Businessmirror september 26, 2017

What do you do when compliance issues arise?

T

By Henry J. Schumacher

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

It is also very clear that the reputation of organizations hinges on their compliance records and how compliance breaches are handled. So, what do you do when compliance issues arise?

W hen a compliance issue is raised, the organization’s response should be reasonable and proportionate to the circumstances. For compliance professionals, the witness interview plays a critical role in determining the scope of an internal investigation.

»continued on A14

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

n

Tuesday, September 26, 2017 Vol. 12 No. 348

Ease of doing business bill hurdles House panel

T

By Jovee Marie N. dela Cruz

@joveemarie

28

he House Committee on Trade and Industry approved on Monday the proposed Ease of Doing The number of days it Business Act, which seeks to simplify takes to start a business the issuance of licenses, clearances, or in the Philippines permits to business entities.

Continued on A2

DEMAND FOR CORN DROPS AS POULTRY GROWERS REMAIN WARY OF BIRD FLU

By Jasper Emmanuel Y. Arcalas

T

@jearcalas

he farm-gate price of corn in Central Luzon has gone down to below P10 per kilogram, as some poultry growers in the region are hesitant to restock their flocks, according to the Philippine Maize Federation Inc. (PhilMaize).

PhilMaize President Roger V. Navarro told the BusinessMirror that demand for yellow corn in Central Luzon has slowed, as it is now being bought at only P9.80 per kg, from P12 kg to P13 kg last month.

The government confirmed the outbreak of bird flu in Pampanga on August 11.

“The corn farmers in Central Luzon are incurring losses right now.

Because of the bird-flu scare, the farm-gate price of corn declined,” Navarro said in an interview.

“Despite the resumption of shipments of poultry from the region, many growers are still maintaining a wait-and-see attitude,” he added.

Navarro said the drop in farmgate price was also seen in Isabela, the country’s top corn-producing province. He said some poultry growers, particularly smaller ones, may still be awaiting word that avian influenza in Central Luzon has been eradicated before reloading their flocks. “ Usu a l ly, pou lt r y g rowers source their day-old chicks [DOCs] abroad. After they import the

Because of the bird-flu scare, the farmgate price of corn declined.”

—Navarro DOCs, they would wait about 15 to 30 days before they would buy corn,” Navarro said.

Earlier, PhilMaize said about 60 percent of the country’s corn output is used as raw material for manufacturing animal feeds. Corn constitutes about 50 percent of poultry feed.

To stabilize farm-gate price, Navarro urged the National Food Authority (NFA) to intervene and step up its purchase of yellow corn in the region. The NFA is mandated to ensure the stability of supply and prices of staple cereals in the farm and consumer levels.

“The NFA should intervene now so the price would normalize.

Because if they do it now, then the farmers would be encouraged to plant again in the next cropping season,” Navarro said.

Navarro added he expects the farm-gate price of corn in Central Luzon to stabilize by early next year. “But we hope that by the end

PESO exchange rates n US 50.8560

See “Corn,” A2

2016 ejap journalism awards

business news source of the year

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

Housing and employment Manny B. Villar

F

THE ENTREPRENEUR

or many years, the Philippines has been a laggard in Asia in terms of economic growth. Today, however, the country is considered one of the best performers in the region, beating most major economies except China.

Unfortunately, the benefits of economic growth have failed to trickle down to the majority of the population, as poverty continues to persist because of lack of unemployment. Thus, despite impressive economic performance, the previous administration did not fare well in terms of creating jobs.

Continued on A10

BMReports

Despite ‘complex’ regulation, PHL tax system seen effective

By Rea Cu

W

@ReaCuBM

Part Two

HERE do taxes go?

The taxes paid to the Philippine government come back to its citizens in the form of improved government social services, according to the National Tax Research Center (NTRC) in its June 2015 publication, entitled “Where does your tax money go?”

“Taxes, being the lifeblood of the government, should be adequate in order to finance the general requirements of growth and development of our country,” the NTRC said. “With more tax collections, the government will be able to widen the scope of expenditures in development programs and projects, and improve the quality of basic services and, thus, provide more economic benefits to every Filipino.”

Abrea Consulting Group President Raymond A. Abrea, however, said taxes go to the state coffers to enable the government to fund infrastructure and social services to improve the quality of life felt by Filipinos, with bulk of the tax being used

A farmer piles up grain harvested from a rice field in Nueva Ecija, on September 17. According to the National Tax Research Center, taxes the government collects are also allocated to improve the country’s agricultural production. NONIE REYES

for to pay for the salaries of government employees.

“It goes to the budget of the government to fund infrastructure and social services,” Abrea said. “But mainly, it is used to pay the salaries of the millions of

government employees.”

Spending

THE NTRC said that, on average, expenditure per Filipino by the government amounted to P25,942 for 2014, from P18,084 in 2009.

On the other hand, tax payments made by the Filipinos reached P18,303 per Filipino in 2014, from P11,373 in 2009. These result to a tax benefit of P7,649 in 2004, from P6,711 in 2009.

n japan 0.4534 n UK 68.6149 n HK 6.5121 n CHINA 7.7183 n singapore 37.7354 n australia 40.4305 n EU 60.5237 n SAUDI arabia 13.5616

Continued on A2

Source: BSP (25 September 2017 )

BMReports BusinessMirror

A2 Tuesday, September 26, 2017

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

According to the Tax Management Association of the Philippines (TMAP), tax collections were spent on sectors such as education, health and nutrition, social security and welfare, employment facilitation, housing, roads and transportation, agriculture, power and energy, defense, public security and safety and public services.

Newly constructed classrooms built by the government, for one, have grown to 33,609 for the year 2014 from the 3,154 in 2009. The government provides funds for the construction of public-school classrooms in the country.

In terms of the students benefiting from the classrooms for the years 2009 to 2014, students enrolled in public preschools grew to 1.812 million for School Year (SY) 2014-2015 while enrollees for SY 2009-2010 recorded 1.049 m i l l ion . P u bl ic e le me nt a r y school students reached 13.301 million from the 12.574 million in 2009. And those enrolled in the secondary levels reached P5.928 million, from the 5.421 million in 2009.

“To improve access to basic education and to help decongest public schools, the government, through the DepEd [Department of Education] made P7.4 billion

Corn. . .

Continued from A1

of the year this would normalize or recover immediately. That’s why we need the NFA to intervene now,” he added. The NFA buys corn from farmers at a support price of P13 per kg. A breakeven farm-gate price for corn is around P9 to P9.50 per kg.

Earlier Manolette Gaerlan of the Bureau of Animal Industry Livestock Group told the BusinessMirror that the price of DOCs in the second week of September was around P15 per kilogram, 40 percent lower than the usual P25 to P27 per kg.

Gaerlan said this decline in the farm-gate price of DOC may be due to low demand as poultry growers remain undecided about restocking their farms after the bird-flu outbreak slashed sales of broiler meat.

Data from the Philippine Statistics Authority showed that the country’s average farm-gate price of corn in the second week of September declined to P11.30 per kg, from the previous week’s record

available to 1 million students under the Gastpe [Government Assistance to Students and Teachers in Private Education] in 2014,” the TMAP said. “Students and teachers participating in the program are given subsidy.”

Social care

THE government also spends for the necessities of the health-care sector, according to the NTRC. It funds 452 public hospitals, providing 45,629 beds, 292 Infirmaries with 5,003 beds, 2,581 Rural Health Units, 19,943 Barangay Health Stations and 13 Dangerous Drug Abuse Treatment and Rehabilitation Centers.

The government also provides for the salaries of health-care professionals. In 2014 the government has financed the salaries of 12,592 government doctors; 1,733 dentists; 21,101 nurses; and 14,346 midwives.

“Health facilities in hospitals and other health units; ambulances, medicines, medical supplies and equipment; and subsidy to PhilHealth insurance premiums covering about 87 percent of the Filipinos as of 2014,” the NTRC said.

The Department of Social Welfare and Development (DSWD) served 58,396 children, 12,374 youth, 44,659 women, 4,721 senior citizens, 2,135 persons with disabilities and 25,928 other needy

adults in 2013.

The DSWD, in cooperation with local government units, spent about P4.3 billion to provide meals for 1.7 million day-care pupils in 2014 though the government’s Supplemental Feeding Program. It also released P189.9 billion for the program, including implementing costs, covering a total of 4,455,116 households from 2008 to 2014.

Labor, pool

IN terms of employment facilitation, the government, through the Department of Labor and Employment, has provided employment assistance to 182,573 youths through its Special Program for Employment of Students in 2014.

A tot a l of 2,018 job fa irs were conducted in 2014, w ith 134,581 applicants being hired on the spot. In terms of housing for the poor, the government had provided homes to 222,789 low-income families amounting to P58.92 billion in 2014. The National Housing Authority has provided permanent housing to 40,052 families and housingmaterials assistance to 143,076 families under its emergency housing- assistance program for calamity victims.

As for infrastructure in the country, the government spends at least P12 bi l l ion t hrough

subsidies for the Manila Light R a i l Transit System and t he Manila Metro Rail Transit System, while P8.4 billion is allocated for the Philippine National Railways annually.

Ports growth

IN 2014 the government spent for the rehabilitation of airports and seaports damaged by Supertyphoon Yolanda including the Busuanga Airport and the Port of Maasin in Southern Leyte.

The government also allocates money to improve the agricultural production of the country in order to sustain the basic needs on food of the Filipinos.

The Department of Agriculture had a budget of P52.7 billion for its programs that increased the productivity and income of farmers and fishermen. At least P10.5 billion was earmarked for the 2.1 million farmers, farm laborers and fishermen of the 20 poorest provinces, in 2014.

The distribution of commodities was provided to farmers to further increase agricultural production. These include: seeds like corn, rice and vegetables; planting materials; fertilizers and other soil ameliorants; liquid and solid pesticides; soil-testing kits; animal vaccines and drugs; as well as fingerlings and broodstock.

To be concluded

NO NEW ADS BUT D.O.T. STILL USING MCCANN FOR MEDIA PLACEMENTS Continued from A14

a new advertising campaign in 2018. “So we want to appeal to more advertising agencies to get themselves accredited with PhilGEPS (Philippine Government Elect ron ic Proc u rement System), if they want to participate in the new bidding,” she said.

PhilGEPS is a centralized web portal where government projects for bidding are listed and published. The portal allows companies to register as single proprietorship, partnership, corporation and cooperative.

She also said Tourism Secretary Wanda Corazon T. Teo wants advertising agencies to bid for each ad, instead of an entire campaign as has been done in the past. The strategy, de Castro explained, would enable “smaller advertising agencies” to participate in the DOT’s bidding exercise.

She noted that the usual advertising giants have won most government advertising campaigns.

While de Castro acknowledged the possibility that advertising firms may shun the bidding if next year’s campaign is broken up into smaller, individual projects, she said the DOT is still refining TOR for the bidding exercise and will consider all possibilities or issues that may arise from this tact.

The advertising campaign of the DOT was derailed this year after it was discovered that McCann WorldWide Group’s “Sights” ad, featuring a blind tourist, was copied from a tourism ad by South Africa. Though McCann denied this and refused to apologize for the alleged “plagiarism”, this led to the DOT dropping its contract with the award-winning advertising agency. (See, “DOT

stops airing of McCann’s ‘Sights’ as unofficial tourism ad reaps praises” in the BusinessMirror, June 15, 2017 http://bit. ly/2yAfkd7 ) The Sights ad would have been the second in a series of four ads McCann was supposed to produce for the DOT and was aimed at promoting the northern destination of the Ilocos region to foreigners.

DOT sources also intimated to the BusinessMirror it was Malacañang that requested the government agency to come up with a new ad, due to the tourism backlash received by the country after President Duterte proclaimed martial law in Mindanao on May 23.

Since said proclamation, visitor arrivals, specifically in Davao, have slowed down, with hotels and convention spaces reporting decreases in bookings.

Govt. . .

Continued from A14

Nelson said business and social ties usually “solidify” in networking activities, which can lead to improving sectoral collaborations between foreign chambers.

The number of small and medium British enterprises—the target companies of the BCCP—engaged in consultancy, food and beverage and pharmaceuticals, is increasing.

The chamber has helped two British firms take advantage of business opportunities in Davao. The companies continue to record strong growth in retail sales.

Bas Haafs, treasurer for the Philippines-Netherlands Business Council, said the 4th Speed Networking Night gave the council’s members a chance to meet potential business partners.

“We want to be the bridge between the Philippine and Netherlands business community. The Netherlands has a lot of expertise in specific fields, such as water management and agriculture, specifically dairy, and we want to help develop these sectors,” Haafs said.

www.businessmirror.com.ph

Ease of doing business bill hurdles House panel Continued from A1

Rep. Ferjenel G. Biron of the Fourth District of Iloilo, committee chair, confirmed that the bill was approved during a meeting on Monday. The proposed Ease of Doing Business Act is one of the priority measures of the Palace and the 17th Congress.

“The purpose of this bill is to provide an easy, simple, straightforward and trouble-free avenue for entrepreneurs, micro, small and medium businesses and ordinary citizens who would like to venture into business in the country,” Biron said.

The House of Representatives is targeting to pass the measure before its Halloween break, which will start on October 14.

Under the substitute bill, the Ease of Doing Business Commission will be created to review and repeal existing executive issuances and recommend the repeal of existing laws and local ordinances, which are outdated, redundant and adds undue regulatory burdens to business entities.

The commission will be composed of a chairman, secretary of trade and industry and secretary of finance as ex-officio members, and one private-sector representative each from the micro, small and medium enterprise and large industry sectors.

The bill provides that all national government agencies and local government units (LGUs) issuing licenses, clearances or permits to business entities will post a comprehensive checklist requirement for every type of license, clearance or permit to be issued. A uniform checklist of requirements required by licensing and permitting offices issuing a similar license, clearance, or permit will also be crafted.

The checklist of requirements, step-by-step procedure and schedule of fees for the issuance of a license, clearance or permit will be conspicuously posted in, among others, the premises of national and local government licensing and permitting agencies, the business one-stop shop, or in designated public places.

The measure provided that national government agencies and LGUs involved in the processing and issuances of licenses, clearances or permits to business entities shall process the appl icat ion of suc h business entities and communicate the decision regarding the approval of the application or, if the application has been disapproved, with the reasons for such disapproval, within the prescribed processing time.

The bill provided that the processing of licenses, clearances or permits should not be longer than one working day for barangay governments, three working days for simple applications and 10 working days for complex applications from the time of receipt.

For special types of businesses that require clearances, accreditation or licenses issued by government agencies, where technical evaluation is required in the processing of licenses, clearance or permits, the prescribed processing time should not take more than 30 working days.

Also, the bill said a national government agency or LGU will assign a unique identification number to an applicant that will become the identifying number for all subsequent business registration-related transactions bet ween t he agenc y a nd t he business entity.

The bill said an application for a license, clearance or permit shall be deemed approved upon failure or inaction of the conce r ne d n at ion a l go ve r n ment agency or LGU to process and issue the license, clearance, or permit after the prescribed

processing time has lapsed without informing the applicant of the errors or omissions in the application or of the additional documents required for submission.

This provision would only apply if all required documents have been submitted and all required feeds and charges have been paid.

In such cases, an assessment of fees shall be automatically issued and, once paid, the license, c learance or per mit sha l l be issued automatically.

But, in case of denial of the application, the reason for the denial, as well as the remedial measures that may be taken by the applicant, shall be cited by the concerned national government or LGu. Moreover, the bill said a single or unified business-application form shall be used in processing new application for business permits and renewals thereof, which consolidates all the items required of the applicant by various local government departments.

Business permits will be valid for one year, reckoned from the date of issuance. Within one year from the effectivity of this act, city and municipal government shall automate their business permitting and licensing system or set up an electronic business one-stop shop or a more efficient business registration.

Complex rules

With its 12th largest population and the 43rd largest economy in the world, Rep. Luis Raymund Villafuerte of Camarines Sur, the panel vice chairman and one of the authors of the bill, said the Philippines ranked as the second-most favored destination for foreign direct investments (FDI) in Southeast Asia.

However, Villafuerte said the Philippines’s rank in ease of doing business is one of the lowest in the world, at 171st out of 185 countries this year.

“Reasons for such a low ranking are attributed to difficulties in starting a business, getting electricity, registering properly, getting credit, resolving insolvency and obtaining business permits.

All are mired by a large number of procedural regulations,” he added.

For example, Villafuerte said dealing with construction permits, it still takes 24 procedures to build a basic physical establishment in the Philippines compared to East Asia and the Pacific’s average of 15 procedures.

“Worse, it takes 16 procedures and 28 days to start a business compared to the region’s average of seven procedures and 23 days,” he added.

Another author of the measu re, R ep. Ma nuel Zubi r i of Buk idnon, said the proposed Ease of Doing Business Act will provide simple and easy business environment to investors.

In the Asean region, Zubiri, also the vice chairman of the trade and industry committee, said the Philippines has 16 procedures in starting a business compared to its neighbors, saying in Singapore and Malaysia have three procedures each, while Lao PDR has six procedures along with Thailand.

He said, in registering a property, the Philippine has nine procedures, while Thailand has three, Singapore and Laos have four each and Indonesia and Vietnam have five each.

In paying taxes, Zubiri added the country has 36 payments that a firm needs to make within a year while Singapore has five, Malaysia has 13 and Myanmar has 31.

In enforcing contracts or time to resolve a dispute, the Philippines has an average of 842 days or 2.3 years, while Singapore has 150 days, Vietnam 400 days, Malaysia 425 and Thailand 440 days, Zubiri said.

news@businessmirror.com.ph

The Nation BusinessMirror

briefs ‘fair, thorough’ probe into vietnamese fishermen’s death assured

Malacañang on Monday assured that a “fair and thorough” probe is now ongoing to look into the incident involving the Philippine Navy and a Vietnamese fishing boat illegally fishing in Philippine waters that led to the death of two Vietnamese nationals and the arrest of five others.

“Authorities are now conducting a fair and thorough investigation into the incident involving a Philippine Navy vessel and Vietnamese fishing boats, which were seen fishing 34 nautical miles off Cape Bolinao in Pangasinan, well within the exclusive economic zone,” Presidential Spokesman Ernesto C. Abella said in a Palace briefing.

According to reports, the Vietnamese fishing vessel was spotted by naval patrols about 32 nautical miles west of Bolinao, Pangasinan.

“The incident led to the death of two Vietnamese nationals, and the Department of Foreign Affairs is closely coordinating with the officials of the Vietnamese Embassy in Manila to update them on the developments and to facilitate their access to the five other Vietnamese fishermen taken into custody by the Philippine Navy,” Abella said.

The fatalities in the incident that happened in part of the West Philippine Sea early Saturday were identified as Phan Van Liem, 41; and Le Van Reo, 41, both of Phu Yen province in Vietnam.

Those arrested were Pham To, 34, the boat captain; Phan Lam, 34; Nguyen Thanh Chi, 49; Phan Van Liem, 41; and Nguyen Van Treong, 41, also of Phu Yen province in Vietnam. PNA

Taguba denies complicity in p6.4B shabu smuggle case CUSTOMS broker Mark Taguba has denied involvement in the P6.4-billion drug-smuggling case filed by the National Bureau of Investigation (NBI) against him and several others, including three Filipino-Chinese businessmen.

During Monday’s continuation of the preliminary investigation on the case, Taguba, Customs broker Teejay Marcellana and businessman Chen Ju Long, also known as

Richard Tan and Richard Chen, submitted and subscribed their separate counter-affidavits to the complaint, before Assistant State Prosecutors Aristotle Reyes and Michael John Humarang.

Also facing violation of Section 4 (Importation of Dangerous Drugs and/or Controlled Precursors and Essential Chemicals) of Republic Act 9165, or the Comprehensive Dangerous Drugs Act of 2002, are businessman Dong Yi Shen, alias Kenneth Dong, Taiwanese nationals Chen Min and Jhu Ming Jyun, Chinese nationals Chen Ju Long, a.k.a.

Richard Tan, Richard Chen and Li Guang Feng.

Warehouse caretaker Fidel Anoche Dee and importer Eirene May Tatad are also facing the same complaint.

Dee failed to submit his counteraffidavit, thus, he is deemed to have waived his right to refute the charges against him. Joel San Juan

dfa says phl respects malaysia’s stand on rakhine issue

The Philippines said on Monday it respects the position of Malaysia on the Rakhine issue, as well as its decision to disassociate itself from the Asean chairman’s statement that Foreign Affairs Secretary Alan Peter S. Cayetano issued to express concern on the humanitarian situation in Myamar's northern region.

In a news statement, the Department of Foreign Affairs (DFA) underscored the Philippines’s deep respect for Malaysia’s stand on the issue in the northern Rakhine State, which, it said, Kuala Lumpur was able to clearly articulate in several Asean meetings in New York.

The DFA, however, said the Philippines, as Asean chairman, also has to respect and take into account the sentiments of the other members of the 10-member regional bloc.

“Asean is deeply concerned about the humanitarian situation in the northern Rakhine state and since Malaysia has different views on some issues, out of respect for its position, we decided that instead of a Foreign Ministers Statement, we would issue a chairman’s statement that would reflect the general sentiments of the other foreign ministers,” the DFA said. Recto Mercene

Editor: Vittorio V. Vitug • Tuesday, September 26, 2017 A3

Sereno moves for dismissal of impeachment charges

By Jovee Marie N. dela Cruz

T

@joveemarie

he camp of Supreme Court (SC) Chief Justice Maria Lourdes Sereno on Monday called for the dismissal of the impeachment complaint filed by lawyer Lary Gadon.

At a news conference following submission before the lower chamber of verified answer to the complaint, lawyer Alex Poblador, lead counsel of Sereno, said the verified answer maintains that the charges against are totally false and absolutely without any basis.

“Her answer maintains that the charges in Gadon’s complaint are utterly baseless because it is based not on authentic records, much less personal knowledge of the complainant, but on conflated hearsay derived from news reports. This is nothing short of an impeachment exercise based on fake news,” he said.

According to Poblador, the Constitution provides for six grounds for impeachment, which are culpable violation of the Constitution, treason, bribery, graft and

corruption, other high crimes and betrayal of public trust.

“In this answer, we asked that the complaint be dismissed for two reasons. First, the charges alleged are false. Second, they do not constitute acts which the Constitution provides for impeachment,” Poblador said.

“The charges against Sereno are trivial, petty and untrue, a stark contrast to the severity of the Constitution deemed necessary for the impeachment,” he added.

Poblador also said certified true copies of relevant documents from the SC do not necessarily support the allegations of Gadon.

“Because impeachment proceedings are analogous to criminal proceedings, it is our hope that the House committee will accord the Chief Justice full exercise of

her rights to be heard by counsel and to confront the witnesses the complaint by cross-examination,” Poblador said.

Sereno’s camp warned lawmakers not to abuse its power of impeachment by making decisions without any sufficient legal and factual basis.

“If the grounds for impeachment of the Chief Justice can be trivialized to include any grounds which Congress may consider, the fate of the Judiciary would be subjected to the whims of Congress,” the answer of Sereno read. “[The abuse of power by the Legislative] would, in effect, place a co-equal branch at its mercy and imperil the very existence of our democratic form of government— a government which rests on the principle of independence and equality of the three great branches of the government,” it added.

In September 13, voting 30-4, the House Committee on Justice, chaired by Rep. Reynaldo Umali of Oriental Mindoro ruled that the impeachment complaint filed by Gadon against Sereno is sufficient in form and substance. Gadon had accused Sereno of corruption, culpable violation of the Constitution, betrayal of public trust and other high crimes.

Economy

A4 Tuesday, September 26, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Lawmaker assures free tuition for college students next year

F

ree tuition and miscellaneous fees in state universities and colleges and Technical Education Skills Development (Tesda)-accredited technical-vocational (tech-voc) schools is no longer just a dream. It’s now for real.

Rep. Joey S. Salceda of Albay, in a news statement issued on Monday, said the House Committee on Appropriations, where he is senior vice chairman, has finally sourced out and allotted some P41 billion for the program in the 2018 budget. This now assures funding for the implementation of the Universal Access to Quality Tertiary Education Act starting next year.

P re s ide nt D ute r te e a rl ie r signed Republic Act (RA) 10931, the Universal Access to Quality Tertiary Education Act, amid doubts on the government’s capacity to finance the program.

The measure did not specify its fund sources, but he advised the House to ensure funding for it.

Salceda, principal author of RA 10931 in the lower house, and Rep. Karlo Alexei B. Nograles of Davao City separately announced the good news in Legazpi City and Manila, re-

RA 10931 The Universal Access to Quality Tertiary Education Act which provides free tuition and miscellaneous fees in SUCs, Tesdaaccredited schools and LUCs

spectively, and confirmed that “P41 billion to P51 billion” is up for education budget next year.

“Free SUCs [state universities and colleges] is real. No tuition and miscellaneous expenses. Admission is the only requirement. No tuition in community colleges is real. Free tech-voc in Tesda/LGU [local government unit]-run TVET [technicalvocational educational training] is real,” Salceda posted successively in

his social-media account.

At the state-run Bicol University in Albay’s second district, which Salceda represents, some 28,000 students stand to benefit from the measure with a subsidy of about P480 million per year.

There are 114 SUCs and 16 local universities and colleges (LUCs) accredited by the Commission on Higher Education (Ched) and 122 tech-voc institutions accredited by the Tesda in the country.

Salceda filed his version of the measure, House Bill 2771 in July last year “to solve the continuing paradox that, while college education helps us to escape poverty, Filipinos have to be rich to afford one”. His bill was merged with those filed by Party-list Reps. Antonio Tinio of ACT and Sarah Jane Elago of Kabataan.

The salient components of the breakthrough legislation include: Free Higher Education in SUCs and LUCs; Free tech-voc education and training in postsecondary techvoc institutions; Tertiary Education Subsidy for Filipino Students; and Student Loan Program for Tertiary Education.

Salceda said RA 10931 will usher in the “next wave social revolution in building a more egalitarian society.” He refers to the law as “a most vital social legislation, second only

to the Tax Reform for Acceleration and Inclusion bill in terms of significance and permanence”.

The Bicolano lawmaker said RA 10931 drew much of its provisions from the Albay model on Universal Access to college education program, which he pioneered when he was governor of his province for nine years. The program had helped some 88,888 students in completing their studies and served as the “inclusive tool and key to Albay’s poverty reduction, from 41 percent in 2007 to 17.1 percent in 2015”.

Salceda, however, said students in community colleges may have to wait a while, since only about 16 out of 111 LUCs have passed Ched accreditation. RA 10931 also provides for some P1.3 billion in student loans for those who belong to the lowest 30 percent who may need additional financial resources in pursuing their college studies.

Aside from its mechanisms that provide all Filipinos equal opportunities to quality education in private and public educational institutions, the measure also aims to prioritize poor but academically able students, ensure optimized utilization of government resources in education and recognize the complementary roles of public and private institutions in the tertiary educational system.

news@businessmirror.com.ph

Duterte removes 3 Cabinet men in LWUA board ‘restructuring’

By Elijah Felice E. Rosales @alyasjah

P

resident Duterte has removed the secretaries of finance, public works and highways and health in the board of trustees of the Local Water Utilities Administration (LWUA) to ensure the agency’s efficient delivery of service.

Under Executive Order (EO) 41, Duterte restructured the board of trustees of the LWUA in a bid to streamline the service delivery and composition of the agency. EO 41 mandates the LWUA to have five trustees, of which, one will sit as chairman and the other four as members of the board. Aside from being citizens of the Philippines, the following qualifications are stipulated under the presidential order:

One trustee shall have at least ten years of experience in banking, finance or business;

One trustee shall possess sufficient background in the field of economics;

One trustee shall have experience in management or system operations;

Two trustees shall be civil or sanitary engineers with experience related to water supply or wastewater operations;

Not more than one trustee may represent a private investorowned utility;

No elected official shall be entitled to act as a trustee; and

At least three of the trustees must be employees of the

national gover n ment.

On top of this, the trustees must also meet the requirements specified under the Fit and Proper Rule in accordance to Republic Act 10149, or the Government-Owned and -Controlled Corp. (GOCC) Governance Act of 2011. The trustees should also possess skills and qualifications for appointive directors indicated by the Governance Commission for GOCCs. On the other hand, the general manager of the LWUA will be elected by the board of trustees from among its ranks.

The shake-up will relinquish the ex-officio designation of the secretaries of finance, public works and highways and health in the board of trustees of the LWUA, in accordance with EO 62, Series of 2011 by former President Benigno S. Aquino III. According to Duterte, “The other public responsibilities and equally important concerns being attended to by the exofficio members of the LWUA board may hamper the timely and efficient performance of its functions.”

The secretaries of finance, public works and highways and health shall surrender their ex-officio designation in the board of trustees of the LWUA once the new representatives of the national government to the agency are appointed.

The LWUA was created under Presidential Decree 198, or the Provincial Water Utilities Act of 1973 as amended, to assist provincial cities and municipalities in the financing and development of local water-supply systems.

DOTr justifies withholding ₧4-M MRT 3 upkeep payment to Busan

T

R ANSPORTATION Secretary Arthur P. Tugade challenged Busan Universal Rail Inc. to include him in the graft charges filed against Transportation Undersecretary for Rails Cesar B. Chavez, as he defended the latter on Monday from accusations of partisanship and corruption.

He said the decision to withhold payment to the maintenance provider of the Metro Rail Transit (MRT) Line 3 was not Chavez’s decision alone, but of the whole depa r t ment, e x pl a ining t hat he approved such an action to confront issues on the rail facility’s upkeep.

“Undersecretary Chavez always consults his plans and actions with me. His decisions were made with my consent, approval and confirmation. So, I should also be included in the graft case filed against him,” Tugade said.

He added: “Besides, all his actions are in accordance with the contract, equity, decency and law. All these are aboveboard

and have gone through rigorous review and due process.”

The transportation chief noted that the withholding of payment to Busan Rail is only taking into account “the good of the country and the welfare of the riding public”.

Busan Rail, a joint venture among Filipino and South Korean companies, recently filed graft charges against Chavez before the Ombudsman.

In its complaint, the maintenance provider said Chavez withheld the payment for the so-called logical vehicle unit (LVU), a part of a train’s onboard signaling system, worth P4 million.

Chavez has said that his decision to hold payment stemmed from the absence of a certificate of origin and factory-inspection report attached to the billing.

Busan Rail has acquired the LVU from Diamond Pearl, owned by the family of Marlo de la Cruz, while the manufacturer of MRT 3’s original signaling system came from Bombadier, Chavez said.

The undersecretary also said this is a requirement of the Commission of Audit (COA) to make sure that the spare parts for the coaches are not taken from other train coaches.

“If the document required by the COA is complete, we pay for their services. If not, we don’t. Why do we need to be strict in reviewing the billing? It is to make sure that the spare parts are original and are not ‘cannibalized’ from other train cars. This ensures that passengers are safe,” Chavez said on Monday.

He added he is “merely ensuring that government funds are spent judiciously on projects and acquisitions”, when he decided to withhold payment to the maintenance provider.

“My decision to withhold payment is precisely to protect public funds. How can I be charged with graft when I am only protecting public funds and the people’s welfare?” Chavez said.

Lorenz S. Marasigan

Grocery tale

An elderly shopper rummages through an inventory of canned goods at a grocery store in Pasay City over the weekend.

Consumers have been advised to brace for a possible hike in the retail price of canned goods in the coming weeks with the approach of the Christmas season. ALYSA SALEN

‘Protracted’ Senate debates seen delaying passage of TRAIN bill P10.9-billion clothing allowance allotted The TRAIN for state workers, police, military in ’18

By Butch Fernandez @butchfBM

C

ontentious issues are likely to derail plans to fast-track Senate passage of the TRAIN bill, a Palace-backed revenue package called Tax Reform for Acceleration and Inclusion expected to raise P169 billion in its first year of implementation that the Duterte administration can tap to partly fund its P9-trillion “Build, Build, Build” infrastructureinvestment projects.

This was disclosed on Monday

by Sen. Juan Edgardo M. Angara, Senate Ways and Means Committee chairman, even as the panel concluded public hearings and submitted measure for plenary deliberation and approval.

“The TRAIN bill is now in plenary because it has been passed by the committee,” he said, adding, “So now, we start floor debates, which

bill is now in plenary because it has been passed by the committee. So now, we start floor debates, which we call period of interpellation, where senators can raise questions and suggest amendments.”

—Angara

we call period of interpellation, where senators can raise questions and suggest amendments.”

Angara admitted, however, that he expects lengthy deliberations on income-tax adjustments, as well as proposals to restructure tax rates imposed on petroleum and sugarsweetened beverages, among others.

As endorsed, those earning P150,000 a year, whether self-employed or professional, will be granted an exemption. “They will enjoy additional exemption of P25,000 per child, or P100,000 up to four children. So if you add up P250,000 plus additional exemption for those getting 13th month pay up to P82,000 maximum of P332,000, this will take the place of President Duterte's pledge to exempt those earning more or less P20,000 to P25,000 a month from income tax.”

“So, that is the first feature of the TRAIN bill of this administration,”

Angara said, estimating that close to 90 percent of the labor force are expected to benefit once the proposal is passed into law.

For instance, Angara said that a school teacher or nurse earning around P20,000 a month, or P240,000 a year, will be able to save P20,000.00 “if you break it down at around P160 per month” with no more withholding tax from their take home pay.

Angara also acknowledged the big disparity in tax rates set by the Senate and the House on petroleum products, where the House approved a P3-P2-P1 formula while the Senate version broke it down at P1.75 on the first year, P2.00 on second year and P2.25 on the last year.

“We agreed to bring down the rate adjustments after listening to various affected sectors,” Angara said, including transport and urban- poor sectors, as well as government departments, among others.”

T

he annual clothing allowance of 1.12 million civilian national government employees will increase to P6,000 in 2018, from the current P5,000, Senate President Pro Tempore Ralph G. Recto said in a news statement released on Monday.

The P1,000 increase for the purchase of what Recto described as the civil servant’s official outfit of the day, will cost P1.12 billion a year. The increase will raise the total budget for clothing allowance to P6.71 billion, the amount indicated in the proposed 2018 national budget.

That amount, however, is for civilian employees only and does not cover clothing supplied to soldiers, policemen, firemen and other uniformed personnel.

The annual clothing allowance of a policeman, fireman and jail guard, whose agencies are under the juris-

diction of the Department of the Interior and Local Government (DILG), is about P14,000, Recto said.

The combined uniform budget of the DILG and the Department of National Defense—the latter for Army, Navy, Air Force servicemen—will reach P3.38 billion next year.

Overall, government will shell out P10.09 billion for the uniform and clothing expenses of its civilian and uniformed personnel next year. “’Yung P10 bilion, hindi pa kasama ang [The P10 billion excludes the] clothing allowance ng mga empleyado ng [of employees of] local governments and government corporations,” Recto said.

Under present rules, clothing allowances in an agency are pooled and the uniforms bought in bulk, but, in some cases, allowances are given directly to employees.

www.businessmirror.com.ph

Special Feature BusinessMirror

Tuesday, September 26, 2017

A5

It’s time to give Taiwan a look Taiwan is turning its head southward to countries like the Philippines as part of its ‘New Southbound Policy’. Here’s why we should reciprocate the attention.

C

By Jt Nisay

LINKS of cutlery and indistinct chatter interrupted the early silence of that grand welcome dinner in downtown Taipei. The mood was stiff and movements calculated, as formal engagements normally go, but everything proceeded like it normally does—much looser and more relaxed.

It was the first night of a recent sevenday Taiwan tour with a mix of Philippine journalists. The gathering’s hosts—executives of the Taiwan External Trade Development Council (Taitra), a nonprofit tradepromoting organization—rolled out the red carpet with a 12-course feast at the VIP suite of a landmark building. Matching the food in grandeur was the view on the panoramic windows, where the busy Taipei streets across and the mountain ranges beyond glowed under the dusk sky.

The conversations eventually swirled from the importance of Philippine-Taiwan relationship to the latest Hollywood films.

The ice was broken.

By the fourth dish, people were laughing.

By the eighth, a question that seems to have been loaded for a while finally got asked: “Do you guys know Dao Ming Si?” said a fellow lifestyle and entertainment writer seated beside me.

Our Taiwanese hosts answered “No”, and asked who the guy was. The Filipino bunch was perplexed. “F4? Meteor Garden? They’re huge in the Philippines!” he asserted.

A couple of writers rallied behind him. Still no dice from the Taiwanese hosts.

It was an interesting moment, which led to an even more interesting thought: Not counting the Philippine media on that instance, who were simply engaging in light fun with the hosts, how much does the common Filipino really know about Taiwan, outside its unofficial, hirsute television ambassadors from the early 2000s?

Dr. Gary Song-Huann Lin, Manila representative of the Taiwan Economic Cooperation Office, believes the answer is “not much”.

Lin met with the Filipino contingent in the Philippines days before the trip, and explained the gap is exactly what Taiwan’s “New Southbound Policy” aims to bridge. Launched exactly a year ago, the initiative targets to expand the island’s economy through regional connectivity with 18 countries, comprised of 10 Asean member-nations, including the Philippines.

Lin said Taiwan used to look north to Japan and west to China and the US, but never south—a mistake, he said, because it is where economic growth is. In 2016 the bilateral trade between the Philippines and Taiwan was $7.1 billion.

He added the key to making the policy work is human development, or the peopleto-people aspect, which is why tourism efforts are being ramped up.

“Our two sides have looked over each other for too long,” Lin said. “Taiwan is a treasure. It is the most livable country in the world, with one of the best health-care systems. Yet, Filipinos don’t know.”

Several efforts have been made by different parties to introduce Taiwan to the Filipinos, but none bigger than what will commence this weekend, from September 29 to October 1, at the SMX Convention Center with the Taiwan Expo 2017.

The event will showcase Taiwan’s various industries, bannered by agriculture and fisheries, tourism, technology, education and green energy.

A total of 170 exhibitors and 21 universities will participate in the Manila leg of the expo, which had a run in Indonesia in May and Vietnam in July, as well as an upcoming iteration in Malaysia this November. It is organized by Taiwan Association Inc., led by President Allan Lin and honorary President Seimo Huang, along with Taitra.

Walter Teh, Taitra president and CEO, said the expo is not just a onetime event because the Philippines and Taiwan need to have more exchanges. He assured another edition next year.

“We hope through these efforts, the Filipinos can know Taiwan better,” Teh said at the welcome dinner in Taipei. “We have to expand as partners. We are neighbors.”

Located 1,200 kilometers north of the Philippines, Taiwan can be reached through a two-hour flight.

First sight

THE moment our group of Philippine media

landed in Taiwan for the tour, to get an experience of its attractions and to visit some of the expo exhibitors, it immediately passed the eye test. The streets were clean and the traffic orderly, a welcome sight if you’ve been fixated to Manila roads.

We took the freeway from the Taoyuan International Airport going to Taipei by a 45-minute bus ride, passing through the island’s harmonious sights of urban development and environment preservation. There was a healthy amount of verdancy amid the progressive urbanity.

Another noticeable view is how most buildings in Taiwan are not clustered, but are allotted with breathing spaces. This allows the structures’ design to stand out, and save the viewer from concrete fatigue. The spaces also allows for the mountain ranges to peak from certain angles.

Our group knew we were closing in on Taipei when the island’s architectural marvel revealed itself from the distance.

Taipei 101 is more than a sky-scrapping icon. At 1,667 feet, it not only stood as the world’s tallest building for six years, from its completion in 2004 until Dubai erected the 2,717-foot Burj Khalifa in 2010, but serves as Taiwan’s pride. Its design is influenced by the island’s rich culture, with advanced features that reflect its people’s capacities.

A visit to the building was one of the tour’s first stop, and as it turned out, the astonishment I got there as a first-timer in Taiwan was sustained throughout the whole sevenday trip.

Experiencing Taiwan

EACH stop proved to be a pleasant revelation.

The itinerary, curated by Jeron Travel and Tours Corp., had us traveling like a touring rock band, hopping from one hotel to another at various points in Taiwan, from north to south, to central and back.

Following the visit at Taipei 101 and the dinner with our Taitra hosts at the capital in the northern part of the island, we traveled south to Kaoshiung aboard the Taiwan High Speed Rail, which runs at a top speed of 300 kilometers per hour. That’s 345 km covered in just 96 minutes.

Kaoshiung has a more laid-back vibe compared to bustling Taipei. The place is rich in colors and in culture. A couple of destinations for those inclined to the arts are the Kaoshiung Pier-2 Art Center and the KMRT Formosa Boulevard Station.

The Pier 2 warehouse used to be a sugar storage when Kaoshiung Port was still the fifth-biggest port in Southeast Asia. But since Taiwan focused less on agriculture, the area was reinvented to a recreational park, with the warehouses converted into theaters and stores.

Now, Pier 2 houses contemporary art.

Meanwhile, the KMRT Formosa Boulevard Station is named after the former name of Taiwan, Formosa, which in Portuguese means “beautiful island”. The ceiling of this underground station is adorned with a sea of vibrant hues by an art installation, which tells the story of human life, titled “Dome of Light”. It was created by Narcissus Quagliata, known for his use of fused glass in large projects.

Kaoshiung is also home to some of the island’s most stunning temples.

The Taiwanese are predominantly Buddhists, accounting for 35.1 percent of the total population, according to worldatlas.com. The Fo Guang Shan Buddha Monastery is the biggest Buddhist monastery in the island that spans 30 hectares. Our tour guide, Albert Jhou, said a whole day is not enough to see the whole area, comprised of university buildings and shrines.

The same worldatlas.com data show that a close second to Buddhism as the island’s top religion is Daoism (Taoism) at 33 percent. Kaoshiung’s must-see Taoist temple is the Spring Autumn Pavilion and the Dragon Tiger Pagodas in the Lotus Pond, a place that is as arresting as it sounds.

Filipino tribe in Taiwan?

OUR bus took us the next day to Tainan, a municipality in the central part of the island. There, we met at the Silaya Scenic Area an indigenous tribe called Siraya, which has yet to be recognized by the Taiwanese government.

where the next day, we got to go on a cruise tour and visit its surrounding temples. There, time slowed down and tourists got to feel Taiwan’s natural beauty and storied culture—a nice way to experience the island from another perspective.

Business trips

TAIPEI 101 towers over Taiwan’s capital

Much to our surprise, the tribe’s language closely mirrors that of the Filipinos’. In one of their learning pamphlets, which target to keep their language alive, a sentence reads “Akumeya ki anim ki asu tu darang,” or “There are six dogs on the road.”

Helping the tribe on their mission to keep their culture alive through language and songs is Edgar Macapili, a Filipino who left the Philippines 25 years ago to marry Uma Talavan, daughter of a full-blooded Siraya named Ban Cheng Hiong Talavan. Macapili lends a hand in translating a 17th-century Book of Matthew in Siraya language, which was hand-

ed to them by a Taiwanese professor in 2002.

“No one could understand the book, but me,” Macapili said. “It was very close to Bisaya. I translated the words to English; then my wife translated it to Chinese.”

In 2008 they were able to publish a Siraya dictionary. Today, 14 schools in Tainan teach Siraya.

Macapili said that, despite the achievements, he still hopes for two things: That the government recognizes their tribe, and that a Siraya University gets established.

The ensuing part of the Tainan trip was a visit to the calm and breezy Sun Moon Lake,

THE rest of the itinerary was peppered with business visits to Taiwanese companies that will be part of the Taiwan Expo 2017 in Manila. The first two were food-and-beverage manufacturers Saucedo Food Co. Ltd., a company that specializes in kitchen sauces that posted NT$150-million global sales in 2016, and Noodles Origin, which recorded a NT$20million revenue last year.

A trip back to Taipei the following day landed us at the offices of two tech companies: the hybrid micro-grid system designers Controlnet International Inc., and radio frequency identification systems developer ClarIDy Solutions Inc. A stop was also made at the Acer Inc. headquarters for an introduction to the Acer BYOC (Build Your Own Cloud) branding that for over 15 years, has offered cloud infrastructure and related services.

In between those destinations were getaways to Taiwan’s famous night markets, which all lived up to the hype, really, with a selection of cheap, quality finds and a gamut of street-food choices.

Whether it’s the Ningxia Night Market at Taipei, Feng Chia Night Market in Taichung or the nocturnal shopping district of Ximending, no commercial areas are alike. Each one has its one character, as well as their own version of food favorites, like the deep-fried squid, milk tea and stinky tofu.

There’s food, there’s art, there’s fast and there’s slow. Taiwan leaves no doubt it is beyond the television characters Filipinos associate it with, but rather, a nearby, multifaceted destination that covers all bases.

A6

Banking&Finance BusinessMirror

Tuesday, September 26, 2017 • Editor: Jun B. Vallecera

Australian banks drop ATM charges in reputation fightback

A

ustralia’s four largest banks are scrapping cash-withdrawal charges for all domestic users as they try to salvage their reputations amid rising political pressure for tougher laws after a series of scandals.

Commonwealth Bank of Australia, the nation’s biggest lender, said last Sunday it would immediately remove the A$2 ($1.60) fee for all users of its 3,400 branded automated tel ler machines (ATMs) across the countr y. Westpac Banking Corp. and National Australia Bank Ltd. followed hours later, while Australia & New Zealand Banking Group Ltd. said it would halt the charge from early-October.

Australian consumers have long complained about being charged to access their own money, so the decision to scrap fees offers a rare piece of positive publicity for the industry, which has been battered by a series of scandals. Commonwealth Bank, the nation’s biggest lender, is embroiled in allegations that it repeatedly breached antimoney laundering laws and is facing a civil court case and two regulatory probes.

The rest of the industry is also under pressure and has been trying to head off calls by opposition lawmakers for a wideranging inquiry into the sector, and fight back against the government’s decision to hit them with a A$6.2-billion levy over the next four years.

The government is also pressing ahead with legislation to hold bank executives to “heightened standards of behavior” and require senior executives to defer a proportion of their pay.

“The Commonwealth Bank has taken the march on that issue,” Treasurer Scott Morrison told reporters last Sunday, referring to the elimination of cashwithdrawal charges. “But it’s important

Market swamps T-bill sale with oversubscriptions

T

he sale of Treasury Bills (T-bills) on Monday proved once again that the various banks and trust units preferred the short end of the yield curve and swamped the Bureau of the Treasury with tenders four times more than the agency was prepared to auction.

Oversubscription totaled P68.3 billion on a sale involving only P15 billion.

According to Deputy Treasurer Erwin D. Sta. Ana, investor appetite still lean heavily toward the short end of the curve.

“Well, more than P68 billion in total tenders gives us more than four times oversubscription. Obviously, there is a lot of demand in this sector of the curve. It’s a very good turnout,” Sta. Ana said on Monday.

The 91-day tenor proved more than five times oversubscribed with tenders totaling P32.576 billion that prompted the auction committee to award the full P6 billion on offer. The BTr rejected P26.576 billion.

This allowed the three-month T-bills to settle at 2.032 percent, which was 5.6 basis points lower than the 2.088-percent rate set earlier.

“Basically, the domestic-inflation picture is quite manageable as a result of the Bangko Sentral ng Pilipinas’s pronouncements last week. Of course there are external risks, like the normalization of balance sheet [of the US Fed] and the geopolitical tensions as well. The participants are really keen on going shortend,” he said.

The 182-day T-bills were sold in full as well, at P5 billion. The tenor also received tenders four times more than expected amounting to P20.416 billion that prompted the auction committee to reject P15.416 billion. The allowed the tenor to post a rate averaging 2.522 percent, which was 4.2 basis points lower compared to the 2.564-percent rate set earlier.

All P4 billion worth of 364-day T-bills were also sold in full. It attracted tenders more than three times oversubscribed amounting to P15.310 billion, forcing the committee to reject P11.310 billion.

The one-year T-bill averaged 2.861 percent, representing a contraction by 5.9 basis points from only 2.920 percent.

“The average rate for the 91-, 182- and 364-day T-bill rates came in below secondary market levels,” the BTr noted.

Secondary market levels for the government security settled at 2.758 percent for the 91-day tenor, 2.522 percent for the 182-day tenor and 2.893 percent for the 364-day IOUs. “Liquidity levels are quite ample as evidenced by this auction,” Sta. Ana said.

The BTr also said its fourth-quarter borrowing program totaled P150 billion, a contraction

by P45 billion compared to the third quarter program, amounting to only P195 billion. Rea Cu

that we continue to take action now right across the full suite of issues that are needed to ensure that our banking is fair, it is stronger, is more accountable and is more competitive.”

Australians made 259 million withdrawals from ATMs of banks other than their own last year, according to Reser ve Bank of Austra lia data.

At A$2 a withdrawal, that equates to about A$520 million in fees charged to customers.

The fee is also a declining source of revenue, with cash withdrawals declining as Australians move to electronic forms of payment. Australians are the world ’s big gest users of contactless payment technology, according to data from Visa Inc. “The earnings impact is likely to be immaterial,” Morgan Stanley banking analyst Richard Wiles said in a note to clients, estimating the hit to each of the big four banks at about A$50 million in pretax earnings.

However, the decision is “another example of how increased political, reg u lator y and communit y scr utiny is likely to weigh on profitabilit y”, he added.

Opposition lawmakers aren’t backing down on calls for a so-called Royal Commission into the banking industry, with some urging a breakup of the nation’s biggest lenders amid claims that a lack of competition allows borrowing costs to be kept too high.

“There is no way that CommBank ever would have made this move without the public pressure on them over multiple scandals and the threat of an impending Royal Commission or parliamentar y commission of inquir y,” Greens Part y’s Treasur y Spokesman Peter Whish-Wilson said.

Legislators seen gifting DOF with TRAIN just before Christmas

T

he Department of Finance (DOF) is fairly certain the package known as the Tax Reform for Acceleration and Inclusion Act (TRAIN) will pass muster before legislators go on recess in mid-October.

According to Finance Secretary Carlos G. Dominguez III, with the Senate vowing to hold daily plenary deliberations on the TRAIN, its final reading should be complete before the congressional recess so that the bicameral conference could reconcile the House and Senate versions by November, in time for the President to sign the TRAIN 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,” Dominguez said.

Finance Undersecretary Karl Kendrick T. Chua said the DOF will continue to work with the Senate and the House to arrive at a package that brings the most benefit to the people while ensuring fiscal sustainability.

Over 200 groups and individuals have endorsed the tax-reform package that include former finance secretaries and undersecretaries, the directors general of the National Economic and Development Authority (Neda), Cabinet offi-

Case clippings

By Justice S J Ranada Jr. RECONVEYANCE–land covered by free patent In an action for reconveyance of land covered by a free patent and a certificate of title, said patent and certificate are incontrovertible. What is sought instead is the transfer of the title to the property, which has been wrongfully or erroneously registered in defendant’s name. The complaint must allege 1) that the plaintiff was the owner of the land, and 2) that defendant had illegally dispossessed him of the same.

Yabut v. Alcantara 06 Mar 2017

GR 200349 Peralta, J

UCPB commits to cede ownership to private hands

T

he United Coconut Planters Bank (UCPB) on Monday vowed to work closely with the Department of Finance (DOF) on the plan to privatize the bank. “ We w ill be coordinating closely with the DOF for their next steps, and will provide updates to all our stakeholders as we do so,” the lender said in a statement.

The bank also said it welcomes the lifting of the Supreme Court-issued temporar y restraining order (TRO) on executive orders 179 and 180 issued by for mer President Benig no S. Aquino III. “As announced by DOF Secretary Carlos G. Dominguez III, the government will soon resume the bank’s privatization through a recapitalization program and sale of the government’s majority stake in UCPB. This will definitely redound to the benefit of UCPB and its clients as this will strengthen the bank’s capital and generate more resources to improve its competitive position in the market,” it added.

Over the weekend, the government bared the plan to wind down its support for the 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.

With the TRO lifted, the sa le of government-owned shares in the bank

news@businessmirror.com.ph

to pr ivate investors has to proceed w ithout fail as the gover nment has no intention to remain a shareholder for long. Such w ithdrawal should now compel the sel ling the gover nment shareholder to pr ivatize the lender quick ly, while ensur ing the potentia l buyer or buyers have the wherew ithal to inject fresh equit y.

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 would like to assure our clients that it is business as usual for the bank while we go through each phase of this much-awaited recapita lization program, and that they can look forward to a better and stronger UCPB,” the UCPB said. Rea Cu and Bianca Cuaresma

cials, leaders of the local business and academic community, foreign business chambers and foreign embassies, multilateral institutions and civil-society organizations and tax-advocacy, labor and student groups.

Chua said the DOF will continue to try convincing lawmakers to look at the bigger picture so that the final approved package will generate, at the minimum, some P134 billion in incremental revenues. Such revenues form part of the

2018 national-budget proposal.

On the remaining four packages under the Comprehensive Tax Reform Program, the DOF plans to submit Package Two that pertains to the corporate income tax and the modernization of fiscal incentives by the first quarter next year.

Packages Three, Four and Five, which deals with property tax, capital income tax, environment and luxury tax and health measures, was seen ready for submission by the second quarter of 2018, according to Chua.

Dominguez said the target is to get all the reform measures approved within this Congress or within two years.

Exactly one year this week, the DOF formally submitted to Congress the first reform package seeking to make the current tax system simpler, fairer and more efficient.

The DOF is moving closer to have the game-changing proposal approved with the hope this should soon be signed into law by President Duterte and implemented by Januar y 1 next year.

Package One has been extensively explained in over 500 tax briefings, 29 congressional hearings, and six technical working group meetings by DOF officials, led by Dominguez and Chua.

The presentations include what stakeholders can expect from the proposal that seeks to slash personal income tax for compensation earners, while raising more revenues for the government’s public investment program through the expansion of the value-added tax base and adjustments in the excise-tax rates for fuel and automobiles, among other measures.

On managing overseas income

A

ccording to latest data from the Commission on Filipinos Overseas, there are 10,238,614 overseas Filipinos (OFW). The number represents approximately 10 percent of the total population.

Based on latest data from the Bangko Sentral ng Pilipinas, OFW remittances reached $13,812,595,000 in the first half of 2017 with a growth of 4.7 percent compared to the same period last year. The top remittance contributions came from the United States and the Middle East. Remittances continue to be a pillar of the Philippine economy and will continue to be so for some time. In this light, having had the chance to be an overseas Filipino in the Middle East from 2013 to 2016, I would like to share a few tips on how overseas Filipinos handle their remittances. The tips can be summarized into 5Rs. The first and most important consideration is Reputation. Trust is at the heart of every decision. Overseas Filipinos should ideally transact only with a remittance center with an established reputation.

Companies in existence for many decades exhibit business strength. Companies that have been recognized by various industry accolades have earned the respect of its peers. Companies that invest well in the welfare and development of their employees indicate their business sincerity to empower for better service.

The second consideration is Reach. This aspect is all about convenience. Time is gold. Many overseas Filipinos patronize a remittance center that is proximate to either their place of residence or place of work. However, they should bear in mind the remittance service most convenient for their beneficiaries in the Philippines. By carefully choosing the remittance service with a pick-up point closest to where their beneficiaries are, families are able to save a lot on both time and transportation costs.

Less costs mean more disposable income for recipient families.

The third consideration is Range. This is all about striving to be complete. Remittance goals are usually tied to reach and time. A good remittance center is one that is like a financial supermarket with a wide array of financial services. More services related to instant money transfer or bank transfers help make for more informed choices. Many overseas Filipinos needlessly stop their pension, housing and health-care contributions so providing payments facilities for these services should boost remittance flows.

The fourth consideration is Rewards.

This aspect is all about value for money.

Genesis Kelly Lontoc

personal finance Exchange rates vary across remittance centers. Periodic and thematic promotions are conducted to encourage new customers or generate more transactions from existing customers. For certain remittance services, loyalty cards are available to provide future benefits in terms of remittance savings and special deals. Overseas Filipinos must, thus, make the effort to survey their locality. They will discover the remittance centers having the best exchange rates with the most relevant promotions for them.

Every peso counts.

Last but not least, the fifth consideration is Responsibility. By going abroad, every overseas Filipino has a goal. To many, the goal is to earn more to secure a better future for the individual and his family. Distractions can happen but the goal must always be in mind. Boosting one’s net income abroad is not just about earning more, but also about being able to keep a lifestyle for both the overseas Filipino and the family back home in keeping with their means. Every remittance must, therefore, emanate from a budget. Once the overseas Filipino receives his salary, the first thing to do is to set aside quickly funds for saving and investing purposes.

Once done, the balance is remitted to the beneficiaries based on a budgeted expense plan. To support execution, a separate bank account may be maintained for saving and investing. Another bank account or cashtransfer account may then be utilized for budgeted expenses. By prioritizing savings and investments, overseas Filipinos are able to pursue a more sustainable standard of living that leads to more resilient remittance flows. Truly, overseas Filipinos have a crucial role to play in our economic development. Resilient remittances help develop a resilient economy.

Genesis Kelly S. Lontoc, RFP, is a registered financial planner. He is a former OFW from Dubai who has passion for financial planning.

To learn more about personal-financial planning, attend the 65th RFP program this October 2017. To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.

The World BusinessMirror

www.businessmirror.com.ph

Editor: Lyn Resurreccion • Tuesday, September 26, 2017

A7

Tech could save China’s slipping exports

A

fter decades of relentless gains, China’s share of global exports is now edging down.

Whether that continues hinges a lot on how fast it can shift into higher technology shipments.

China’s portion of the global export pie has shrunk from a high of almost 17 percent reached in December 2015, International Monetary Fund data show. The pullback is driven mainly by the growth of shipments from commodityexporting nations like Brazil and Australia amid rising prices for staples like iron ore and bauxite, according to economists from Oxford Economics and TCW Group Inc. Another factor is global demand tilting more to advanced machinery and cars, segments where China is just beginning to emerge as a competitor, says HSBC Holdings Plc. Beijing’s drive to create national champions, subsidize emerging industries and force technology transfers from foreign firms in the country has prompted US Trade Representative Robert Lighthizer to say it’s an unprecedented threat to the world trading system.

Despite the smaller share of global exports, the “Made in China 2025” policy blueprint envisions global competitiveness by that year across 10 key industries, from robots to medical devices.

“Declining export market share of late is more likely a blip, rather than the start of a lasting trend,” said Frederic Neumann,

cohead of Asian economics research at HSBC in Hong Kong. “As China’s share in global GDP continues to rise, it’s likely that its share of global exports will expand as well, with products stretching from mass manufacturers to increasingly more sophisticated products as well.”

A rebound in global car demand has lifted German and Japanese exports, while China runs a large semiconductor trade deficit, Neumann says. That will reverse as industrial policy pushes for more advanced manufacturing, taking share from developed economies, he adds.

It ’s in low- end indust r ies like textiles and furniture where market share is pressured most.

That’s in keeping with the nation’s policy of shifting to higher valueadded industries, from electric vehicles to robots. A recent pollution crackdown has raised costs for industries, such as dyeing companies and paper producers, pressuring their competitiveness.

Low-end manufacturers also face rising wages, a shrinking work force, and rising competition from lower-wage nations like Bangladesh and Vietnam in cheaper products, such as t-shirts.

Workers at Foxconn, a Taiwanese multinational electronics contract manufacturing company Bloomberg

Although China remained the world’s biggest textile exporter of last year, accounting for 37 percent, shipments fell 3 percent to $106 billion, World Trade Organization (WTO) data show.

Nations like Vietnam and Pakistan are winning larger shares, with Vietnam breaking into the top 10 exporters with 7 percent of global textile shipments last year, the WTO says.

Some market-share losses are being offset because more components of exports are made at home, not imported, said David Loevinger, an analyst at TCW Group Inc. in Los Angeles and a former China specialist at the US Treasury Department. The domestic value added of gross exports has risen to 71 percent in 2014, from 62 percent a decade earlier, according to the most recent data from the

US senators revise health bill in last-ditch effort to win votes

W

A SHINGTON—Wit h time running short, the authors of the latest plan to repeal and replace the Affordable Care Act shifted money in the bill to Alaska and Maine, which are represented by Republican senators who appear reluctant to support it.

The revised version of the bill, authored by Sens. Lindsey Graham of South Carolina and Bill Cassidy of Louisiana, would provide extra money for an unnamed “highspending low-density state,” a measure seemingly aimed at Alaska and its holdout Republican senator, Lisa Murkowski, who has yet to say how she will vote.

It would also send money toward Maine, whose Republican senator, Susan Collins, said last Sunday she would almost certainly vote no.

Cassidy circulated a table last Sunday showing the state-by-state effect of the revised bill from 2020 to 2026. It indicated that Alaska would receive 3 percent more money under the bill than under current law, while Maine would get 43 percent more.

However, the numbers and the calculations could not be independently confirmed. Similar estimates prepared by Cassidy’s office for the earlier version of the bill differed significantly from estimates by the Kaiser Family Foundation and health policy-consulting firms, which said that most states would receive less money than under current law.

Still, the aim seemed clear. Collins said last Sunday that she was all but certain to oppose the proposal, bringing to three the Republicans who have publicly voiced opposition—enough to end the bill’s chances this week as time runs out on a last-ditch effort to repeal the Affordable Care Act. In addition, Sen. Ted Cruz, Republicans-Texas, said he had not yet been won over and suggested that Sen. Mike Lee, Republican-Utah, had the same stance.

Sen. Rand Paul of Kentucky, the first Republican to come out against

Sen. Susan Collins (Republican-Maine) speaks to reporters on Capitol Hill in Washington, on September 18. Collins said she had “a number of serious reservations” about the latest proposal to repeal and replace the Affordable Care Act. Tom Brenner/The New York Times

It’s very difficult for me to envision a scenario where I would end up voting for this bill.”—Collins the measure, once again criticized the bill in blunt terms, despite pressure from President Donald J. Trump to rethink his opposition.

“It’s very difficult for me to envision a scenario where I would end up voting for this bill,” Collins said on CNN’s State of the Union. “I have a number of serious reservations about it.”

The cascade of critical comments left Trump and Republican leaders on the precipice of failure in their 11th-hour attempt to fulfill the party’s promise to dismantle a cornerstone of former President Barack Obama’s legacy.

Already, Paul and Sen. John McCain of Arizona, who announced his position last Friday, had pushed the bill to the edge of failure. McCain issued a plea for bipartisan-

ship on a matter as consequential as health care.

Republican leaders can afford to lose no others in the narrowly divided chamber, and they have only until the end of this month to pass the bill in the Senate using procedures that shield it from a Democratic filibuster.

Senators will return to the Capitol on Monday in what could be a bruising week for Trump and the Senate majority leader, Sen. Mitch McConnell of Kentucky.

In addition to the health-care drama that is looming in Washington, voters in Alabama will vote on Tuesday in a closely watched Republican Senate runoff, and a loss by Sen. Luther Strange would be a setback for both Trump and McConnell.

The health bill’s authors scrambled to get back on track. The revised version of the GrahamCassidy bill is generally similar to the original version unveiled on September 13.

But it now would allow states to set many of their own healthinsurance standards without getting waivers from the federal government. States could, for example, allow insurers to omit some of the benefits they are now required to

provide, like coverage for maternity care, mental health care and drugaddiction treatment.

Under the revised bill, states could set their own limits on outof-pocket costs that differ from the federal limits. Under the Affordable Care Act, the annual limits are now $7,150 for an individual health plan and $14,300 for a family plan.

The new version of the bill would give decision-making authority to the administrator of the Centers for Medicare and Medicaid Services, now Seema Verma. The initial version gave the authority to the secretary of health and human services, Tom Price.

Under the revised bill, it appears that a state could allow insurers to set higher premiums based on a person’s health status, though not on the basis of sex or genetic information. In applying for federal grants, state officials would have to describe how they would “maintain access to adequate and affordable healthinsurance coverage for individuals with preexisting conditions.”

All of this might be too late.

Changes to the bill’s funding formula to win over Murkowski might cost it support with conservatives.

And the hasty revisions could only strengthen concern that Congress would be moving forward on a bill that has not been properly vetted.

The Congressional Budget Office is set to release a partial analysis of its effect as soon as Monday, but that report will not include the latest changes.

Speaking to reporters in New Jersey on Sunday, Trump seemed to be looking ahead to the next big legislative goal for Republicans— overhauling the tax code—even as he talked up the Graham-Cassidy bill and applied pressure to resistant senators.

“Eventually, we will win on that,” he said of repealing the health law.

“My primary focus, I must tell you— and has been from the beginning, as you can imagine—is taxes.”

But Graham and Cassidy were not giving up. New York Times News Service

Organisation for Economic Cooperation and Development.

Because China is a manufacturing exporter, it’s not surprising that its market share peaked when global commodity prices were bottoming out, Loevinger said. “With commodity prices rising, commodity producers have been clawing back market share,” he said.

Meanwhile, the economy is also the victim of its own surging

imports, which, by definition, increases the share of global exports for other countries, according to Andrew Polk, cofounder of research firm Trivium China in Beijing.

“China’s biggest problem is that it can’t export to the second biggest economy in the world—itself,” Polk says. “The real beneficiary here has been other emerging economies, especially in Asia, and raw-materials exporters.” Bloomberg News

Trump’s new order bars travel from 7 countries

W

ASHINGTON—President Donald J. Trump last Sunday issued a new order banning almost all travel to the United States from seven countries, including most of the nations covered by his original travel ban, citing threats to national security posed by letting their citizens into the country.

The new order is more far-reaching than the president’s original travel ban, imposing permanent restrictions on travel, rather than the 90day suspension Trump authorized soon after taking office. But officials said his new action was the result of a deliberative, rigorous examination of security risks that was designed to avoid the chaotic rollout of his first ban. And the addition of non-Muslim countries could address the legal attacks on earlier travel restrictions as discrimination based on religion.

Starting next month, most citizens of Iran, Libya, Syria, Yemen, Somalia, Chad and North Korea will be indefinitely banned from entering the US, Trump said in a proclamation released last Sunday night.

Citizens of Iraq and some groups of people in Venezuela who seek to visit the US will face restrictions or heightened scrutiny.

Trump’s original travel ban caused chaos at airports in January and set off a furious legal challenge to the president’s authority. It was followed by a revised ban in March, which expired last Sunday even as the Supreme Court is set to hear arguments about its constitutionality on October 10.

The new order—Chad, North Korea and Venezuela are new to the list of affected countries and Sudan has been dropped—will take effect on October 18.

“As president, I must act to protect the security and interests of the United States and its people,” Trump said in the proclamation, which White House officials said had the same force as an executive order.

He added that the restrictions would remain in effect until the governments of the affected nations “satisfactorily address the identified

inadequacies.”

For Trump, whose efforts on health care, infrastructure improvements and tax reform are floundering, the new order is a third attempt to make good on his campaign promise to respond to terror threats by tightening entry at the nation’s borders.

In December 2015 he called for a complete ban on Muslims “until our country’s representatives can figure out what the hell is going on,” though he later denied that he sought a religious test on travel.

Officials described the new order as a much more targeted effort than the president’s earlier one. Each of the countries will be under its own set of travel restrictions, though, in most cases, citizens of the countries will be unable to emigrate to the USpermanently and most will be barred from coming to work, study or vacation in America.

Iran, for example, will still be able to send its citizens on student exchanges, though such visitors will be subject to enhanced screening. Certain government officials of Venezuela and their families will be barred from visiting the US. Somalis will no longer be allowed to emigrate to the US but may visit with extra screening.

Administration officials said the new rules would not apply to legal permanent residents of the United States, and that visitors who hold valid visas from the countries listed will not have their visas revoked.

That means that students studying in the United States can finish their studies and employees of businesses in the United States who are from the targeted countries may stay for as long as their visas remain valid.

People whose visas expire will be subject to the travel ban, officials said.

People seeking access to the United States as refugees are not covered by the proclamation, officials said.

Entry of refugees is currently limited by the president’s original travel ban, and officials said the administration was preparing new rules for refugees that should be announced within days. New York Times News Service

A8

Tuesday, September 26, 2017

The World BusinessMirror

www.businessmirror.com.ph

Merkel wins 4th term; faces far-right party as obstacle

German Chancellor Angela Merkel smiles at the headquarters of the Christian Democratic Union in Berlin, Germany, on September 24, after the German parliament election. AP/Michael Sohn

B

ERLIN—Angela Merkel won a fourth term as chancellor in elections last Sunday, placing her in the front ranks of Germany’s postwar leaders, even as her victory was dimmed by the entry of a farright party into parliament for the first time in over 60 years, according to preliminary results.

The far-right party, Alternative for Germany (AfD) got about 13 percent of the vote—nearly three times the 4.7 percent it received in 2013—a significant showing of voter anger over immigration and inequality as support for the two main parties sagged from four years ago.

As Merkel and her centerright Christian Democratic Union (CDU) won, the center held, but it was weakened. The results made

clear that far-right populism— along with anxieties over security and national identity—was far from dead in Europe.

They also showed that Germany’s mainstream parties were not immune to the same troubles that have afflicted mainstream parties across the continent, from Italy to France to Britain.

“We expected a better result, that is clear,” Merkel said last Sunday night. “The good thing is that

Forget Brexit bluffing, now comes real fight over hard cash

O

ne thing at least is certain as Brexit negotiations restart after three months of scant progress: it will ultimately be settled at the bank, and the real fight is about to begin.

British Prime Minister Theresa May accepted for the first time in a much-hyped speech in Florence last Friday that Britain would pay its dues, contributing to the European Union budget through 2020 and also honoring its commitments more broadly.

With the clock ticking and discussions resuming in Brussels on Monday, the United Kingdom’s aim is to break the deadlock over the bill for severing 46 years of membership in 2019 and move onto talks over what a future trade deal might look like.

The trouble is that there’s no precedent, a starting point to frame the divorce. And the British themselves are squabbling over how much they owe, with May’s rogue foreign secretary and key Brexit campaigner, Boris Johnson, reportedly unhappy over his prime minister’s plans and ministers split over who they support.

Although the EU has never published a figure, European Commission President Jean-Claude Juncker said in March it would be about €60 billion ($71 billion), prompting outrage in the UK. After EU governments upped their demands, the gross number became about €100 billion. Last

Sunday Brexit Secretary David Davis rejected as “made up” a sum of £40 billion ($54 billion) reported in the Times newspaper, and vowed to go through the EU’s numbers line by line.

“Money is the most visible issue, the most sensitive and the most likely to be the focus of disagreements,” said Michael Leigh, a former European Commission director general who is now political adviser to law firm Covington.

Time is more on the side of the EU. As long as the UK refuses to acknowledge its obligations, the EU won’t allow May’s government to open discussions over postBrexit trade.

Last Friday May alluded to a figure by saying that the UK is prepared to plug the black hole in the EU’s budget for the two years after it leaves.

If paid in full, that would come to approximately €20 billion. She also said the UK would honor commitments “made during the period of our membership.” That indicates she’s willing to pay Britain’s share of unpaid bills, which would add up to at least another €20 billion, two people familiar with the Brexit negotiations.

O t her pe ople w it h k nowledge of the EU’s thinking said it might help kick-start negotiations, and could pave the way for compromise, but it still falls a long way short of the demands of some EU governments. Bloomberg News

we will definitely lead the next government.”

She said she would listen to those who voted for AfD, and work to win them back “by solving problems, by taking up their worries, partly also their fears, but above all by good politics.”

But her comments seemed to augur a shift to the right and more of an emphasis on controls over borders, migration and security.

Despite her victory, Merkel and her conservatives cannot rule alone, making it probable that the chancellor’s political life in her fourth term will be substantially more complicated.

The shape and policies of a new governing coalition will involve weeks of painstaking negotiations. Smiling, Merkel said last Sunday night that she hoped to have a new government “by Christmas.”

The center-left Social Democrats, Merkel’s coalition partners for the last four years, ran a poor second to her center-right grouping, and the Social Democrats

60

The number of years when a far-right party had not earned a seat in Germany’s parliament announced last Sunday evening that the party would go into opposition, hoping to rebuild its political profile.

But the step would also make sure the AfD stays on the political sidelines and does not become the country’s official opposition.

The AfD, nonetheless, vowed to shake the consensus politics of Germany, and in breaking a postwar taboo by entering parliament, it already had.

A lexander Gauland, one of AfD’s leaders, told party supporters after the results that, in

parliament, “We will go after them.

We will claim back our country.”

To cheers, he said: “We did it. We are in the German parliament and we will change Germany.”

Burkhard Schröder, a Düsseldorf AfD member since 2014, was ecstatic. “We are absolutely euphoric here,” he said. “This is a strong victory for us that has weakened Angela Merkel.”

Up to 700 protesters gathered outside the AfD’s election-night party, chanting slogans like “All of Berlin, hate the AfD.” “It’s important to show that it’s not normal that a neofascist party got into the German parliament,” said Dirk Schuck, 41, a political scientist at the University of Leipzig.

While both Merkel and the Social Democrats lost significant voter support from 2013, her victory vaults her into the ranks of Konrad Adenauer and Helmut Kohl, the only postwar chancellors to win four national elections.

The election is a remarkable capstone for Merkel, 63, the first East German and the first woman to become chancellor.

It also represents a vindication of her pragmatic leadership and confidence in her stewardship of Europe’s largest economy and of the European Union itself in the face of populism, challenges from Russia and China and uncertainty created by the unpredictable policies of President Donald J. Trump.

Even so, the advance of the far right was a cold slap for her and the CDU. The AfD made particular inroads in the former East Germany but also in Bavaria, where Merkel’s sister party, the Christian Social Union (CSU), has long ruled but lost some 10 percent of its vote over 2013.

Horst Seehofer, the CSU leader, said: “We made the mistake of having the right flank open.”

A critic of Merkel’s immigration policies, he added: “We have a vacuum on the right, we will close it with politics that ensure Germany remains Germany.”

The late leader of that party, Franz-Josef Strauss, said in 1986 that the party should allow no one to run to their right. “To the right

of us there is only the wall,” he said.

Seehofer echoed that insight last Sunday night. But others cautioned calm.

“We will remember today in history,” said Thomas Heilmann, a member of parliament from the CDU, in an e-mail interview. “As in the US, hate became part of politics. The CDU cannot and must not match this attitude.”

Governing Germany “will become more difficult,” Heilmann added. “It is definitely not a good day for Germany and most likely not good for Europe either.”

Clemens Fuest, the director of the Institute for Economic Research in Munich, said that the results showed wide concern about “security, immigration and possible challenges to the German economic model, like globalization.”

These mattered more than the Social Democrats’ concentration on injustice and inequality, he added.

The other parties should make less of the AfD showing “and, instead, ask themselves what questions they have not answered”— questions of borders, migration and the pressures on Germany to do more to prop up other countries of the EU. Merkel ’s conser vative bloc won some 32.9 percent of the vote, sharply down from 41.5 percent in 2013, the early results showed.

The Social Democrats slumped to 20.8 percent, a new postwar low, down from 25.7 percent four years ago.

If the Social Democrats hold to their intention to go into opposition, Merkel will be faced with an unusually difficult task to form a working coalition.

Given the numbers, it would seem that she would have to cobble together her own CDU-CSU bloc together with two other parties.

The potential new partners inhabit virtually opposite poles on t he pol it ic a l s pec t r u m— t he pro - bu si ness Free Demo c r at s , w ho won some 10.4 percent of t he vote, and t he left-leaning pro-env ironment Greens, who won about 9 percent. New York Times News Service

Abe’s LDP leads in polls, faces challenge from Tokyo Gov. Koike’s Party of Hope

J

apanese Prime Minister Shinzo Abe’s ruling party held a commanding lead in opinion polls released before a news conference on Monday at which he’s expected to announce a general election.

A poll published in the Nikkei newspaper on Monday said Abe’s Liberal Democratic Party (LDP) held a 44 percent to 8 percent lead over the main opposition Democratic Party. Another survey by Kyodo News published last Sunday showed the LDP with a more than three-to-one margin against its closest rival, with 42 percent still undecided.

Abe is expected to announce the election at 6 p.m. briefing in Tokyo. Voting will be set for October 22, according to three people with knowledge of his ruling coalition’s plans.

Heightened tensions w it h North Korea have boosted his approval rating after a series of scandals, and may help Abe retain his coalition’s two-thirds majority in the Lower House of parliament.

Abe has served a total of almost six years as prime minister: he had a truncated term a decade ago, and came back to power in a landslide in 2012. He could serve until 2021 if reelected as party leader next year, making him the

ABE

Bloomberg

longest-serving prime minister in Japanese history.

Challenge from Koike

While the Democratic Party is splintering, Abe faces a challenge from a new party set up by an associate of popular Tokyo Gov. Yuriko Koike, who has a history of local election victories over the premier’s party. After defecting from the LDP, she crushed it in a July election for the metropolitan assembly.

Koike announced on Monday that she would lead candidates across the country under the “Party of Hope.” She spoke ahead of Abe’s 6 p.m. news briefing.

Inappropriate timing

The Nikkei poll said 8 percent supported the new party, while 20 percent were undecided. A majority said it was inappropriate for Abe to dissolve the lower house this month, more than a year before his government’s term is set to expire. Nikkei Research Inc. surveyed 1,044 people aged 18 or older by phone.

Kyodo reported that its survey conducted over the weekend showed 27 percent of respondents saying they would vote for Abe’s LDP, compared with 8 percent for the Democratic Party.

Sixty-four percent said they don’t support his drive for a fresh

mandate, the report said, without giving details on the number of respondents or margin of error.

Abe’s support is likely to be buoyed by the economy, which has grown for six straight quarters.

While unemployment is less than 3 percent, the premier has said wage rises have fallen short of his expectations.

The ruling party’s campaign will focus on a pledge to increase education spending by putting off a target for reining in the budget deficit, as well as a more divisive plan to revise Japan’s pacifist constitution, according to domestic media reports.

Abe will seek backing for a ¥2-trillion ($18-billion) economic package, the Yomiuri newspaper reported on Monday, without attribution. The premier may also renew his pledge to implement a planned increase in the nation’s unpopular consumption tax.

The ruling coalition currently controls 68 percent of seats in the 475-member Lower House, including 288 for the LDP and 35 for its coalition partner Komeito, according to the parliamentary web site. The total number of seats is set to be cut to 465 in the next election as part of a reform aimed at reducing the excessive weight given to rural votes under the current system. Bloomberg News

The World BusinessMirror

news@businessmirror.com.ph

Tuesday, September 26, 2017 A9

Witnesses: Many Rohingya still trying to flee Myanmar Search and rescue workers remove rubble a bucket at a time while standing on the debris of a felled office building brought down by a 7.1-magnitude earthquake in the Roma Norte neighborhood of Mexico City on September 24. AP/Marco Ugarte

Searchers dig as Mexico City reopens just 1% of schools

M

E X ICO CIT Y—Search teams are still digging in dangerous piles of rubble hoping against the odds to find survivors at collapsed buildings, while officials say they have so far cleared only 103 of Mexico City’s nearly 9,000 schools to reopen on Monday.

The need to inspect 98 percent of the capital’s public and private schools nearly a week after a 7.1-magnitude earthquake killed at least 182 people in the city and 138 in nearby states was a stark indicator of just how long the path back to normalcy will be.

Federal Education Secretary Aurelio Nuno said last Sunday that it could take a couple more weeks to inspect all of the schools.

As school inspections progress, the government will announce each day which schools have been cleared to resume classes. For schools found to have structural damage, students could be put in temporary classrooms.

“For the safety of the boys, the girls, the teachers and for the peace of mind, of course, of all the fathers and all the mothers, all schools will be inspected,” Nuno said.

Rescue operations remained active in at least three sites in Mexico City—two apartment buildings and an office building—but hope dimmed every time rescuers had to retreat due to instability of debris.

But no one has been found alive since Wednesday, when a woman was pulled from debris.

As darkness fell last Sunday, prayers were held by families who have been gathered near the collapsed office hoping missing relatives will be found. A crowd of onlookers watching swelled, and so did the number of volunteer workers. Teachers at one corner tried to entertain children of some of the waiting families. There also appeared to be more people offering psychological support.

Hugo Luna, whose cousin Erika Gabriela Albarran was believed trapped in the fallen building, complained that officials had not immediately informed families when two bodies were removed last Saturday night.

“There is a lot of distrust of authorities,” he said.

His aunt, who was also inside the building when the quake hit but escaped, is traumatized, he said.

“Nothing happened to her, but now she has panic attacks,” Luna said. “You open the door, she hears a noise and she gets scared.”

For t he fa m i ly of A d r i a n Moreno, a missing 26-year-old human resources worker at an accounting firm, the emotional roller coaster is getting to be too much. Moreno’s mother had a look of anguish and largely stopped being able to speak.

His boyfriend, Dario Hernandez, also looked lost, his gaze tearstained and unfocused.

“Just hearing the earthquake alarm was horrible,” Hernandez said of a siren that rang during a 6.1-magnitude quake last Saturday morning that was an aftershock of

an even bigger temblor that struck in southern Mexico on September 7.

Looking at the huge pile of rubble, Hernandez started to comment. “Something moves and...,” he said, his voice trailing away at the unspeakable thought that the whole pile could suddenly collapse.

“There is a lot of nervousness, a lot of desperation,” he finally said.

“This is the worst thing I have ever seen in my life, the worst.”

A total of 38 buildings in the Mexican capital—mostly apartment blocks or office buildings—collapsed in Tuesday’s earthquake.

The first days saw a dramatic scramble with picks, shovels and bare hands to reach survivors.

Mexican marines, the lead force in many of the rescue efforts, said they had recovered 102 bodies and rescued 115 people alive from toppled structures.

Thousands of people are homeless because their houses or apartment buildings, while still standing, are too dangerous.

Mexico City Mayor Miguel Angel Mancera said 7,649 damaged properties had been examined so far and 87 percent were deemed safe, needing only minor repairs.

But that means nearly 1,000 were found uninhabitable—and the number seemed likely to rise as more are inspected.

One by one the searches have closed down in recent days, after sniffer dogs were sent in and didn't find life and thermal-imaging devices turned up no bodyheat signatures.

Heavy machinery moved in to begin removing the mountains of debris. Empty lots began to appear where just days ago a building stood.

At one of the collapsed apartment buildings still being searched, members of a Japanese search and rescue team pulled a small white dog from the rubble alive last Sunday, cradling and petting it as they brought it down.

The dog’s rescue gave hope to residents and neighbors of the building who successfully got an injunction from a judge last Saturday night requiring the rescue operation continue for at least five more days.

Isaac Garcia, spokesman for the neighbors, said the injunction was a precautionary measure to make sure the search continues at the site wrecked by Tuesday’s earthquake.

He said residents and neighbors had maintained a good relationship with the navy and civil defense authorities running the search operation at the site. But, Garcia said, “We wanted to make sure that we had something based in law to protect us.”

Back at the collapsed office building, volunteer rescue worker Johny Yebra said the smell of death was now heavy directly atop the rubble heap, and by Sunday afternoon occasional gusts of wind were blowing it outside the immediate search site.

“All of us are doing the most we can,” Yebra said. AP

Newly arrived Rohingya Muslim family, who crossed over from Myanmar into Bangladesh, carry their belonging as they arrive at Kutupalong refugee camp, Bangladesh, on September 24. AP/Dar Yasin

C

OX’S BAZAR, Bangladesh— The massive exodus of Rohingya Muslims fleeing Myanmar to escape brutal persecution appears to have slowed down, but several recent refugees say at least tens of thousands more are huddled near beaches or in forests waiting to escape.

Some Rohingya who have fled over the last week said Myanmar army soldiers were shooting at those trying to flee to Bangladesh. Others said thousands were stuck in Myanmar because most boatmen had made the crossing to safety themselves and soldiers had burned many of the boats that remained.

Over the last month, an estimated 430,000 Rohing ya have arrived in Bangladesh as their homes and villages were set on fire by mobs of soldiers and Budd h i st mon k s. T he y h ave brought with them accounts of soldiers spraying their villages with gunfire.

In the first three weeks of the latest convulsion of violence in Myanmar’s R akhine state, tens of thousands of Rohingya poured into Bangladesh each day, walking for days through forests or taking rickety wooden boats on the rain-swollen Naf River.

Many crossed into the country via the thin sliver of the Bay of

430,000 The estimated number of Rohingya from Myanmar have arrived in Bangladesh over the last month

Bengal that separates Myanmar from Bangladesh.

But Associated Press journalists have seen only a handful of people enter by land or sea at a few border crossings over the last week. However, there are several crossing points on the border between the two countries where Rohingya have entered over the last month, making it impossible to verify how many people enter Bangladesh each day.

The United Nations High Commissioner for Refugees, Filippo Grandi, also noted that the number of incoming Rohingya appeared to have dipped.

One man who fled Myanmar, Syed Noor, said last Sunday that tens of thousands of Rohingya were waiting at border points in Myanmar desperately trying to escape.

Noor and his family had fled overnight into Bangladesh.

Noor said other people from his village and other villages near the Rakhine town of Buthidaung were hiding in forests near the Naf River.

“They are stuck in one place because the Myanmar army is shooting at us,” said Noor, exhausted and groaning in pain. His excruciating journey took nine days and he said there was no food to be had for the last four days.

At first, the Myanmar army was targeting people and shooting at them and asking them to leave their villages, but now that the terrified villagers were hiding in the forests “they are firing in the air to scare us,” Noor said.

“The people are scared to move.

They are in a jungle near the river,” he said.

Last week two other men who made the crossing said similar things.

Nur Karim, who crossed on foot last Friday, said Myanmar soldiers fired on him and his family as they attempted to cross into Bangladesh. In the chaotic scene that followed, his wife and daughter were separated from him.

On Thursday only three men had arrived at Shah Porir Dwip, the main coastal arrival point for refugees arriving in boats. The three came on a tiny wooden boat and said Myanmar soldiers were

shooting at those trying to flee.

“The Myanmar army is not letting them go,” said Mohammar Amir, one of the three who got away. “But anyone who gets the chance escapes.”

Nur Islam, the imam of the main mosque at Shah Porir Dwip, also said the number of boats arriving there had dropped. A few small boats were still coming, making the already risky voyage even more dangerous by arriving at night or at dawn.

Maj. K azi Obaidur Reza of Border Guards Bangladesh, the paramilitary force that guards the nation’s borders, said it appeared that most of the villages in Rakhine state were vacant of their Rohingya Muslim residents.

The Myanmar army was repairing the broken barbed wire fencing across many parts of the border, he said, adding that the repair work suggested that there were no Rohingya Muslims left to flee.

Grandi, the UN High Commissioner for Refugees, said last Sunday that the agency’s access in northern Rakhine state was limited.

“The information that we have is very patchy. But we know that there are people on the other side and under pressure and we know that there people who are displaced internally,” he said, adding that “we don’t know what will happen next. We have to be ready for large figures.”

He said the exodus of Rohingya from Myanmar to Bangladesh is “the most urgent refugee emergency in the world ” right now.

“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,” Grandi told reporters in the Bangladeshi town of Cox’s Bazar.

Myanmar’s leader, Aung San Suu Kyi, said in a nationally televised speech last week that military operations in the troubled areas had ceased a few weeks ago. She also said the “great majority” of Muslims within the conflict zone were still in their villages and that “more than 50 percent of their villages were intact.”

But Amnesty International said as recently as Friday that fresh fires continued in Rakhine and that satellite and video images showed smoke rising from Muslim villages.

Rohingya have faced persecution and discrimination in Budd h i st - m ajor it y My a n m a r for decades and are denied citizenship, even though they 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. AP

Lawyer: Kushner used personal e-mail for some WH messages

W

A SHINGTON—President Donald J. Trump’s son-in-law, Jared Kushner, used his personal e-mail account on dozens of occasions to communicate with colleagues in the White House, his lawyer said last Sunday.

Between January and August, Kushner either received or responded to fewer than 100 e-mails from White House officials from his private account, attorney Abbe Lowell said in a statement that confirmed Kushner's use of a personal address in the first months of the administration.

The use of a private e-mail account to discuss government

matters is a politically freighted issue that factored prominently in last year’s presidential election. Trump repeatedly attacked Democratic opponent Hillary Clinton for setting up a private e-mail server as secretary of state, a decision that prompted a Federal Bureau of Investigation (FBI) investigation that shadowed her for much of the campaign.

In Kushner’s case, Lowell said, the e-mails to and from his private account usually involved “forwarded news articles or political commentary and most often occurred when someone initiated the exchange by sending an e-mail

to his personal, rather than his White House, address.”

The attorney said Kushner, a key aide to Trump, uses his White House address to discuss White House business and that any nonpersonal e-mails were forwarded to his official account and “all have been preserved in any event.”

Politico, a political news company, first reported Kushner’s use of a personal e-mail account.

Trump repeatedly argued during the campaign that Clinton deserved to be prosecuted for mishandling classified information, frequently deriding her as

“Crooked Hillary,” and has continued to suggest that even after being elected president.

Former FBI Director James Comey said that though Clinton and her aides were “extremely careless” in their handling of classified material, there was no evidence that anyone intended to break the law, and he recommended against criminal prosecution. The Justice Department accepted that conclusion.

At a political event in Alabama last Friday, Trump responded to supporter chants of “lock her up” by saying, “You’ve got to speak to [Attorney General] Jeff Sessions about that.” AP

A10 Tuesday, September 26, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

The power of the purse

T

he House Appropriations Committee is restoring the full budgets of the Commission on Human Rights (CHR), the Energy Regulatory Commission (ERC) and the National Commission on Indigenous People (NCIP) after initially shrinking their 2018 budgets to just P1,000 each.

The CHR’s 2018 budget of P678 million was previously slashed to just P1,000 after it was accused of being selective in its investigations on human-rights violations by Speaker Pantaleon D. Alvarez and his allies in Congress (119 representatives voted in favor of the move to slash the CHR budget vs. 32 against).

The proposed NCIP budget had been reduced from P1.1 billion to P1,000 after the agency allegedly failed to protect the lumads, an indigenous-people group in Mindanao.

And the ERC was given the same P1,000 budget from its P351-million proposal for allegedly failing to address graft and corruption issues that continue to hound the commission.

According to a statement released by the House of Representatives, their proposed budgets have been restored after the respective heads of the three offices appealed to Alvarez in a meeting that was mediated by House Majority Leader Rodolfo C. Fariñas Sr. and Appropriations Committee Chairman Karlo Alexei B. Nograles.

Right or wrong, this turn of events only goes to show that the budget season can be payback time for legislators in Congress.

In some cases, it can be an opportunity for redress for those legislators whose committee investigations have been frustrated by the lack of cooperation coming from concerned public officials. They can closely scrutinize the proposed budgets of uncooperative government agencies to see whether they truly deserve their share of people’s taxes.

We have seen how legislators at times have met stiff stonewalling from government executives who have found the temerity to either keep mum or snub altogether hearings and investigations in Congress. We have seen officials failing to show up in hearings, despite a congressional committee’s use of its power to subpoena.

There was a time when the issuance of subpoenas for government officials to appear in committee hearings was a matter that was exercised only during rare instances.

Despite disagreements with the executive and various government offices, legislators then always tried to operate by cooperation.

Senators and congressmen invited the “noncompulsory” participation of government departments and their agencies—and they almost always got it. Public officials concerned in congressional investigations and hearings usually showed up to provide testimony and deliver the necessary official documents, which enabled legislators to conduct the investigative and oversight functions of their committees.

Recent times have shown, however, that this noncompulsory approach has ceased to be the norm between the legislature and government offices. In fact, even the compulsory approach, as we have seen in recent legislative investigations, has resulted in very little cooperation and has elicited nothing but dilatory tactics from government officials eager to stave off any attempt to shed light on the anomalies hounding their offices.

So, can we blame senators and congressmen if they begin exploring other legislative alternatives, including Congress’s power of the purse, in order to sanction government executives whose failure to provide documents and testimony undermines Congress’s ability to exercise its constitutional authorization, appropriation and oversight functions? Legislators are well within their rights to do so.

The noncooperation of government executives and their offices in legislative investigations is simply unacceptable. It belittles the oversight and investigative functions of the legislature that are so indispensable to our system of checks and balances.

What is fundamentally at stake here is the responsibility of government agencies to respect the oversight and investigative functions of Congress. Government executives are deeply mistaken if they believe they can elude compliance with Congress’s request for documents and testimony.

Indeed, it is the obligation of legislators to ensure that their respective committees are able to exercise oversight over the government offices in their jurisdictions.

If they cannot do so, because said government offices or their executives refuse to cooperate, then legislators need to consider whether they should continue to provide funds for those offices.

This sends a strong message that Congress, as a coequal branch of government, will not stand for any stonewalling on the part of certain government officials.

And those who seek to limit Congress’s access to information necessary for it to perform its legislative and oversight functions could face sanctions through its powers of appropriation.

Since 2005

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

Jun B. Vallecera

Managing Editor Associate Editor City & Assignments Editor

Max V. de Leon Jennifer A. Ng Vittorio V. Vitug Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

Online Editor Social Media Editor

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes

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

Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Rolando M. Manangan

BusinessMirror is published daily by the Philippine Business Daily Mirror Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines.

Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025.

(Advertising Sales) 893-2019; 817-1351, 817-2807.

(Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

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

Manny B. Villar

THE Entrepreneur Continued from A1

I

N March 2014, the middle of the Aquino administration’s term, the United Nations Department of Economic and Social Affairs published a report titled “The Philippines: a case of jobless growth”.

The report noted that, unlike many other countries in the region, the Philippines avoided a recession in 2009 and, since 2010, its yearon-year GDP growth has exceeded 6 percent in 12 out of 16 quarters.

Growth was driven by a robust expansion of domestic demand, particularly fixed investment, supported by both the private and the public sectors.

The UN report pointed out, however, that the fast economic growth was not accompanied by a similar increase in job generation, as unemployment and underemployment

“remained stubbornly high, well above the rates seen in most other East Asian economies”.

According to the UN, average unemployment was 7.1 percent in 2013, while underemployment was 19.3 percent—about the same levels as in the last few years and only slightly below the combined rate of about 30 percent registered in the early-2000s.

This led many economists to refer to the country’s economic performance as “jobless growth”.

The previous administration may have succeeded in driving economic

The government places the current housing backlog at 3.9 million units. Assuming that production of housing units would average 200,000 units every year from 2012 to 2030, the backlog would still persist and hit 6.5 million households by 2030. The highest demand would come from the economic housing segment, followed by socialized housing, and lastly by low-cost housing. growth, but it lacked focus on generating employment.

What makes the Duterte administration’s economic strategy different is its focus on employment. Selection and evaluation of infrastructure and other projects now consider their impact on employment—how many jobs will the projects generate—rather than on economic growth alone.

On the part of the private sector, the housing industry plays an important role not only in generating employment but also in fulfilling social needs. Housing fulfills the basic human need for shelter and upholds the dignity of a family. It has a multiplier effect on the economy —stimulating other industries and

Stock prices will go up until…

T. Anthony C. Cabangon

Editor in Chief

Senior Editors

Housing and employment

John Mangun

OUTSIDE THE BOX

Y

ou can rent a 2017 Rolls Royce Ghost for P1,000,000 per day—including driver. You can rent a 2015 Toyota Vios for P1,000 per day—driver not included. Based on the cost of renting—or, more accurately, borrowing—one of these cars, we can reasonably assume that the price of the Rolls Royce is 1,000 times greater than the price of the Toyota.

You cannot buy money, but you can rent or borrow it, and we call that rental cost the interest rate of borrowing. In practical terms— just like with the automobiles—the higher the borrowing or interest rate, the higher the value of the money.

In other words, if interest rates are relatively high, then the value of the money is equally high. You do not loan anything, including money, at a low interest rate if the value at that time is high.

The Rolls Royce rents at 1,000 times more than the Toyota because it is 1,000 times more valuable.

Global interest rates are at the lowest level in the past 5,000 years.

We have clay tablets from 1771 BC

Babylon showing that farmers took out agricultural loans, paying back the debt at a 10-percent interest.

Other loans carried a 20-percent interest rate. When King Cyrus of Persia conquered Babylon in 529 BC, interest rates jumped above 40 percent.

Around the time of Christ, Roman interest rates were 4 percent and, by 300 AD, Roman moneylenders were charging 15 percent. Borrowing costs have always gone up and down based on how “valuable” cash was to the holders.

In early-2000 the Philippine government was paying 16-percent interest for borrowing money for 10 years. Now that rate is about 5

In early-2000 the Philippine government was paying 16percent interest for borrowing money for 10 years. Now that rate is about 5 percent. Banks were borrowing from the Philippine central bank at 15 percent in 2000 to the current rate of about 3 percent.

percent. Banks were borrowing from the Philippine central bank at 15 percent in 2000 to the current rate of about 3 percent.

What determines whether a cash holder perceives money to be more or less valuable? Cash can either be saved and loaned out, or it can be spent. The first option creates “cash wealth”, and the second increases “asset wealth”.

If you know that tomorrow gasoline prices are going up, you might go out tonight and fill your tank.

If you knew that gasoline prices would never be any lower than they are today, you might borrow money and store thousands of liters of gasoline to sell at a profit in the future.

Beginning in 2008, global central banks lowered interest rates to unprecedented low levels, thinking that people would borrow “cheaply” and

generating a lot of jobs. Housing, as part of the construction sector, is among the major sources of growth for the country’s GDP. In its web site, the government places the current housing backlog at 3.9 million units. Assuming that production of housing units would average 200,000 units every year from 2012 to 2030, the backlog would still persist and hit 6.5 million households by 2030. The highest demand would come from the economic housing segment, followed by socialized housing, and lastly by low-cost housing.

Thus, the government must continue to support the private sectorled industry to encourage more investments. It must maintain or even improve the incentives given to developers, including value-added tax exemptions, and the ceiling on socialized housing.

As a very labor-intensive industry, housing is the key not only to providing jobs and livelihood to many families but in reducing poverty, which has afflicted generations of Filipinos.

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

buy stuff. But the initial growth was not high enough to make it profitable to buy things and expect to make a profit reselling. So, instead, all the extra money pumped into the economies went into buying paper assets like stocks.

Since the end of 2008, the total value of the United States economy has increased by $3.9 trillion.

The US Federal Reserve Bank has pumped $3.5 trillion into that economy. Private-sector debt has gone up by $2.6 trillion. Public-sector debt increased by $10 trillion. The total value of all the stocks listed on the New York Stock Exchange has increased by $11.1 trillion. In effect, most of the money borrowed in the past nine years was used to buy stocks.

Stock prices will continue higher until interest rates go up to a point that it makes more sense to buy and sell hard assets for profit—like that gasoline—than to buy paper assets like stock. And you will not have to worry about that for the next nine to 12 months. So enjoy the stock market while you still can.

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Tightening security for transport of drugs, chemicals Cecilio T. Arillo

database

T

HE House Committee on Transportation has called on maritime transportation agencies to strengthen their capacity to detect and monitor the transport of illegal drugs, chemicals and paraphernalia for drug laboratories in light of the recent raids on the modern shabu factory/laboratory in Catanduanes province.

Chaired by Rep. Cesar V. Sarmiento of the Lone District of Catanduanes, the committee made the call during the recent hearing on the plans and programs for 2017 of the Department of Transportation maritime sector and related agencies, such as the Maritime Industry Authority (Marina), Philippine Coast Guard (PCG), Philippine Ports Authority and the Office of Transportation Security-Maritime Division (OTS).

Sarmiento expressed fears that if the modern shabu laboratory was able to exist in his home province, then there is also a possibility that this might happen in other islands in the country if concerned agencies fail to improve their supervision of ports and of guarding the country’s coastal waters.

Sarmiento has filed House Resolution 585 directing the PCG, Marina, OTS, Land Transportation Office and other government agencies to intensify and coordinate their efforts to suppress the trafficking of illegal drugs in the country.

“The seemingly lax security protocols being implemented in ports all over the country, which is being taken advantage of by drug syndicates, is contrary to the directive of President Rodrigo Duterte to intensify the war against drugs,” Sarmiento said.

He suggested to the Philippine National Police, Philippine Drug Enforcement Agency (PDEA) and the PCG to also focus on the coastal waters, as this may also be used as transport routes for illegal drugs.

Marina Administrator Marcial Amaro III said that in support of the intensified antidrug campaign in ports, his agency is willing to come up with a corresponding circular to make shipowners also accountable for the goods they transport.

Deputy Speaker Gwendolyn F. Garcia of the Third District of Cebu recalled a similar incident that happened in Cebu in 2004 wherein 70 barrels of pseudoephedrine, a decongestant used for cold medicines, were confiscated by the PCG in coordination with the National Bureau of Investigation (NBI) and PDEA. The authorities said the seized decongestant is also a component in the manufacture of shabu.

“The PCG was able to confiscate those barrels of pseudoephedrine, and charges were filed. So, this allout war against illegal drugs can be done through coordinated efforts with related agencies,” Garcia said.

“Knowing fully well that the drug problem is worse than what we expected it to be, focus should also be directed now on the prevention of the influx of drugs and drug raw materials into our ports through proactive intelligence gathering on the part of the Coast Guard and Marina, and coordination with the local government and concerned agencies and offices.”

She added the Cebu incident was a product of a joint operation of the NBI, PDEA and PCG. “Knowing fully well that the drug problem is worse than what we expected it to be, focus should also be directed now on the prevention of the influx of drugs and drug raw materials into our ports through proactive intelligence gathering on the part of the Coast Guard and Marina, and coordination with the local government and concerned agencies and offices,” Garcia said.

Rep. Gerald Anthony V. Gullas Jr. of the First District of Cebu proposed that canine units also be trained to sniff drug-manufacturing components, such as ephedrine, so that, even if it is legal to transport it, the necessary surveillance and investigation can be conducted on persons transporting them.

Rep. Rodolfo T. Albano III of the First District of Isabela recognized the enormity of the task, citing the country’s shoreline is much longer than that of the Unites States.

“Even the US Coast Guard, which has better equipment, has a hard time effectively securing their shoreline,” Albano pointed out.

He proposed that concerned agencies conduct independent studies on how to improve their services, with the corresponding budget to achieve it.

“If there is any law hampering the accomplishment of your duties, it is our job here in Congress to amend this so you can execute your responsibilities easier,” Albano said.

Gullas and Albano advised the agencies not to hesitate to ask help from Congress so that, apart from the inclusion of necessary procurement in the budget, the pertinent legislative initiatives can also be done to better equip them in the execution of their mandates.

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

Maynilad seeks water-rate adjustment Ernesto M. Hilario

ABOUT TOWN

W

ith the recent Quezon City Regional Trial Court’s (RTC) decision favoring the enforcement of the Singapore-based International Commercial Court’s (ICC) award to Maynilad, the water concessionaire is hopeful that Malacañang would finally protect the Manila Waterworks and Sewerage System (MWSS) from the mistakes of the past administration and save it from the series of legal debacles simply by honoring the court ruling.

In fact, this RTC ruling is just a reaffirmation of the past two decisions by the Singapore arbitral tribunal that the Philippine government must compensate Maynilad for its losses because it is entitled to periodic rate adjustments as stated in its 1997 concession agreement with the MWSS. Malacañang must abide by the legal ruling for (1) the benefit of Metro consumers and (2) to send the right signal to investors that it is committed to a level playing field and wants to adopt policies aimed at attracting more investments.

Maynilad CEO Ramoncito Fernandez is correct in saying that this latest legal victory is an affirmation that the concession agreement works and restores investors’ confidence in the Public-Private Partnership Program.

This is a major victory for

consumers because rate adjustments ensure continued implementation of Maynilad’s multibillion-peso capital-expenditure projects intended to ensure steady, adequate supply of safe water.

The RTC ruling also serves to validate Maynilad’s claim that it has been experiencing increasing revenue shortfall as determined by the arbitral court in Singapore.

The Singapore ICC had ordered the Philippine government to reimburse Maynilad a total of P3.4 billion for losses from March 2015 to August 2016 alone, and that the firm is entitled to recover additional losses from September 2016 onward.

In contrast to the acrimonious relations in the past between the MWSS and Maynilad/Manila Water, we now see more harmonious ties between the regulators and its

I

negotiations, which face a deadline of March 2019, have been paralyzed by a dispute over exit liabilities.

May told Britain’s European Union (EU) partners they wouldn’t be forced to “pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. The UK will honor commitments we have made during the period of our membership”.

This acknowledges that a substantial sum will be due, which is more than she’s allowed up to now, but it’s still too vague. One man’s “commitment” is another’s

two concessionaire under MWSS Administrator Reynaldo Velasco, a former police general.

The Supreme Court itself has pointed out in a ruling that private contractors are entitled to reasonable profits so they can recoup their investments.

The MWSS’s refusal during the past administration to abide by two ICC decisions favoring Maynilad serve as undeniable proof of government flipflopping that had spooked investors despite the Philippine government’s investment-grade status.

The rate adjustments will actually have minimal effect on Metro consumers, including those who consume only 10 to 20 cubic meters per month.

What we’re driving at here is that, always, the government must respect the sanctity of contracts.

Who’s targeting govt doctors?

WE see as a very disturbing development the recent killings of medical doctors whose mission is to save lives and yet are being murdered in broad daylight for yet unknown reasons.

This year alone, according to health groups, five murders of government doctors have taken place, with none of the cases solved by the police as of today.

The latest incident is the murder of Dr. Vicente Soco in Dinagat Island last September 14. Initial reports indicate that the doctor was gunned down by a man on a motorcycle while the victim was at his family’s gasoline station.

A rebel, a warrior and a race fiend Charles M. Blow

new york times

D

onald J. Trump is operating the White House as a terror cell of racial grievance in America’s broader culture wars. He has made his allegiances clear: He’s on the side of white supremacists, white nationalists, ethno-racists, Islamophobes and anti-Semites. He is simpatico with that cesspool.

And nothing gets his goat quite like racial minorities who stand up for themselves or stand up to him.

Stephen Curry of the Golden State Warriors was asked about the annual rite of championship teams visiting the White House, and Curry made clear that he didn’t want to go because “we basically don’t stand for what our president has said, and the things he hasn’t said at the right time”.

Trump responded to Curry’s expressed desire not to go by seeming to disinvite the entire team, to which Curry responded with a level of class that is foreign to Trump. Curry said, “It’s surreal, to be honest.” Curry continued: “I don’t know why he feels the need to target certain individuals, rather than others. I have an idea of why, but it’s kind of beneath a leader of a country to go that route. That’s not what leaders do.”

Of course, Curry is correct. Not only is this episode surreal, the

entire Trump tenure is surreal. He is not a leader.

Separately, last Friday night at a political rally in Alabama, Trump took to task National Football League (NFL) players who kneel in protest during the national anthem and NFL owners who allow it.

Trump said owners should respond by saying: “Get that son of a b___h, off the field right now. Out. He’s fired. Fired!”

Pause. No, full stop. Folks, this cretin is who we are supposed to call a “president”. He uses harsher language against people quietly protesting injustice than he does against violent racists marching through the streets. Unbelievable.

OK, continue.

Last year Colin Kaepernick, who was then a quarterback for the San Francisco 49ers, kicked off these protests when he began to quietly kneel during the pregame playing of the national anthem.

At the time, he explained his rationale to NFL Media, saying: “I am

Britain’s government is still dithering over Brexit N her much-anticipated Brexit speech last week, British Prime Minister Theresa May faced three main challenges. She met one and fell short on the other two— and as a result, the threat of a disorderly Brexit continues to mount.

The best part of May’s speech was its tone: Positive and friendly, she offered Europe a close future partnership, stressing modesty and mutual interests. Given the acrimony that has marked Brexit negotiations thus far, this is no small achievement.

When it got into specifics, however, the speech faltered. Brexit

Tuesday, September 26, 2017 A11

misunderstanding. And the reference to “the current budget plan” is another bone of contention—an offer on that basis will fall far short of the number that the EU has in mind.

The other sticking point May failed to address adequately was a transitional deal that would freeze existing EU arrangements until a new EU-UK pact can be concluded.

May talked not of a transitional arrangement but of an “implementation period”. That implies there will be a plan to implement at the moment of exit. There won’t be.

In March 2019 Britain exits, and

at that point talks on the long-term future partnership may not even have started. The two years May proposes for “implementation” of the new deal will probably be insufficient for the difficult negotiations to come, let alone for the subsequent execution of what, if anything, is agreed.

She did acknowledge that during her so-called implementation period, “access to one another’s markets should continue on current terms”, which is good. There’s no time for anything more complicated. But even just extending

The Philippine Medical Association (PMA) and the Health Alliance for Democracy have condemned the killing of Soco, and rightly so.

“The PMA, once again, laments the killing of another doctor, Dr. Soco of Butuan, who was shot two days ago by unknown assailants,” PMA President Irineo Bernardo III said.

The PMA chief also expressed alarm that “the government has not issued a statement on these crimes against our members with impunity”.

Soco is the fifth doctor to be killed this year, following the deaths of doctors Dreyfus Perlas in March, Sajid Sinolinding in April and Geroge Repique and Romeo Gadot Subiate, both in July.

Perlas was the municipal health officer of Sapad in Lanao del Norte, while Sajid Sinolinding was the brother of Dr. Kadil Sinolinding, Jr. of the Department of Health (DOH). Repique served as the provincial health officer of Cavite, while Subiate served in Tarlac City.

We agree with the observation by health groups that the government should take decisive action amid the culture of impunity in the country.

We support the call for the DOH to make “a firm and unequivocal stand for the protection of all health workers, especially those working at the frontlines”.

The police should investigate all these unsolved cases of killings of doctors and bring the perpetrators to justice.

E-mail: ernhil@yahoo.com.

not going to stand up to show pride in a flag for a country that oppresses black people and people of color.”

He continued, “To me, this is bigger than football, and it would be selfish on my part to look the other way. There are bodies in the street and people getting paid leave and getting away with murder.”

Let alone that the anthem was authored by a white supremacist, Francis Scott Key, who was a proponent of African colonization—exporting free blacks back to Africa— and an opponent of the antislavery movement.

Let alone the fact that the third stanza of that anthem, the part that you never hear, goes like this: And where is that band who so vauntingly swore, That the havoc of war and the battle’s confusion, A home and a country, should leave us no more?

Their blood has washed out their foul footsteps’ pollution.

No refuge could save the hireling and slave, From the terror of flight, or the gloom of the grave.

This is thought by some to be an excoriation of the Colonial Marines, a mostly black unit composed primarily of runaway slaves who fought for the British during the War of 1812, on the promise of attaining their freedom. The unit humiliated Key’s own unit in battle.

As Jason Johnson, a professor of political science at Morgan State University and political editor at The Root wrote on the site last year: “With a few exceptions”, Key “was

about as proslavery, antiblack and antiabolitionist as you could get at the time”.

Kaepernick’s objection is valid on its own, but the anthem itself is problematic. It all points to the complexity we encounter when we pull back the gauzy veil of hagiographic history we have woven.

The exploitation of black bodies and the spilling of black blood are an indelible part of the American story, and how we deal with that says everything about where we are as a nation and who we are.

This is about far more than football and flags, about more than basketball and battle cries. This is about American memory, the ongoing quest for equality, the racial inequities fused to the DNA of power in this country. This is also about the response to minority advances and the coming minority-to-majority demographic conversion.

This is about the honest appraisal of what America was, is, and should be. Trump is not a proper leader for any moment or any conversation, let alone this moment and this conversation.

Trump has no desire to advance truth and reconciliation when it comes to race in this country. His venality and vulgarity seeks only to exploit white racial anxiety and hostility, in the most vulgar of terms, to maximum political gain.

With every passing day, Trump diminishes the office of the presidency and elevates a virulent strain of racial animus. Trumpism is becoming ever more synonymous with racism.

current arrangements is far from simple, and—given how slowly the EU makes decisions—the real deadline for agreeing the terms of exit is now only a year away.

What’s missing, in sum, is an appropriate sense of urgency. Guided by her main political concern—to reassure her country’s Brexit hardliners that they aren’t about to be betrayed—May is still in the realm of big themes and broad ambitions.

By now, she should have moved the UK past that.

The exit terms need to be settled at once, or else referred to

independent arbitration—and British citizens must be persuaded to accept a number they won’t like. A freeze of the current arrangements then needs to be agreed with no set limit on its duration. Many Brits won’t like that, either. With all this done, the focus can shift to talks on the future partnership.

For now, making Brexit work is a matter not of big ideas but of small details. To avoid inflicting unnecessary damage on Europe and a shattering blow on Britain, May and her government need to move much faster. Bloomberg View

Global Eye

A12 Tuesday, September 26, 2017 • Editor: Angel Calso

BusinessMirror

news@businessmirror.com.ph

Chinese consumers seek a piece of the action

Q

By Keith Bradsher & Ailin Tang New York Times News

IQIHAR, China—Over the past eight years, to the world’s growing alarm, China’s big state-owned companies and powerful local governments have borrowed trillions of dollars to get what they want.

Now, it’s Li Jing’s turn.

Li, a 33-year-old car salesman here in the middle of China’s declining industrial zone, is one of the growing millions of Chinese using mortgages and credit cards to finance a middle-class lifestyle. Over the past two years, she and her husband have bought and remodeled a $120,000 apartment and purchased two new cars for $30,000 apiece.

To help pay for it all, they took out a 10-year mortgage that absorbs nearly a third of their monthly income—once considered an unusual amount of debt in a country that used to depend almost solely on cash.

“I view the mortgage as a form of savings,” Li said, “because in 10 years, I’ll own the whole apartment.”

Standard & Poor’s on Thursday became the latest voice to warn that China, which has the world’s secondlargest economy after the United

States, has piled on too much debt and done it too quickly. The steep increase has the potential to destabilize the country’s financial system, the ratings agency warned, which could hurt the prospects of a country that has been the single biggest driver of global growth for a decade.

While critics have focused on borrowing by local governments and companies, China’s consumers— once famous for saving rather than spending—are also quickly taking on debt.

Chinese central bank data shows that consumer loans have grown almost 50 percent since the start of last year, when the government began encouraging more lending to households. That lending could grow considerably higher. The International Monetary Fund said it expected China’s household debt as a percentage of its economic output

to double by 2022 compared with a decade before.

Home mortgages represent a majority of China’s new household loans by value, adding to a surge in real-estate prices. Car loans have been growing even faster in percentage terms. And credit-card debt is now rising in a country that is otherwise dependent on cash or online transactions.

There are signs that China is moving on the fringes to contain mortgage lending, in part to tame housing costs. In the past week, banks in Beijing began raising mortgage interest rates. In a lengthening list of China’s largest cities, banks are under instructions to discourage the use of personal loans for real-estate speculation. Six large cities established new home sales restrictions in recent days to cool off prices.

Surging property prices have helped keep consumer spending high even as China’s growth has slowed, giving its economy a lift.

But more debt may not spur more growth—and could pinch the household finances of some.

“China will get less of a kick out of consumer debt in the coming 18 months than it did in the past 18 months,” said Louis Kuijs, an economist with Oxford Economics, a British research firm.

Some economists also worry that consumer loans may be a backdoor way for bloated companies to maintain or even expand their capac-

ity. China’s domestic automakers— many of which are state-owned and suffer from too many underused factories—have unleashed a blizzard of zero-interest car loans in the past two years, often through their own financing subsidiaries. In that time, the majority of Chinese consumers began to pay for cars with credit instead of cash, according to J.D. Power and Associates, a global consulting firm.

To be clear, most economists consider China’s consumer credit splurge to be a good thing. Chinese families are nowhere near the borrowing levels of spendthrift Americans, whose household debt is equal to more than three-quarters of the annual economic output of the United States.

In China that measure is still less than half.

Chinese leaders envision a time when their country, like the US, derives a major chunk of its economic growth from people buying homes, cars and appliances. To do that, Chinese households need better access to mortgages, credit cards and other ways to enhance their purchasing power.

Traditionally, China’s state-controlled banking system focused on lending money to big state-owned companies. Economists view household lending as an appealing alternative to having banks shovel more money into unprofitable, debtridden state firms that cannot be closed because they provide jobs to

Emerging markets may be due for their comeback

By Ben Carlson Bloomberg View

E

merging-market stocks are quietly having a huge year.

Through mid-September, the iShares MSCI Emerging Markets ETF, known as EEM, is up more than 31 percent, outpacing gains in both US and foreign developed markets, which are up 13 percent and 19 percent, respectively.

If you’ve been a long-term holder in emerging markets, this year’s gains have felt like they were a long time coming. Total returns in EEM from 2008 to 2016 were minus 16 percent. In that same time, the S&P 500 was up almost 85 percent. Before rallying double digits in 2016, emerging-market stocks were in negative territory in four out of five years beginning in 2011.

Looking a little further back, you can see the MSCI Emerging Markets Index is currently in a lost decade in terms of price performance:

The index still is about 17 percent below its peak in the fall of 2007.

Emerging markets remain an attractive asset class because of their relatively higher growth prospects compared with developed markets, but investors have to understand how things generally work in developing countries before investing.

Here are some tips to better understand this market: Emerging markets are highly volatile. Going back to the inception of the MSCI EM Index in 1988, 76 percent of all annual calendar returns have been double-digit gains or losses. Also, almost half of all annual returns in that time were either gains or losses in excess of 20 percent.

In that same period, the volatility of emerging-market stocks has been double that of their US counterparts.

Investing in emerging markets requires sitting through bone-crushing

millions of workers.

So far, consumer lending has helped Chinese consumers weather the gradual slowdown in the country’s economic growth in recent years. That is particularly true in places like Qiqihar, a city of 5 million in the northeastern province of Heilongjiang. The local economy took a hit last year when a large steel mill closed a big blast furnace and overstaffed communal- and stateowned enterprises pushed out more than 40,000 workers.

But even here, 500 miles north of China’s border with North Korea, the local economy seems to be rebounding from a slump two years ago, when the national economy was looking shaky. Walk out the front door of the recently completed high-speed rail station in Qiqihar and no fewer than 45 cranes are visible, erecting apartment towers and office buildings. The city’s economy grew at an annual rate of 6.4 percent in the first half of this year, up from 5.6 percent in the same period last year and nearly matching the national growth rate of 6.9 percent thus far this year.

Borrowing has been a big help, residents say. Where apartments once sold for cash only, many people now offer down payments of between 20 percent and 30 percent and take out mortgages for the rest.

“Certainly, more people tend to borrow when purchasing apart-

More sanctions, fewer insults against North Korea

N

Changing of the guard. Bay Ismoyo/AFP/Getty Images

volatility most of the time, with higher highs and lower lows than more mature markets.

Even 10 years isn’t long-term in the stock market. Stocks generally become less risky the further you lengthen your time horizon as an investor, but even 10 years isn’t enough time to completely wipe out risk.

The US has experienced its own lost decades in the past, most recently from 2000 through 2009, when the S&P 500 lost 9 percent in total.

Emerging markets experienced another lost decade from 1994 through 2003, when the MSCI EM Index was up just 1 percent over that 10-year stretch. Long-term in stocks is far longer than most investors assume.

Diversification matters. W hen the S&P had its lost decade, from 2000 through 2009, emerging-market stocks were up more than 160 percent. When EM had its lost decade, from 1994 through 2003, the S&P was up almost 185 percent. From 1988 through 2016, the returns in emerging market and US stocks were almost identical, as both gave investors gains of slightly more than 10 percent per year. But if you were to construct a portfolio consisting of 80 percent in US stocks and 20 percent

in EM, rebalanced annually, the combined return was higher than both of the individual markets, coming in at closer to 11 percent annually.

The reason for this is that these markets show relative cyclicality with one another. This table shows how stark these cycles can be:

of the cellar dwellers was minus 26 percent, while the average annual performance of the top performers was plus 81 percent. That means the difference between the best- and worst-performing countries was more than 100 percent each year, on average. There’s no rhyme or

Using two volatile assets that both earn similar long-term returns, but take a much different path to get them, can add value to a portfolio, assuming you have the patience and discipline to stick with it when one of them is not working.

Picking the best emergingmarket countries to invest in is not easy. Emerging markets are made up of vastly different countries.

This has caused some to question whether they should even be considered an asset class in the first place.

The problem is that the winners vary from year-to-year by such a dramatic amount that it’s very difficult to pick the winners. This table from Dimensional Fund Advisors shows the ranks of the annual performance by country over the past 20 years: The average annual performance

reason to the order of these countries. So if you plan on placing a more concentrated bet on certain countries or regions you need even more intestinal fortitude than you would investing in a broad basket of emerging-market stocks, because the volatility is even higher in the individual countries. US stocks have had a great run since the financial crisis ended in 2009. Emerging markets have badly lagged in that time.

One year does not make for a trend, but valuations and performance momentum could put more attention on developing-market stocks and attract flows to the sector. If that were to happen, there’s a good chance we’re at the beginning of a turning point in the cycle that could see emergingmarket stocks outperform US shares for years to come.

ments,” said Fu Shiqiang, a realestate agent. “They may want to get a bigger apartment or do business.”

Zhao Ying, another property agent, said he used a credit card at supermarkets and shopping malls and bought a $21,000 Toyota Vios sedan last year with a zero-interest loan. He said he had bought his current apartment with cash but would do things differently next time.

“I will definitely get a mortgage,” Zhao said. “It is very convenient, and I could use the leftover money to do some business or investment.”

Li, the car salesman, and her husband built their wealth the traditional way. They bought an inexpensive, two-bedroom apartment in 2003 when they married. Her husband was given a small apartment by his employer. They bought a third apartment as an investment.

Real-estate prices have surged since then, and Li and her husband have cashed in. They sold all three units and bought a spacious, threebedroom apartment for themselves and spent $30,000 to remodel it.

They also bought a Volkswagen Tiguan and a Honda Accord.

Their mortgage helps support that lifestyle. Li, who said nearly a third of her customers buy with credit, knows that they are not alone.

“When I got my first car in 2006, almost no one in my local community had one,” Li said. “Now the roads are packed, and it’s really hard to find a place to park.”

o one knows how North Korean leader Kim Jong Un will respond to growing pressure on his regime, other than by scouring the thesaurus. But the US and China seem to be stumbling toward a more effective strategy for confronting him. More boldness from the latter, and restraint from the former, will be necessary to see it through.

New US sanctions that give the Treasury Department the authority to block banks and businesses that do business with North Korea from using the US financial system are a powerful tool. Existing United Nations sanctions haven’t yet forced a change in Kim’s behavior, while the known military options remain inconceivable in anything but the direst circumstances.

And the US has every right to decide for itself who can and cannot participate in its financial system.

China seems to recognize this, judging by recent instructions to Chinese banks not to hold accounts for North Koreans. In fact, Treasury would be wise not to deploy its new powers immediately, in order to test whether Chinese leaders are prepared to go even further.

They should. China isn’t wrong to insist that, in the long run, the only way to defuse this crisis is through dialogue. But the “freezefor-freeze” proposal Beijing continues to push—whereby the US and South Korea would suspend joint military exercises in exchange for the North temporarily halting its nuclear and missile testing— should be abandoned, not least because Kim himself shows no interest in it.

Only actions, not words, can stop this. Handout

On the other hand, fears that additional sanctions will provoke a collapse in North Korea are overblown. Furthermore, that’s not their purpose: They’re meant to slow the North’s progress toward a nucleararmed ICBM and squeeze the economy enough that the regime seeks to alleviate the pressure. There’s some evidence that current measures have already begun to drive up prices of goods in Pyongyang.

China should be focused on driving Kim back to the table, which means cracking down not just on North Korean businessmen but the Chinese intermediaries they use to evade sanctions. More creative measures may be in order, similar to the three-day “malfunction” in China’s oil pipeline to the North in 2003. If Chinese officials are indeed discussing post-Kim scenarios with their US counterparts for the first time, they should make sure Kim himself knows about it.

For his part, President Donald J. Trump needs to restrain his rhetoric.

It’s unlikely that Chinese leaders take it seriously anymore—and, in any case, the possibility of having more Chinese banks and companies cut off from the US financial system would seem threat enough. For Kim, meanwhile, Trump’s insults only reinforce his argument that the North confronts a mortal threat from warmongering Americans and that citizens should endure sacrifices for the good of the nation. And South Korean President Moon Jae-in has pleaded that this crisis be managed “in a stable manner”.

The US has brought out a big stick.

For now, Trump should let it speak for itself. Bloomberg View

Global Eye BusinessMirror

news@businessmirror.com.ph

Tuesday, September 26, 2017 A13

A L’Oreal heiress is now the world’s richest woman

T

By Tom Metcalf & Devon Pendleton Bloomberg News

he death this week of L’Oreal SA’s founding family matriarch is putting the spotlight on a reclusive 64-year-old heiress who now finds herself as the richest woman in the world.

Francoise Bettencourt Meyers has shunned the glittering social life that her late mother, Liliane Bettencourt, once embraced.

Bettencourt Meyers is known for playing piano for several hours a day and has written two books—a five-volume study of the Bible and a genealogy of the Greek gods.

“She really lives inside her own cocoon,” said Tom Sancton, author of The Bettencourt Affair, who noted that even when she was a little girl she appeared uncomfortable in the world of rich people. “She lives mainly with the confines of her own family.”

That kind of seclusion will be harder to maintain as the head of Europe’s fourth-largest fortune.

Through family holding company Tethys, she takes charge of her

family’s 33 percent stake in the cosmetics maker, which lies at the heart of a net worth the Bloomberg Billionaires Index values at $43.3 billion.

L’Oreal speculation

Bettencourt Meyers steps into the spotlight at a time of increasing discussion about the future of the family’s stake, as well as the 23 percent of L’Oreal held by Swiss food-giant Nestlé SA. L’Oreal climbed 2.46 percent to €180.95 at the close of trading last Friday in Paris, after rising as much as 6.7 percent earlier in the day.

With Bettencourt’s death last Thursday at age 94, analysts have started to float a variety of scenarios, including L’Oreal buying stock back from Nestlé or a takeover bid for the Paris-based company. Bettencourt

Liliane Bettencourt in Paris, on March 5, 2009 Francois Durand/Getty Images

Meyers has already indicated little will change.

“In this painful moment for us, I would like to reiterate, on behalf of our family, our entire commitment and loyalty to L’Oreal and to renew my confidence in its President JeanPaul Agon and his teams worldwide,” she said in a statement last Thursday.

The billionaire heiress has shown less interest in L’Oreal matters than her mother did, despite her role as a board member for more than two decades. “She’d show up to meetings but unlike Liliane she never was handson,” Sancton said. “Liliane read tons of documents, L’Oreal was her lifeblood.

That’s definitely not Francoise.”

Bookish, austere

In addition to music and study, the bookish and austere Betten-

Francoise Bettencourt Meyers Mehdi Fedouach/AFP/Getty Images

court Meyers has involved herself in charity work.

China could seize a bit of the skies with the C919

By Adam Minter Bloomberg View

L

ast week the Commercial Aviation Corp. of China Ltd. (Comac) announced that the C919, China’s first homemade large passenger jet, had chalked up its 730th preorder. Those numbers won’t necessarily make the Boeing Co. or Airbus SE quake; Boeing estimates Chinese airlines alone will require 5,420 new single-aisle planes by 2036. Ultimately, though, they could herald the end of global aviation’s great duopoly.

Most of the C919’s orders come from state-owned Chinese companies, some of whom probably wouldn’t have placed them if given a choice. The C919 is technologically out of date and has been repeatedly delayed; it’s unlikely to enter commercial service before 2020.

The plane is cheap, though—reportedly 10-percent less expensive than the competition—and designed to be good enough not just for China but other emerging markets where air travel is booming and regulations are less strict than in the developed world.

The hope is that cost-conscious carriers in Africa and Asia will embrace a plane that they can afford and that does most of what they need, even if its technology isn’t cutting edge.

Chinese manufacturers have a track record of winning market share with similar products, matched to the limited means and needs of developing-world consumers. In mature economies, China’s largely known as a contractor for some of the world’s most famous brands, such as Apple Inc. Elsewhere, it’s identified more with low-cost goods targeted to poorer consumers. Those Chinese brands have been beating out more expensive competitors for years, despite their poor reputation for quality.

For example, between 2012 and 2014, China’s total share of Kenya’s imports increased from 12 percent to 23 percent, leading to a 10-percent overall drop in the unit price of manufactured goods in the country.

Meanwhile, during the first quarter of 2017, Chinese smartphones claimed 51 percent of the Indian market, besting better known but more expensive international brands, such as Samsung Electronics Co. Ltd. and Apple.

Many, if not most, of those phones wouldn’t

“The family doesn’t really mingle with rest of the rich in France,”

Opec production cut deal with Russia is showing signs of strain

By Robin M. Mills Bloomberg

S

Spectators at the C919’s maiden flight Greg Baker/AFP/Getty Images

sell in more developed markets with stricter standards and higher consumer expectations. Chinese manufacturers have also begun to demonstrate a greater ability to innovate. For example, Sany Heavy Industry Co. Ltd., China’s largest heavy-equipment manufacturer, spent much of the last three decades making and selling low-end excavators and cement trucks in China and other developing countries. Rather than challenge international competitors, like Caterpillar Inc., on the basis of quality or technology, Sany built up market share on price, local connections and cheap financing—all of which were aided by generous Chinese government subsidies.

That approach allowed Sany to grow fast, generate economies of scale and, ultimately, begin investing in research and development.

Today Sany and other heavily subsidized Chinese equipment makers are narrowing the quality gap and winning customers in developed countries and among qualityconscious equipment buyers, including top mining companies.

That’s roughly the path that the Chinese government would like to see the C919 follow. Launched in 2008, the plane is part of a long-term effort to build out a Chinese aviation industry capable of competing with Airbus and Boeing. More broadly, the hope is to upgrade China’s role from

manufacturer and assembler of products, such as off-brand smartphones and tractors, to world-class innovator.

The stakes involved in making jets are much higher than with cement mixers and phones, of course. But Comac isn’t flying blind. The most important components in the C919, including the engines and most electronics, are made by non-Chinese companies with decades of aerospace experience. While Comac doesn’t have Boeing’s long history integrating components into a jet, the C919’s many delays suggest the company’s taking the time to learn, rather than rush. As a flagship enterprise, Comac has the luxury of time— and a very nearly blank check to keep spending until they get it right.

If Boeing and Airbus are likely to retain their preeminent positions, the developing world should provide enough demand for Comac to become a reasonable third alternative for many buyers. According to the International Air Transport Association, global air-passenger growth will nearly double over the next 20 years, with the bulk coming from Asia Pacific.

China and India alone will put more than 1.1 billion new fliers into the skies. And according to Boeing, flying them around will require more than 10,000 new planes. For China, that’s the ticket to breaking into the global aerospace industry.

said Eric Treguier, who has tracked French fortunes for Challenges magazine for more than two decades.

“Twenty years ago they hosted receptions at their home that drew politicians, bankers and artists, but as Francoise grew older and Liliane’s husband died, the circle around the family has shrunk.” The Bettencourts have added 19.6 percent this year as L’Oreal’s market capitalization topped €100 billion ($122 billion).

Her $43.3-billion net worth puts her $5.4 billion ahead of Alice Walton, an heiress to the Wal-Mart Stores Inc. fortune, and at the top of the list of 64 women featured on the Bloomberg index, a daily ranking of the world’s 500 richest people. Of the 64 billionaires, 58 are stewards of an inheritance.

Bettencourt Meyers had a difficult and, at times, contentious relationship with her mother. After the death of her father, French conservative politician Andre Bettencourt, in 2007, she spent years battling her mother in court, claiming she was mentally unfit and had been manipulated by her entourage.

She targeted one of Liliane’s friends who received about €1 billion in gifts and cash from her. A French judge assigned Bettencourt Meyers and her sons as guardians over Liliane’s interests in 2011.

Raised a strict Catholic, Bettencourt Meyers married Jean-Pierre Meyers, the grandson of a rabbi killed in Auschwitz. The couple’s two sons have shown more interest in L’Oreal, but it remains to be seen whether Bettencourt Meyers will take a more active role at a company long associated with her mother.

“Liliane’s death will probably be a personal relief to Francoise,” author Sancton said. “That was a difficult relationship that she’s now, in a way, released from.”

audi Arabia’s former oil minister Ali alNaimi complained in 2014 that Russia never followed through on its promises to reduce production during the 2008-2009 financial crisis, and he assessed the chance of cuts at “zero”. Under his successor, Khalid al-Falih, Russia—leading a group of non-Organization of Petroleum Exporting Countries (Opec) states—has engaged in unprecedented cooperation with the Saudi-guided Opec. Rising oil prices reflect some market optimism, but strains are again showing in the deal, up for renewal or expiry in March 2018.

A failure to renew the accord would add further oversupply. Despite a bump in August, compliance is already weakening slowly. The conditions in the first half of this year were the most favorable: Russian production usually is stagnant in spring, due to weather. At the same time, Saudi domestic demand for power generation was lower, and Iraq and Iran struggled to boost output. Nonetheless, Opec exports did not decline nearly as much as reported falls in production.

Since then, Libyan production, though volatile, has recovered substantially, while Nigerian output also came back, as both have been exempt from cuts under the arrangement. Iran has recently started exceeding its agreed cap slightly, with production inching up, while investment is returning in Iraq, which has reluctantly agreed to the deal. To meet summer domestic demand, Saudi Arabia moved from overcomplying to merely complying. Opec’s goal of removing 1.16 million barrels per day (bpd) from its October 2016 production has shrunk to only 489,000 bpd, taking into account the two exempt countries, while exports are down just 213,000 bpd, according to the tanker-tracking service Kpler.

In June al-Falih told other Opec ministers, “I am losing my credibility,” according to the Wall Street Journal. He has been pushing the Opec to make decisions based on exports rather than production, a fundamental change to its modus operandi. This would have to include refined product, as well as crude shipments. Tanker-borne cargoes are

easier to track than pipeline exports, which Russia supplies on a large scale to Eastern Europe and China. Nigeria, Iraq and others might deliberately or inadvertently see large-scale smuggling in excess of quotas. And for those Opec and non-Opec states that are also World Trade Organization members—prominently, Saudi Arabia, Russia, the United Arab Emirates, Kuwait and Venezuela—explicit export restrictions could expose them to legal action.

Meanwhile, Russia met its 300,000 bpd production-cut obligation in August, due to maintenance work at the Arctic Prirazlomnoye field, which is scheduled to be wrapped up in October. But its overall reduction in the first half of this year has been small. Russia’s diplomatic contribution to pulling the deal together was essential; its compliance has been better than cosmetic, but well short of what was promised.

The oil-price prognostications of Russian officials do not inspire great confidence in the deal’s future. Igor Sechin, chief executive of the state oil giant Rosneft, has said he expects oil prices to be from $40 to $43 next year; Bank of Russia Gov. Elvira Nabiullina has put them at $40 for 2018-2019.

President Vladimir Putin is up for reelection in March 2018. Although he is expected to win overwhelmingly, the ballot holds some potential to air discontent. Growth is anemic but positive, and a moderate budget deficit of 1.4 percent of GDP in 2018 is manageable. The weakening of the ruble, while cutting ordinary Russians’ purchasing power, has cushioned the government budget and made the local oil industry highly cost-competitive.

Saudi Arabia is in a weaker position. Fiscal discipline has slipped with the reinstatement in April of public-sector bonuses and allowances, and austerity has led to flatlining economic growth, which the International Monetary Fund predicts will be just 0.1 percent. The deficit shrank in the first half of this year, to 5.6 percent of GDP, but the improvement was driven by an increase in oil prices, as non-oil income was down 12 percent. The ambitious National Transformation Plan, designed to raise non-oil revenues, depends on a degree of pump-priming from government spending.

2nd Front Page BusinessMirror

A14 Tuesday, September 26, 2017

www.businessmirror.com.ph

Duterte signals Zamora’s PT&T as third player in telco industry 70.05% D

By Manuel T. Cayon |

@awimailbox Mindanao Bureau Chief

AVAO CITY—It’s official.

Former leading telegraph company Philippine Telegraph & Telephone Corp.

(PT&T) has resurrected from a long hibernation and has entered as the third player in the local telecommunication industry that’s saddled with snail-paced Internet and mobile-load loss.

“Time is up for the two telecom companies, Globe [Telecom Inc.] and Smart [Communications Inc.],”

President Duterte told journalists last Friday.

The President’s office asked

The total shares of PT&T bought

by Menlo Capital Corp.

for an embargo on naming PT&T as the firm challenging Globe and Smart on the business of mobile communications.

Duterte’s longtime personal aide and Special Assistant Christopher Go “gave the go signal [on Monday] to bare the decision of the President”.

Listed firm PT&T said last month in a disclosure to the Philippine Stock Exchange (PSE) it sold majority shares to Menlo Capital Corp., a company major it y-ow ned by Zamora and Peregrino P. Fernandez.

In accordance with our disclo-

sure dated August 25 that Menlo Capital acquired from Republic Telecommunication Holdings Inc. 559,995,728 common shares of PT&T, which is equivalent to 70.05 percent of its listed shares, PT&T said. The firm told the PSE the transaction is worth less than P1 billion.

PTT was incorporated on November 14, 1962, as a diversified telecommunications entity catering to the corporate, small and medium business and residential segments across the country.

Two years later on June 20, PTT was granted a 25-year national legislative franchise. An amendment to the franchise was made in 1967 granting the company, among others, equal privileges against any competing franchise.

PTT listed on January 10, 1990, for the trading of its common shares but requested voluntary suspension of trading effective

December 13, 2004.

PT&T has told the PSE it intends to seek the lifting of the voluntary suspension of trading of its shares in the exchange.

Hobbled by financial difficulties after the Asian financial crisis, the firm sought court intervention for rehabilitation. PT&T then downsized its operation and instead concentrated on the National Capital Region, including the provinces of Batangas, Laguna, Rizal, Cavite, Bulacan, Pampanga up to Angeles City.

Its main services are highspeed broadband Internet, data services and accept colocation for data centers.

“PT&T intends to expand its fixed broadband business in Metro Manila and that the management is hopeful that the resumption of the trading of the company’s shares in the exchange will play a major part

No new ads but dot still using mcCann for media placements

By Ma. Stella F. Arnaldo

N

interacting with a host Filipino family in Blue Lagoon, a popular tourist destination in Surigao del Sur. The mother enjoins him to eat with them, calling him anak, which Ellis later learns means “my child”. It ends with the line, purportedly written by Ellis,that says: “When you’re with Filipinos, you’re with family.” The ad was also produced by McCann, and was premiered during the Miss Universe beauty pageant in January, which was held in Manila.

De Castro said new terms of reference (TOR) will be drawn up for the bidding for

@akosistellaBM Special to the BusinessMirror

O new advertising or commercials for television will be produced for the Department of Tourism (DOT) this year, its officials said.

In a recent news briefing, Tourism Undersecretary for Public Affairs, Communications and Special Projects Katherine Chloe de Castro said of the DOT’s P650-million advertising budget for 2017, the remaining amount is P170 million, which has already been “obligated for media placements” for its current television commercial (TVC) for Hong Kong, Singapore and Malaysia.

The media placements are still being carried out by the McCann WorldWide Group, she said, although the DOT’s contract for new TVCs with the advertising giant has already been cancelled.

She added the ad being used in overseas markets is the “Anak” TVC, where model/travel writer Jack Ellis is portrayed as

Continued on A2

Tourism Undersecretary for Public Affairs, Communications and Special Projects Katherine Chloe de Castro (left) tells reporters in a news briefing that the Department of Tourism is currently finalizing terms of reference for a new bidding for an advertising campaign in 2018. She urged advertising agencies to register with Philippine Government Electronics Procurement System (PhilGEPS), the centralized Web portal that publishes bidding notices for government projects. At right is Tourism Secretary Wanda Corazon T. Teo. Photo courtesy of D.O.T.

What do you do when compliance issues arise?

Continued from A1

These inter views, however, can be undermined by poor planning, lack of preparation and inadequate record-keeping, among other factors.

A variety of avenues lead up to the point where you have no choice but to launch an investigation: someone in finance could report that they think something fishy is going on with a certain reimbursement request, or an employee could call your hotline to report a case of suspected bribery, or a member of your staff could claim that his or hers personal data protection has been violated by the organization.

In either scenario, the next steps are going to require you to talk with the people who may have witnessed this issue.

Conduc t i ng i nter v ie w s to gather this information is no simple matter. As the interviewer, you want to be civil and elicit responses from the person you’re interviewing. At the same

time, you have to be ready to con f ront t h at p erson a b out uncomfortable issues.

The witness interview is just on step in the investigation process, but it is an important part that requires finesse and preparation.

GAN Integrity (www.ganintegrity. com) has developed compliance processes to help companies of all sized manage regulatory and legal compliance. GAN Integrity is coming up with seven tips, based on best practices: Determine whether a government agency is investigating the issue. If an agency is already involved (or likely to investigate), you have to carefully consider whether the government could later request notes you’re taking as evidence.

Plan the sequence of interviews. Compliance issues usually involve more than one person, and the people being interviewed sometimes talk among themselves even though they are not supposed to discuss the issue. For that reason, it’s important to think about

what person you want to have on the record first, and plan the sequence of interviews around the potential of chatter between your interviewees.

Make in-person interviews a priority. Talking in person helps you gather information effectively and get people to open up about what could be an uncomfortable issue. Body language also helps you size up the interviewee and how honest they’re being with you.

Prepare as if you’ll only get one shot at the interviewee. It’s a big mistake to assume that you can ask follow-up questions later, because you may not get another chance to interview a person—they could lawyer-up, for example. It’s better to do your homework and gather any documentation you want to ask about, so that it’s a meaningful and thoughtful discussion. Prepare a witness outline, as well as answers to predictable questions a witness may ask you.

Provide a warning on relevant

compa ny r u les. Inter v iewees should be told that you represent the company, and reminded about company policies that require their cooperation. Employees typically have a duty to cooperate in an internal investigation, but not always.

Document the interview in detailed w r itten repor ts and memoranda. The interview is a fact-gathering activity. W hile the goal is to ask open-ended questions and make people feel comfortable to obtain as much information as you can, the process also needs to be recorded in copious notes.

Conclude with clarifications and reminders. End by reminding the person to refrain from talking about the issue with co-workers and give them some parameters for what to do if they are contacted by outside parties, such as the government. Ask them to provide you with any relevant e-ma i ls, documents or ot her data. Finally, you also want to

clarify whether the interviewee would be willing to help in the future. Give the interviewee your contact details in case they think of additional information, and ask if it’s OK to call with followup questions.

Let me remind you that, for instance, in data-privacy protection breaches, criminal liabilities arise.

Personal data controllers have to comply with the following: ■ Appoint a data protection officer; ■ Conduct pr ivac y impact assessment; ■ Create a privacy management program and manual; ■ Implement privacy and data protection measures; and, ■ Establish a stringent breach reporting system (which could well be based on the above mentioned witness interview best practice).

If you need any assistance contact us at the Integrity Initiative Inc.— Schumacher@integrityinitiative. com.

in the success of such expansion plan,” PT&T told the PSE in a disclosure on August 28. “The expansion plan will necessarily require PT&T to have strategic partners and the company is confident that the resumption of trading of its shares in the PSE will provide an opening for strategic partners to participate in such expansion.”

Duterte is actually not a stranger to PT&T since Davao City was the company’s center of operations in Mindanao. For many remote towns and cities like Davao, the only means or alternative medium of communications are long distance service, telegram and Internet cafes, among others.

“All it took the President to decide was when he learned that PT&T has existing frequencies and when he was advised that PT&T’s franchise was just renewed,” a person familiar with the matter said.

Govt infra drive attracts interest of EU firms LOVEREZ: “Each foreign chamber is for better collaboration and improving business relations with the Philippines.”

By Catherine N. Pillas

T

@c_pillas29

he country’s strong economic performance and the Duterte administration’s “Build, Build, Build” program have piqued the interest of European businessmen who visited the Philippines recently to scout for investment opportunities.

Members of the German, Spanish, Italian, French and British Chambers of Commerce in the Philippines, and the PhilippinesNetherlands business council, participated in the Fourth Speed Networking Night last Friday.

The event allowed European and Filipino businessmen to engage in a cross-sectoral “meet and greet”, allowing them to strengthen partnerships and open avenues for collaboration.

“Each foreign chamber is for better collaboration and improving business relations with the Philippines, particularly at this time, when the country’s economy is doing well,” said Tristan Loveres, president of the GermanPhilippine Chamber of Commerce and Industry.

L o v e r e s c it e d G e r m a n y ’s strength in alternative energy and railway and transport technology, which could help move forward the Build, Build, Build infrastr ucture agenda of the Philippine government.

Chris Nelson, president of the British Chamber of Commerce Philippines (BCCP), said there is a need to further improve relations and cooperation with other business groups amid the United Kingdom’s ongoing process of negotiating its departure terms with the European Union.

See “Govt,” A2