Section 1) RA 8049, likewise, defines in Sections 2 and 3 thereof the requirements for hazing or initiation rights: n No hazing or initiation rites in any form or manner by a fraternity, sorority or organization shall be allowed without prior written notice to the school authorities or head of organization seven days before the conduct of initiation; n The written notice shall indicate the period of the initiation

activities, which shall not exceed three days; n It shall include the names of those subjected to such activities; n It shall further contain an undertaking that no physical violence be employed by anybody during such initiation rites; n The head of the school or organization or their representatives must assign two representatives of the school or organization, as the case may be, to be present during the initiation; and n It is the duty of such representative to see to it that no physical harm of any kind shall be inflicted upon a recruit, neophyte or applicant. In the case of 22-year-old Horacio Tomas Castillo III, the University of Santo Tomas law student who was apparently a hazing victim of the Aegis Juris Fraternity, were the above requirements complied with? The University of Santo Tomas cannot evade the issue because the fraternity implicated is a duly recognized organization. Nor can its Dean Nilo Divina claim lack of knowledge—because as Dean of the Law School and a

from the current P1.9 million. Everything is seemingly advantageous, but not until one looks at the other provisions, specifically those referring to additional excise taxes on fuel, automobile and sugar-sweetened beverages (SSBs). Essentially, the losers are the consumers of certain oil products, buyers of vehicles and consumers of the SSBs. Additionally, individuals receiving interests from their bank deposits and royalties will also be affected, as a final tax rate of 20 percent will be imposed on the amount of interest from any currency bank deposit and income from other monetary benefit from deposit substitutes, trust funds and other similar arrangements. Royalties will be taxed an additional 10 percent, except royalties for books, literary works and musical compositions. VAT exemption for apartment or house-rental fees below P10,000 will be removed. An additional 12

percent will be added to the fees. Lotto winners will likewise shoulder additional taxes—20 percent on lotto winnings, except if the prize is P10,000 or less. Finance Secretary Carlos G. Dominguez III said in a statement, “We hope the Senate will pass the TRAIN on third reading before going into recess in mid-October, the bicameral conference to conclude in November, and the President to sign the bill into law by December 15. This schedule will allow us to implement the tax reform on January 1, 2018, so that the benefits of the reform can be felt at the soonest possible time.” There are those who argue that TRAIN will do more harm than good, especially for the poor Filipinos. I certainly hope our senators could look into the details of the bill more closely to see where it can be amended, in consideration of the welfare of the greater number of Filipinos.

The problem with the present law is that it regulates hazing instead of banning it totally. As long as it gets the approval of the school authorities or head of the organization, then it is not illegal. The law also penalizes only those who “actually participated in the infliction of the physical harm”.

activity in which he was habitually engaged in. In case the victim becomes insane, imbecile, impotent or blind, the penalty is Reclusion Temporal in its maximum period. If death, rape, sodomy or mutilation results from the hazing, the penalty is Reclusion Perpetua or Life Imprisonment. The problem with the present law is that it regulates hazing instead of banning it totally. As long as it gets the approval of the school authorities or head of the organization, then it is not illegal. The law also penalizes only those who “actually participated in the infliction of the physical harm”. As no fraternity member will testify against a fraternity brother who directly participated in the hazing, it is not surprising why there is hardly any conviction. Philippine National Police data show “there have been 207 hazing victims with at least 12 incidents that led to a recruit’s death. Despite this, the conviction rate is only 3.8 percent” (ABS-CBN news, posted 9/20/2017). Castillo is now among Lenny Villa, Mark Andre Marcos, Marvin Reglos, Noel Borja Jr., Glacy Monique Dimaranan and Elvin Sinaluan—all useless and senseless deaths from hazing. Let us join the family of Atio in seeking justice for their son (#JUSTICE FOR HORACIO). Let there be a speedy, objective, impartial and fair investigation. Let there be a law totally banning hazing. Otherwise, the culture of impunity now pervading our society will likewise infect and corrupt our school campuses and universities and destroy the moral fiber of our youth. One more death from hazing is one too many. Never again!

practicing lawyer, he is presumed “to know or ought to know” the requirements of the Anti-Hazing Law. Nor can he claim that he does not know about the hazing and initiation rites of Aegis Juris Fraternity because he is senior member of the fraternity. Will Divina also claim ignorance of Commission on Higher Education Memorandum Order 4, series of 1995, which outlines preventive measures against violence and sanctions on fraternities and other organization and imposes automatic expulsion on any fraternity member for (a) starting or taking the offensive action that clearly provokes violence; (b) carrying knives, sticks, pipes, guns and other deadly weapons in schools; and (c) extortion. Fraternity officers found guilty of provoking violence will be suspended for 60 days. The fraternity found guilty is likewise penalized with a one-year suspension and permanent ban after the next offense. The current penalties under the Anti-Hazing Law range from prison correccional (six months to six years) to reclusion temporal (12 to 20 years) depending on the gravity of the physical injuries, loss of speech or power to hear or smell, loss of an eye, hand, foot or leg or any member of the body incapacitating the victim for the work or

opinion@businessmirror.com.ph

Opinion

Hitting home runs

Questions from Dentons, Beijing

BusinessMirror

By Alberto Agra

Siegfred Bueno Mison, Esq.

PPP Lead

THE PATRIOT

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eing at the right place at the right time is one of the best things that can happen to anyone; your accomplishment becomes effortless as you become the unwitting beneficiary of circumstances. Famous former baseball manager of the New York Yankees, Mr. Yogi Berra, said, “You don’t have to swing hard to hit a home run. If you got the timing, it’ll go.” But these moments come few and far in between; more often than not, we must be patient and wait for the right time to act. American Archbishop Fulton John Sheen said, “Patience is not an absence of action; rather it is “timing.” It waits on the right time to act, for the right principles, and in the right way.” One of my former students in Ateneo Law School, Vida Verzosa, shared her experience about patience and timing. In her Facebook post, she openly admitted that she failed many exams, including her first Bar exams, but somehow recently topped the most difficult licensure exams of all—the Foreign Service Officer exams administered by the Department of Foreign Affairs. Vida, a 35-year-old lawyer working for the International Justice Mission, is a product of the University of the Philippines Los Baños and the Ateneo de Manila Law School. After going through so many difficulties in life, I know she will be an excellent ambassador someday. Her story is somewhat reflective of what the Bible says in Galatians 6:9, “So let’s not get tired of doing what is good. At just the right time we will reap a harvest of blessing if we don’t give up.” Vida never did. And she was rewarded in due time. Recently married in a celebrityfilled wedding in Paris, Hayden Kho and Vicki Belo managed to withstand the storms in their MayDecember relationship, most notable of which were the sex tapes of Hayden with other women. Of course, it wasn’t easy; both made innumerable sacrifices and waited for the right time to reconnect, rebuild and commit. Inspirational author Shannon Alder said, “God will bring the right person into your life at the right time. Always believe that! If they are not there, God isn’t finished yet!” Vicki and Hayden believed in the right timing. And they were rewarded in due time. In Ecclesiastes 3:1, the Bible tells us, “There is a time for everything and a season for every activity under the heavens.” The rest of Ecclesiastes 3 illustrates how life is comprised of various seasons. The proper activity at the right time is a part of His grand plan for all of us, hitting home runs included. I recently went to a Dive Resort Travel Expo and saw some marvelous photographs taken underwater by experienced divers. Some of the participants in this underwater photo-shoot competition said taking amazing pictures requires more than having the best equipment and the right angle. It takes being in the right place at the right time, especially for

We have to feel confident that events will happen at the most appropriate time. In terms of On Time Performance, the Lord’s schedule will certainly arrive at the right time. While patiently waiting, we can only hope and pray. In the end, we are assured, in Ecclesiastes 3:11, that “He has made everything beautiful in its time.” We will hit our respective home runs, never a day late nor a minute too early. macro underwater pictures. And timing is a factor of patience. Capturing picture-perfect behavioral photos of marine animals, such as the yawning of frogfish, the mating of nudibranch or the nesting of dwarf pygmy gobies, become effortless if the timing is perfect, a home run in underwater photography so to speak. I only received my scuba-diving certification late last year. Whenever I hit the water, I initially see one seemingly disorganized artwork of marine life underwater. But, given the right dive site, the proper equipment and providential timing, I see how magnificent it can be. Our lives will always be a masterpiece, no matter how messy it might seem. Death in the family or separation from loved ones will always give us sorrowful moments as much as birth, career advancements and recognition will give us joyful moments. Vida Verzosa and Vicky Belo had their respective share of highs and lows. In due time, they both hit a “home run”; the former in her career, the latter in her love life. I think my friend FM will hit that home run soon, in both. We have to feel confident that events will happen at the most appropriate time. In terms of On Time Performance, the Lord’s schedule, although unpublished, will certainly arrive at the right time. While patiently waiting, we can only hope and pray. In the end, we are assured, in Ecclesiastes 3:11, that “He has made everything beautiful in its time.” We will hit our respective home runs, never a day late nor a minute too early. For questions and comments, please e-mail me at sbmison@gmail.com.

Continued from A1

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ere are the questions the participants raised, and these could very well be the same ones foreign, even local, investors may ask:

Are there opportunities? Of course, there are. Under the “Build Build Build” program of the current administration, PPPs may be pursued for hard and soft projects —expressways, bridges, airports, reclamation, rail and water supply; and health care, socialized housing and rehabilitation centers. These projects may even be combined into one contract under the bundling approach.

By Frank Bruni

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aybe “some are rapists”, in Donald J. Trump’s nasty words. But many are geniuses. Just ask the MacArthur Foundation, which responded to our president’s frequent demonization of immigrants, including that infamous phrase, by doing a little math. Every year since 1981, the foundation has bestowed so-called genius grants on more than 20 of the country’s most accomplished and promising scientists, scholars, artists and writers. These awards are a huge deal, trumpeted in the media and worn with pride forevermore. And the winners, typically in the middle of their careers, get $625,000 each. Of the 965 geniuses (or, more properly, MacArthur fellows) to date, 209 were born outside the United States, according to Cecilia Conrad, who leads the

fellowship program. That’s 21.7 percent. The 2010 census determined that less than 13 percent of the US population is foreign born. Conrad wondered whether MacArthur fellows are anomalies. They’re not. She looked back over the past three-anda-half decades—which is the life span of the fellowships—to see who’d received other top honors given only to US citizens and residents. She found that immigrants were overrepresented among the winners of the Pulitzer Prize for music, of the National Humanities Medal and, especially, of the John Bates Clark Medal, which recognizes brilliant US economists under the age of 40. Thirty-five percent of these economists were foreign born, including people from India, Turkey and Ukraine. The far-right paranoiacs and scaremongers who pressured Trump to end Daca (Deferred Action for Childhood Arrivals) hate to acknowledge what we reality-moored types understand:

The seminar participants requested copies of the build-operate-transfer (BOT) law and the template PPP ordinance. They recognized that our PPP policy is advanced and must be differentiated from other PPP policies elsewhere. Can we own the land and operate the facility? The Philippine Constitution and statutes prescribe nationality requirements, i.e., limitations to foreign involvement. Foreign corporations cannot own land. Depending on the industry and type of public utility, there are limitations (zero percent, 30 percent, 40 percent, etc.) on the participation of foreign companies in the operations of PPP projects. There is no such limitation on supply of equipment and financing by foreign banking institutions. Will policies change when President Duterte is no longer the Chief Executive? Successor risk is real. Changes in administration, either at the national, corporate or LGU levels, could or

What can the Asian profession learn from the 2016 Ifac Global SMP Survey?

highest for SMPs globally, while audit and assurance was showing the strongest growth for Asian SMPs compared with the weakest growth for SMPs globally. However, Asian SMPs, in concert with SMPs from other regions, are witnessing robust growth in advisory and consulting services. Professional Accounting Organizations (PAOs) might need to think how they can help SMPs build their revenue base, possibly by building their advisory services in the region. After all, advisory services appear to have recently propelled the prosperity of North American SMPs. For the first time, the annual survey included questions on key performance metrics. A question on utilization revealed that nearly half (49 percent) of all SMP respondents had a utilization percentage (chargeable hours divided by total hours) of 61 percent to 90 percent, while 9 percent had a utilization percentage exceeding 90 percent. Utilization at less than half of capacity was 17 percent for Asian SMPs, much more than the global average of 12 percent. This suggests Asian SMPs are operating with significant

(61 percent), rising costs (59 percent), competition (53 percent) and difficulties accessing finance (51 percent) as a high/very high challenge for their SME clients. By comparison, in Asia, only rising costs (54 percent) was considered a high/very high challenge by a majority of respondents. Rising costs are arguably the one challenge where accountants stand to have a direct role in helping SMEs mitigate and manage. Though it is still a significant concern, economic uncertainty (49 percent) was much less a challenge for Asian SMEs than SMEs globally. While across all challenges a lower percentage of Asian respondents than all respondents assigned a rating of high/very high, the top challenges facing Asian SMEs are very similar to the top challenges facing all respondents. Overall, Asian SMPs and their SME clients have found 2016 better than 2015 and, moreover, expect 2017 to be better still. The business environment continues to be challenging but SMP fee revenue is growing. PAOs in Asia will find the survey data useful for helping them to determine how best they can help their SMPs realize their potential for growth.

the Atlantic just a few years ago noted that the four US-based physicists who sounded the 1939 warning about nuclear weapons that led to the Manhattan Project were born outside the US. The article went on to point out that “immigrants or the children of immigrants have founded or cofounded nearly every legendary American technology company, including Google, Intel, Facebook and, of course, Apple (you knew that Steve Jobs’s father was named Abdulfattah Jandali, right?).” And Jennifer Hunt, a professor of economics at Rutgers University, has done research showing that among graduates of US colleges, immigrants are twice as likely to receive patents as native-born Americans. Her research further suggests that this doesn’t come at the expense of native-born Americans but in fact stimulates their innovation, too. “You’re bouncing ideas off each other,” Hunt told me. Her findings speak to the oft-charted

success of US immigrants in Stem (science, technology, economics and math) fields. The MacArthur grants cover the humanities, too; the past decade’s winners include such celebrated writers as Junot Díaz, born in the Dominican Republic; Edwidge Danticat, born in Haiti; and Chimamanda Ngozi Adichie, author of Americanah, born in Nigeria. José Quiñonez, named a genius last year for his pioneering work in financial services, was born in Mexico, the country vilified in Trump’s “rapists” remark. He told me that he and his siblings immigrated illegally in 1980, after their mother died, to live with relatives in San Jose, California. He was 9. He studied hard and got a master’s degree from Princeton. He said that his four siblings, like him, have good jobs, two as high-school teachers. Long before Trump’s campaign, he heard and cringed at complaints that Mexican immigrants were criminals, freeloaders. “Especially early on, I began to believe:

Maybe I was lazy, maybe I was broken?” said Quiñonez, 46, who now lives in Oakland, California. “But there was something in our family that helped us reject that narrative. We fought back against that narrative. I never allowed it to seep into my soul.” It’s possible that the bounty of immigrants who’ve won MacArthur grants demonstrates some predisposition among foundation executives toward certain life stories and a desire to promote people who have been overlooked and underappreciated. Some critics of the foundation have asserted that. But it’s worth noting that if the foundation took into account children of immigrants, as well as immigrants themselves, the percentage of its geniuses that reflects the benefits of immigration would be higher than 21.7. It’s also worth noting that for most of the grant’s history, foreign-born people constituted less than 10 percent of the US population.

DEBIT CREDIT Conclusion

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his article on the 2016 International Federation of Accountants (Ifac) Global SMP Survey with an Asian perspective continues with a discussion on the small- and mediumsized practices (SMP) 2016 revenues and projected 2017 revenues; key performance indicators, namely, collection and employee utilization ratios; and the consulting services they provide.

A slight majority of Asian SMPs (52 percent) reported an overall increase in practice fee revenues in 2016, identical to the global picture. Changes in total practice fee revenues between 2015 and 2016 varied significantly by region: while a greater proportion of respondents from North America (64 percent) and Africa (58 percent) reported an increase in revenues compared with Asian respondents, growth in Europe (48 percent) and the Middle East (44 percent) was lagging behind Asia. For all four service areas (audit and assurance; advisory and consulting; tax, including compliance and planning; and accounting, compilation and other nonassurance/related services), fee revenues increased for 30 percent to 35 percent of all respondents’ practices. For Asian SMPs, the picture was slightly more positive: between 31 percent and 37 percent of respondents reported an increase. Interestingly, Asia was out of line with the global picture: accounting, compilation and other nonassurance/related services experienced the slowest growth for Asian SMPs compared with the

Many of our country’s finest minds and brightest ideas are forged when dreamers from elsewhere encounter an unfamiliar place with unimagined possibilities. There’s a creative spark in that convergence. It has powered American greatness. That’s the moral of the MacArthur Foundation’s math, which it shared first with The New York Times. That’s also the moral of the Nobel Prizes. According to an analysis late last year by Adil Najam, a Boston University professor: “Since its inception in 1901, the Nobel Prizes and the Prize in Economic Sciences have been awarded 579 times to 911 people and organizations. The US alone has had more than 350 Nobel winners. More than 100 of these have been immigrants and individuals born outside of the United States.” If immigrants to the US were considered their own country, Najam wrote, their tally of Nobels would exceed that of every country but the United States. An article about immigrants in

has led to cancellation of PPP contracts, and changes in interpretation and policies. How can this risk be mitigated? Contract wise, the incorporation of clauses on Maga (Material Adverse Government Action), termination and arbitration may give comfort to PSPs. There is really a need to future-proof PPP projects that are envisioned to serve the people. What else can the government promise? The government can make contractual commitments, and cash and noncash contributions. Revenue guarantees, direct government guarantees, subsidies and equities, legal and security assistance, performance undertakings and credit enhancements are allowed under the BOT law. In joint ventures, the government can allow its property to be used, issue a concession and provide tax holidays, among other noncash support. The enthusiasm is there. Sustaining this, not merely on paper and well-crafted policies, is the key.

spare capacity: this means they have the capacity to grow or else have scope to boost efficiencies. Another question revealed that 26 percent of all respondents’ SMPs experienced an average receivables collection period of zero to 30 days. Asian SMPs reported a lower figure of 18 percent indicating a less timely collection of receivables than the global norm. Respondents from Asia were, in general, more optimistic regarding increases for all four service lines, with advisory and consulting services alongside audit and assurance expected to show the highest growth rates. A higher proportion of Asian SMPs than SMPs globally anticipated revenue increases for all four service lines, with Asia ahead most significantly for audit and assurance services (47 percent, 38 percent for all respondents) and advisory and consulting services (47 percent, 45 percent for all respondents). PAOs need to consider whether they are doing enough to help SMPs realize the growth potential in these service lines, especially advisory and consulting, which is considered by many to offer the greatest growth potential. The most frequently provided business advisory and consulting services by Asian SMPs in 2016 were in line with that for all respondents. The two most commonly provided were corporate advisory (50 percent, 48 percent for all respondents) and management accounting (44 percent, 46 percent for all respondents). Fewer respondents from Asia (13 percent) reported that their SMP offers human-resource policies and procedures/employmentregulation services suggesting that there might be untapped potential for growth in this area. Small and medium enterprises (SME) continued to face many challenges, with a majority of all respondents viewing economic uncertainty

Paul Thompson

Want geniuses? Welcome immigrants New York Times News Service

Who can we partner with? Private-sector proponents (PSPs), both here and abroad, for as long as they are eligible, may partner with government agencies. PPPs may be entered into by national government agencies, government corporations or instrumentalities and local government units (LGUs). Do we have a PPP law? To date, the Philippines has no single PPP law. We have PPP laws and regulations.

Monday, September 25, 2017 A15

Paul Thompson is European Federation of Accountants and Auditors director and a consultant dedicated to thought leadership and development of the global accountancy profession. From 2004 to 2016 Thompson worked for Ifac latterly as Director, Global Accountancy Profession Support, a role that extended to overseeing the Ifac Global Knowledge Gateway, research and innovation and activities in support of SMPs practices and professional accountants in business. He was a speaker during the Board of Accountancy sponsored SMP Summit in Makati in May 2017. This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa. secretariat.@gmail.com.

2nd Front Page BusinessMirror

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www.businessmirror.com.ph

H1 2017 growth in SEA arrivals outpaces global rate–UNWTO By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

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HE Philippines pushed further cooperation in Asian tourism initiatives to continue to boost the growth in visitor arrivals in the region.

Speaking at the roundtable for ministers at the Global Tourism Forum of the recent Tour Expo Japan 2017, Philippines Tourism Secretary Wanda Corazon T. Teo said: “This growth is something we hope for, but collaboration among our nations will be the key to continued growth, development and sustainability of tourism in Asia.” Data from the United Nations World Tour ism Organization (UNWTO) showed international visitor arrivals in the Asia-Pacific region growing by 5.7 percent in the first half of the 2017. The growth rate is well within the organization’s earlier projected growth rate of 5 percent and 6 percent for 2017. No volumes were available for the first half arrivals, although arrivals for full-year 2016 was 308.4 million. Visitor arrivals in Southeast Asia, including the Philippines, recorded an increase of 7 percent from the same period in 2016. Fullyear 2016 arrivals in the region were 113.3 million. Said growth in Southeast Asia outpaced the 6-percent global average for the first six months of 2017.

According to the UNWTO’s latest World Tourism Barometer, “ destinations worldw ide welcomed 598 million international tourists in the first six months of 2017, some 36 million in the same period than in the same period of 2016. At 6 percent, growth was well above the trend of recent years, making the current January-to-June period the strongest half-year since 2010”. The first half of the year usually accounts for about 46 percent of total annual international arrivals, with the second half longer by three days, and including the Northern Hemisphere high season months of July and August. “The first half of 2017 shows healthy growth in an increasingly dynamic and resilient tourism market, including a strong recovery in some of the destinations impacted by security challenges last year”, outgoing UNWTO Secretary-General Taleb Rifai said in a news statement. A t t he Tok yo con fe re nce, m e a n w h i l e , Te o s a i d t h e Phi l ippines w i l l a lways be a partner in the worldwide effort to protect the environment and

Tourism Secretary Wanda Corazon T. Teo (sixth from left) leads the ceremonial toast at the welcome reception of Japan’s Tourism Expo in Tokyo. Photo courtesy of D.O.T.

ensure the sustainability of the tourism industr y. “With the Philippines’s diversely rich natural environment, Filipinos offer ultimate fun experience to our guests. But, without collaborated measures on environmental protection, we cannot ensure sustainable growth of the tourism industry nor reap its

economic benefits,” she noted. In a separate meeting with Japanese tourism executives, she congratulated the organizers of the Tour Expo Japan participated in by 140 countries this year to stimulate overseas travel among the Japanese. The tourism chief led a 33-member delegation comprised of 15 Fili-

Budget for 2018 to get House’s final OK on Tuesday–Fariñas By Jovee Marie N. dela Cruz

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@joveemarie

fter almost two months of deliberations in the committee and the plenary, the House of Representatives will vote on the final passage of the Duterte administration’s proposed P3.7-trillion national budget this week, a leader of the lower chamber said last Sunday. House Majority Leader Rodolfo C. Fariñas Sr. of Ilocos Norte said the lower chamber will pass the proposed 2018 General Appropriations Act (GAA) on Tuesday. “Barring any printing technical difficulties, we will consider on third reading the 2018 General Appropriations Bill (GAB) on Tuesday, September 26, immediately following the roll call,” Fariñas told reporters. In a radio interview, House Committee on Appropriations Chairman Karlo Alexei B. Nograles of Davao City said, before the budget’s final approval, copies of the 2018 proposed GAA containing all the

amendments will be distributed to the 294 members of the House of Representatives. According to Nograles, one the major changes in the budget bill is the restoration of the allocations of the Commission on Human Rights, Energy Regulatory Commission and National Commission on Indigenous People, which were initially given P1,000 by the chamber. “With the budgets of the three agencies restored to reasonable levels, there are hardly any contentious provisions left where the House and Senate might disagree”, he said. Nograles also added another big adjustment in the 2018 budget is the realignment of a total of P40 billion to finance the full implementation of the Republic Act 10931, or the Universal Access to Quality Tertiary Education Act. He said the P40 billion will be sourced from the Commission on Human Right, P115 million; Department of Education, P30 billion; Department of Transportation

(DOTr), P3 billion; the Commission on Higher Education, including state universities and colleges, P6 billion and Department of Information and Communication Technology, P1 billion. However, Nograles added the Senate will still have ample time to go over the House’s version of the GAB. The Senate is still scrutinizing the 2018 budget. The lawmaker added President Duterte is expected to sign the 2018 budget bill into law in November. The 2018 P3.767-trillion national budget will focus on education and its ambitious infrastructure program of the government. The proposed P3.767-trillion national budget for 2018 is 12.4 percent higher than the P3.35-trillion budget this year. The education sector will receive P691 billion next year—P41.7 billion more than the 2017 budget. As much as P1.097 trillion has been allocated for the government’s infrastructure projects next year. It is 29.5 percent, or

Govt to finish 37 flagship projects by 2022–DOF Continued from a1 also assured that the rehabilitation of MRT-3 is ongoing despite perceptions that it is moving at a snail’s pace. “I assure you the MRT-3 project is moving. As people know, when you do a lot of projects, it

takes a bit of time for everything to fall in place and get going,” he said. Earlier, the DOF said the Investment Coordination Committee-Cabinet Committee is set to recommend to the National

E conom ic a nd D e v e lo pme nt Aut hor it y boa rd t he f u r t her streamlining of the approval process for big-ticket projects funded by official development assistance loans to help fasttrack the pursuit of f lagship

P249.8 billion, higher than the 2017 national budget’s allocation for public infrastructure. The Department of Public Works and Highways and DOTr have hefty budgets of P643.3 billion and P70.8 billion, respectively. As for allocation according to sector, social services will get a huge chunk at P1.45 trillion, or 38.5 percent of the proposed budget. The economicservices sector follows with P1.15 trillion, or 30.6 percent of the proposed budget. Other agencies with the highest budgetary allocations are: Department of Interior and Local Government, P172.3 billion; Department of Health, P164.3 billion; Department of National Defense, P145 billion; Department of Social Welfare and Development, P138 billion; Department of Agriculture, P54.2 billion; Autonomous Region in Muslim Mindanao, P33.5 billion; and Department of Environment and Natural Resources, P27.9 billion.

infrastructure projects. Approval of the new “3-inone” strea m l ined process by the Neda board will reduce the time to assess the financing leg of projects, accord ing to Dominguez. Rea Cu

pino travel and tour operators, including Philippine Air Lines (PAL), Cebu Pacific and various hôteliers, with the rest coming from the Department of Tourism (DOT) and its marketing arm, the Tourism Promotions Board. T he D O T, l i k e w i s e , he l d bilateral tourism talks with officials of Japan’s Ministry of Land,

Infrastructure, Transport and Tourism headed by Minister Keiichi Ishii; and met with companies offering Japanese travelers tour packages anchored on studying English as a Second Language (ESL) in the Philippines. The latter include the Association for English Studies in the Philippines headed by Minemura, Atsushi and DMM.com, a web site for learning English online, represented by Yamamoto Asami. At the Expo site, the Philippines’s 198-square-meter booth highlighted the “It’s More Fun in the Philippines” brand, showcasing the 7,100-island nation as a premium resort destination. The booth featured seminars about Philippine destinations and products, business-to-business meetings, onstage performances by award-winning Filipino talents, and virtual-reality gadgets to enable travelers to “experience” Philippine destinations. The booth also offered visitors a sampling of the Philippine Hilot massage therapy at the Wellness corner, fun Filipino cocktail mixes and fruit shakes at the Mabuhay Bar, a roving ice-cream cart with Filipino ice-cream flavors and an interactive fun photo wall. The Philippine DOT delegation included Undersecretary for Tourism Development Planning Benito C. Bengzon Jr.; Assistant Secretary for Tourism Regulation, Coordination and Resource Generation for Luzon and Visayas Ma. Lourdes Japson; and Director for Market Development for Russia, India, Middle East and Europe Verna C. Buensuceso.

Govt sets ‘lower level’ of communist violence as condition for talks By Elijah Felice E. Rosales @alyasjah

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HE government will resume the peace talks with the National Democratic Front (NDF) should it see a “lowering level of violence” on the side of the communists. According to Chief Negotiator and Labor Secretary Silvestre H. Bello III, the government panel is closely monitoring the situation in the countryside to evaluate if the environment is conducive for peace negotiations. “We are still waiting for better developments,” Bello told the BusinessM irror. No other than President Duterte has expressed willingness to resume the suspended fifth round of peace talks, following the safe return of a police formerly captured by the New People’s Army (NPA). “Now, if you want to resume the talks…I am not averse to the idea. But let me sort out first the other branches of the government,” the President said on September 16. The Communist Party of the Philippines (CPP) issued a rejoinder on Tuesday, saying it is still open to negotiating with the government. “As the Party and the NDF have often stated, it is the policy of the revolutionary forces to remain open to peace negotiations with any ruling regime that expresses willingness to seriously discuss

We are still waiting for better developments.” —Bello the roots of the armed conflict, in accordance to previously agreed principles and procedures as stipulated in The Hague Declaration,” the CPP said. The CPP added “the ball is still in Duterte’s hands”, and it would only agree to return to the peace table if the government panel drops its precondition of a bilateral cease-fire. Asked what “better developments” is the government panel looking for to resume the peace talks, Bello said they would appreciate if the NPA decrease its offensives against the military. “[We want to see a] lowering level of violence,” Bello added. On the other hand, NDF Legal Consultant Edre U. Olalia declined to give a comment on the possible resumption of the peace talks. “Given the sensitive nature of the situation, I would, at this time, defer to my principal’s official take on this,” Olalia said in a text message. The government panel in May withdrew from the fifth See “Govt,” A2