Businessmirror september 30, 2016

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Friday, September 30, 2016 Vol. 11 No. 356

ALVAREZ TO MAKE SURE LOWER CHAMBER WILL NOT BE A RUBBER STAMP

House bucks DOF’s tax-reform package

INSIDE

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By Jovee Marie N. dela Cruz

@joveemarie

he leadership of the House of Representatives on Thursday rejected the Department of Finance (DOF)proposed offsetting measures to recover the estimated P179 billion in revenues that will be lost due to the planned lowering of personal income-tax (PIT) rates. See “Tax,” A2

car of the month: All-New Toyota Innova 2.8 V

25

The number of bills filed in the House that seek to reduce individual and corporate income tax

P25.00 nationwide | 5 sections 34 pages | 7 days a week

Stringent food standards threaten PHL fruit exports

By Jasper Emmanuel Y. Arcalas

@jearcalas

T

he government must appeal to Japan and South Korea to put on hold their implementation of stringent food standards for fruit imports, which could hurt small farmers, fruit exporters said on Thursday.

Roberto C. Amores, president of the Philippine Food Processors and Exporters Organization Inc. (Philfoodex), told the BusinessMirror that farmers would incur “huge losses” once Japan and South Korea implement the zero maximum-residue limit (MRL) on mangoes and bananas by next year.

“Our exports will be limited, because if the pesticide laboratories of importing countries find that our exports violate their MRL standards, they will just throw away Philippine shipments,” said Amores, who is also the president of the Philippine Mango Exporters Foundation Inc.

“It’s a question of bilateral talk between the concerned governments,” he added.

See “Fruit Exports,” A2

motoring

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understanding road markings

motoring

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EYE IN THE SKY The Hermes 450 medium-size multipayload unmanned aerial vehicle (UAV) is shown at the Asian Defense, Security and Crisis Management Exhibition and Conference 2016. The UAV has an endurance of over 20 hours, with a primary mission of reconnaissance, surveillance and communications relay. The exhibition features global defense, security and disaster-relief companies showcasing their technology, products and services. NONIE REYES

PAL to expand N. America foothold via new Airbus jets

forever young: KTM motorcycles

By Lorenz S. Marasigan @lorenzmarasigan

P motoring

E4

HILIPPINE Airlines Inc. (PAI) will take delivery of six new wide-body jets from Airbus in 2018, as the national flag carrier aims to further expand its North American market.

PAL Holdings Inc. President and COO Jaime J. Bautista said PAI will use the first two Airbus A350s to increase the capacity of the airliner’s ManilaNew York route.

“The initial two will be used for our New York flights,” Bautista said in an interview. “We have six coming in by 2018,

PESO exchange rates n US 48.2170

so the others may be used for our Los Angeles and San Francisco flights.”

From Manila, PAL operates 11 weekly flights to Los Angeles, 10 weekly flights to San Francisco and four weekly flights to New York. It also has thrice-weekly services between Cebu and Los Angeles.

The carrier uses Airbus A340s or Boeing 777s for its US flights.

The A350-900—which will have a three-class configuration, namely, Business Class, Premium Economy and Regular Economy—is capable of flying nonstop from Manila to New York on a full load. It can carry more than 300 passengers per flight.

PAL Holdings subsidiary PAI is set to receive the first two A350s in March 2018. The others will be delivered in June, September and December of the same year.

“We will also use them for our Europe flights,” Bautista told reporters.

“We have entitlements to Frankfurt in Germany, Paris, Rome and Amsterdam; but we will have to decide which one to launch first.” At present, PAL only flies to one European destination, London.

The flag carrier aims to become a fivestar airline in five years, with service innovations, route network expansion and fleet modernization as its flagship initiatives.

n japan 0.4790 n UK 62.7834 n HK 6.2191 n CHINA 7.2235 n singapore 35.4798 n australia 37.0789 n EU 54.0898 n SAUDI arabia 12.8579 Source: BSP (29 September 2016)

News

BusinessMirror

A2 Friday, September 30, 2016

Tax...

continued from A1

Speaker Pantaleon D. Alvarez said instead of removing the valueadded tax exemptions for senior citizens and persons with disabilities (PWDs), as well as imposing excise tax on petroleum, the finance department and its attached agencies should improve their tax-collection efficiency.

“Rest assured that the lower chamber will always be on the side of the people. We will not allow these kind of [antipoor] proposals here in

the House of Representatives,” Alvarez said in an interview.

Alvarez added that he will set consultations with the Senate to discuss the DOF proposal.

“I am against making the senior citizens and PWDs suffer. We will study the DOF measure very closely to make sure that it will be fair to all concerned,” he added.

House Committee on Ways and Means Chairman Dakila Carlo E. Cua of Quirino said there is no fi-

nal decision yet whether the lower chamber will adopt the whole proposal of the DOF.

Aside from the DOF proposal, Cua said there are 25 bills filed at the lower chamber seeking to reduce the income tax imposed on individuals and corporations by amending the National Internal Revenue Code.

Alvarez also assured the public that his fellow lawmakers will not allow the lower chamber to be turned into a DOF rubber stamp.

“I noticed in the DOF proposal there’s no provision that will address the tax-collection efficiency [of

www.businessmirror.com.ph

the government’s revenue-generating agencies],” the Speaker added.

Alvarez also told the DOF to look into other revenue-generating measures that will not affect the poor, senior citizens and PWDs. Earlier, Alvarez urged the DOF to strictly implement Republic Act 9335, or the lateral attrition law, which provides a system of reward and punishment for officials of the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR), depending on their performance.

The BOC and BIR are both under the DOF, now headed by Secretary Carlos G. Dominguez III.

“In the attrition law, there is a provision punishing them through removal from office for not hitting their target revenues,” Alvarez said. “[Because of this] we will activate the congressional oversight committee.”

According to Alvarez, the previous administration failed to implement the law, which provides for a system of reward and punishment for officials and employees of the BOC and BIR who meet and fail their target collections.

The attrition law, enacted during the term of then-President Gloria Macapagal-Arroyo, seeks to improve the revenue-collection performance of the BIR and BOC through the creation of a rewards and incentives fund and of a revenue performanceevaluation board.

The law said BIR and BOC officials and employees who fall short of their collection targets by at least 7.5 percent would be dismissed from service, while those who go beyond expectations would be given incentives.

Members of the Makabayan bloc also bucked the tax proposals of the DOF, highlighted by the restructuring of the PIT, VAT-coverage expansion, excise-tax hike on oil prod-

ucts and restructuring of excise tax on automobiles.

“The tax proposal of the finance department is far from benefiting the poor, while expanding VAT and excisetax hike on oil products are definitely detrimental,” Party-list Rep. Ariel Casilao of Anakpawis said in a news conference.

The lawmaker said restructuring the personal-income tax, particularly pegging the maximum P250,000 annual income for tax exemption, would not benefit the 55 percent of the country’s population based in the rural areas, the near 11 million unemployed and underemployed workers and the 4.7 million Filipino families below poverty line.

He added that the expansion of VAT coverage would certainly lead to higher consumer prices, which would affect the poor, while the increase in excise tax on oil products would trigger a cumulative effect, particularly on the prices of basic goods and services.

He said while some would benefit from the PIT restructuring, the effect of other provisions of the DOF proposal would affect the poor.

Party-list Rep. Carlos Isagani Zarate of Bayan Muna also questioned the basis of the DOF proposal of exempting only those with an annual salary of P250,000.

“Where did this figure come from? What is the basis for this?

The amount of P250,000 is way below the annual family living wage of a Filipino that is now pegged at P396,390, or P1,086 daily,” Zarate said, citing the study of independent think tank Ibon Foundation.

“Under our proposal, House Bill 333, we used the amount P396,390 as the minimum figure of tax exemption because this is the basic living salary needed by a

Fruit exports...

continued from A1

Amores warned that small farmers and farmworkers could lose their livelihood once the MRL takes effect on January 1, 2017. “Exports would go down, production will be cut and there would be unemployment.”

The Philippine Center for Postharvest Development and Mechanization (PhilMech), an attached agency of the Department of Agriculture, said South Korea and Japan has earlier announced that they would implement zero MRL on tropical-fruit imports by next year.

MRL—the maximum concentration of pesticide residue which is legally permitted in food and animal feeds—is usually recommended by the Codex Alimentarius Commission, according to the Food and Agriculture Organization (FAO).

FAO added that the limits are based on good agricultural practices data and food derived from commodities that comply with the respective MRLs are intended to be toxicologically acceptable.

A zero MRL means that there should be no trace of fungicide or pesticide use in agricultural products.

The Japan Ministry of Health, Labor and Welfare (MHLW), which oversees the MRL standards of Japan, has published five MRL amendment proposals and three MRL standards amendments since January 2016. According to the Global MRL Database

by Bryant Christie Inc., a market research firm specializing on global

trade policies, the proposals eliminate MRL standards previously set on pesticides use on tropical fruits.

More than 75 pesticides will be eliminated from the previous MRL standards set by Japan-MHLW, meaning a 0.01 part per million (ppm) MRL shall apply to all the concerned pesticides.

Some of the pesticides identified by Japan-MHLW were chinomethionat, cyflumetofen, imi­cya­fos, mepanipyrim, proheaxdione-calcium, saflufenacil and abamaectin.

There are at least 230 recognized agricultural chemicals applied to bananas and mangoes in Japan, according to the Japan Food Chemical Research Foundation.

The Japan-MHLW has notified the World Trade Organization (WTO) thrice regarding their MRL amendment proposals, according to Global MRL Database.

The Korea Ministry of Food and Drug Safety (FDA) announced earlier that it will overhaul their existing MRL system and would adopt a positive list system (PLS) as importation measures starting 2017. The KoreaFDA said will only use the national Korean MRLs previously identified and if a certain pesticide is not under the said system, then the 0.01 ppm standard will apply.

According to the Korea-FDA, 39 out of 44 MRL on bananas and 28 of the 31 identified MRL on mangoes will be converted to the 0.01 ppm limit.

family,” Zarate added.

Zarate said some 17 million Filipino families, or 80 percent of all families, earn at most around P20,000 a month. The poorest half, or 53 percent, try to survive with less than P13,000 a month, and the poorest fifth at less than P5,600 a month.

“These poor and low-income families that should not be taxed at all. On the other hand, the country’s richest 326,000 families, or 1.5 percent of all families, earn an average of P106,000 to P191,000 a month,” Zarate added.

Senate receives copy of DOF bill

“Yes [we received the] DOF draft bill,” Sen. Juan Edgardo Angara said, confirming that Dominguez submitted late last week to the committee the 27-page DOF proposal.

In a letter to Angara accompanying a copy of the counterpart bill that Cua is sponsoring in the House of Representatives, Dominguez wrote: “We respectfully endorse the DOF bill, which embodies the fulfillment of the administration’s commitment to lower income-tax rates for wage earners and fund the 10-point socioeconomic agenda of the government.”

Senators sitting in the Ways and Means Committee are expected to convene public hearings on the DOF bill before crafting a committee report for plenary deliberation and approval by the Senate.

Angara admitted the committee has yet to fix a target date for the submission of the report endorsing early passage of the DOF bill.

“That depends on when the House of Representatives passes their version as required by the Constitution,” Angara explained, referring to Charter’s provision that all money measures must emanate from the House. With Butch Fernandez

Amores explained that only “some pesticides” applied to bananas and mangoes were affected by the MRL system amendments by the two countries. He added that these pesticides are the “strong” pesticides that are used by most, if not all, mango and banana farmers in the Philippines.

He said at least 51 percent of the mango farmers in the country are small stakeholders who cannot comply with the strict pesticide limit measure. Since they are “backyard farmers,” Amores said they will find it difficult to comply with the more stringent requirements of importing countries.

“Other mango farmers who are commercial growers can easily comply with the pesticide residue rule because of their more professional approach in farming. However, not all of them can pass the MRL set by Japan and South Korea,” he said.

The stringent MRL would also hurt 35 percent of banana growers who own small farms.

“The government failed to give assistance to our fruit growers, such as the provision of fertilizers, postharvest technologies and even harvesting and farming equipment,” Amores said.

PhilMech Executive Director Dionisio G. Alvindia said the agency is developing nonchemical approaches, such as the use of biocontrol agents, organic salts and food additives. Alvindia added these approaches are safe alternatives to fungicides and pesticides.

“It’s panic time for the industries. Starting January next year, the Korean and Japanese markets won’t accept our fruits with funcide and it’s final according to them. I don’t know if they will give us extension,” he said.

Alvindia said China may follow Japan and Korea in implementing a more stringent MRL for fruit imports.

According to data from the Philippine Statistics Authority, Japan and South Korea were the top buyers of Philippine bananas last year. Japan purchased 605,492 MT of locally grown bananas valued at $277 million, while South Korea imported 212,083 MT valued at $890.99 million.

Of the 12,991 MT of fresh mangoes exported by the Philippines last year, Japan bought 415 MT valued at $729,417, while South Korea purchased 3,299 MT valued at $6.84 million.

BMReports BusinessMirror

A4 Friday, September 30, 2016

news@businessmirror.com.ph

PHL seeks bigger share in $72-B global medical-tourism market T

By Ma. Stella F. Arnaldo

Special to the BusinessMirror

@Pulitika2010

HE Philippines is poised to take advantage of the $72-billion global medical tourism market, by positioning itself as a provider of excellent and affordable hospital care and medical treatments.

“The Philippines is globally positioning itself as the heart of Asia, combining modern technology with Philippine culture and tradition, highlighting the warmth of the Filipino people. We offer a brand of service that is distinctly Filipino,” said Patrick A. Chuasoto, chargé d’affaires ad interim of the Philippine Embassy in Washington, D.C., in his welcome remarks at the 2016 World Medical Tourism and Global Healthcare Congress (WMTC) on September 27 at the Romulo Hall of the Philippine Embassy (Related story on B4).

According to a news statement

1.4M The estimated number of Americans who will travel outside the US for medical care this year

from the embassy, there were about 40 delegates and participants who attended a briefing on the Philippine Medical Tourism Program.

The visit was part of the WMTC’s Embassy Tours.

Cynthia C. Lazo, director for Medical Travel and Wellness Tourism of the Department of Tourism (DOT), made a brief presentation on the key aspects of the Philippine medical-tourism program, including the country’s advantages in terms of modern facilities, fluency in the English language, good infrastructure, proximity to most of Asia’s major cities, “and the ability of a caring local community to help in total healing in body, mind and spirit.”

On a 2015 list of top destinations for medical tourism released by the International Healthcare Research Center and the Medical Tourism Association, the Philippines was ranked eighth after Canada, the United Kingdom, Israel, Singapore, Costa Rica, Italy and Germany.

Five medical centers are currently certified by the Joint Commission International (JCI) as offering the highest quality health care that foreigners can trust in the Philippines.

These are Asian Hospital in Muntinlupa City, St. Luke’s Medical Center in Quezon City and Taguig, Makati Medical Center and the Medical City

in Pasig City.

JCI identifies, measures and shares best practices in quality and patient safety with the world. Its team of experts works with hospitals and other health-care organizations, health systems, government ministries, public-health agencies, academic institutions and businesses to achieve peak performance in patient care. A JCI accreditation for a Philippine hospital enables patients from other countries to use their health insurance to pay for the costs of treatment in a local hospital or medical facility.

For its medical-tourism program, the DOT is targeting to attract visitors from the following key markets: overseas and former Filipinos in North America and Canada; Australia; Pacific Island nations, such as the Republic of Nauru, Papua New Guinea, Guam, Palau and the Federated States of Micronesia; Japan; South Korea; and the Middle East (i.e., the United Arab Emirates, Saudi Arabia and Bahrain).

While not yet JCI-certified, other hospitals the DOT has accredited as excellent patient facilities offering premium health care are Capitol

Medical Center in Quezon City, the University of Santo Tomas Hospital in Manila and the St. Frances Cabrini Medical Center in Santo Tomas, Batangas.

The DOT’s medical tourism program also includes spa tourism, promoting traditional Filipino healing methods and use of local herbs, oils and essences. It was through DOT’s initiative that many spas now offer the deep tissue therapeutic massage called hilot and the traditional foot massage from the Mount Province using wooden sticks called dagdagay.

According to the DOT, among its other competitors in Asia, like Thailand, Malaysia, Singapore and the Philippines, offers the lowest rates on hospital rooms ($23) and facelifts ($1,900). It also offers the lowest cost in medical checkups ($218).

A number of spas in the Philippines, such as The Farm in San Benito, Batangas and Mandala Spa in Boracay, have received a string of awards from international health and wellness organizations.

The web site Patients Beyond Borders estimates the global market for medical tourism at $45.5 billion to $72 billion, “based on approximately

14 million cross-border patients worldwide spending an average of $3,800 to $6,000 per visit, including medically related costs, cross-border and local transport, inpatient stay and accommodations. We estimate some 1.4 million Americans will travel outside the US for medical care this year [2016].”

Seidric Tapscott, founder of Tapscott Health, who delivered a short testimonial on Philippine medical tourism, said: “It is time to put the Philippines on the map of medical tourism. It has some of the best medical facilities in the world with top rated doctors. I avail of general health screening in the country regularly.”

Omar Shalabi, from the Johns Hopkins Aramco Healthcare Co., also expressed his appreciation for the expertise and work ethic of Filipino nurses and other allied professionals.

The embassy briefing was organized with the support of the DOT, Department of Health, Department of Trade and Industry, and the Philippine Tourism Office in New York. Representatives from major hospitals in the Philippines and medical tourism facilitators were also present.

1 million Chinese tourists set to visit PHL in 2017–envoy

By Recto Mercene @rectomercene

A

mid government preparations for bilateral talks with China in October, the country’s tourism industry is expected to benefit from President Duterte’s conciliatory stance toward Beijing, as Ambassador Zhao Jianhua said China plans to send more than 1 million Chinese tourists to the

Philippines by the end of 2017.

“In the first half of 2016, the number of Chinese tourists increased by 79 percent and, given the rapid rate, the number will exceed 1 million by the end of 2017,” Zhao said.

He said both China and the Philippines share the common goal of promoting the interests of vast majority of developing countries, particularly when it comes to mutual respect and

equality, and the fundamental policy of noninterference in domestic affairs.

“Illegal drugs is the enemy of all mankind. It is the shared responsibility of all countries to fight against drug-related crimes. The Chinese government is a staunch force in the international campaign against drug crimes,” he said.

“The Chinese side fully understands and firmly supports the Duterte administration’s policy that prioritizes the fight against drug crimes, and we stand ready to continue to cooperate with the Philippines by providing further assistance and jointly implementing bilateral plans of action,” Zhao added.

Zhao said Beijing is open to talks, but made no commitment to discussing President Duterte’s appeal to allow Filipino fishermen to return to the Scarborough Shoal during the Philippine leader’s visit to China sometime in October.

“We would like to discuss this issue with the Philippines and that we can look at the possibilities on how we could handle it properly,” Zhao said in an interview.

Asked if Mr. Duterte’s demand for

the return of Filipinos’ fishing rights at the Scarborough will be allowed by China, Zhao said: “Yes, you can say it.

But the President has already made it clear that if he goes to China, he said...we’re going to focus on issues that unite us, instead of issues that will divide us.”

President Duterte said he wants China to comply with the international ruling, but maintains a conciliatory stance toward Beijing, which accused the Philippine government under then-President Benigno S. Aquino III of stirring up tensions in the resource-rich waters when Manila sued them before an international court.

The President’s position indicates that he does not want to antagonize Beijing, as the Philippines prepares for bilateral talks to repair strained ties with its Asian neighbor and for China to eventually allow Filipino fishermen back to the Scarborough Shoal.

“We quite understand that your President is concerned about the well-being of your fishermen, and our fishermen also suffered from this kind of tension. So, based on traditional friendship and brotherhood, we would like to figure out

how we can handle it,” Zhao said.

What’s important, he noted, is for both sides to commit to “peaceful means” to settle differences through “friendly bilateral dialogues and negotiations.”

“As friends and partners, as long as China and the Philippines maintain the political willingness to resolve problems, there will be no insurmountable obstacles in the future development of bilateral relations,” he said.

Under President Duterte’s predecessor, Aquino, relations with China were severely strained over escalating territorial disputes in the South China Sea, where Vietnam, Malaysia, Brunei and Taiwan also have overlapping claims. But Mr. Duterte has taken steps to bring the relationship back to normal.

The President also said he is considering bolstering defense cooperation with China, and even Russia, and hinted that he wants both countries to supply the Philippine military with their armament s, t rad it ion a l ly acqu i red f rom t he cou nt r y ’s long-t i me treaty ally, the United States, and Western partners.

“Ever since President Duterte took

office, China and the Philippines have been engaging in friendly interactions, which have yielded a series of positive results,” Zhao said.

Zhao said people often ask him what are the secrets behind China’s great success and shared the secrets with the audience “and you don’t have to keep it confidential.”

“Secret No. 1, a strong leadership that is dedicated to the wellbeing of the people, and a leadership that takes improving people’s lives as the fundamental goal of national economic and social development.

Secret No. 2, a consistent and correct national development strategy that allows flexible changes and adjustments with the times. We are now implementing the 13th five-year plan of national development.

Secret No. 3, a hardworking and diligent people who are willing to work long hours and spare no efforts in striving for a better life.

Secret No. 4, a stable, peaceful and cooperative regional and international environment, which allows us to concentrate on national development, which enables us to be No. 1 trading partner of over 100 countries.

GGAM wins arbitration case against Bloomberry

By VG Cabuag

A

@Vilygc

Singapore-based arbitration court has sided with US-based Global Gaming Asset Management Philippines (GGAM) and said it did not mislead billionaire Enrique Razon Jr. into signing the management agreement to operate Solaire Resorts and Casino.

The court also said there is no basis for Razon, who owns Bloomberry Resorts Corp., to challenge the ownership of GGAM on some 921.18million shares in the company.

GGAM acquired the said shares after it exercised its equity option rights to raise its stake in Bloomberry to 8.7 percent.

“There is no basis for respondents [Bloomberry] to challenge GGAM’s title to the 921,184,056 [Bloomberry] shares, because the grounds for termination were not substantial and fundamental, thus GGAM can exercise its rights in relation to those shares, including the right to sell them,” the arbitration court said.

GGAM is the previous operator of Solaire after signing a five-year management contract.

In September 2009 Bloomberry entered into a management services agreement with GGAM for all the aspects of the operations of Solaire, which included the preopening preparations.

As part of the agreement, GGAM

was granted the option to purchase up to 921.18-million shares at a purchase price equivalent to P1-per share plus $15 million.

Fees per contract amounts to $100,000 per month for the technical assistance and $75,000 monthly for services related to the preopening operations. Its contract was for five years, with the option to extend by another five years.

However, Razon fired GGAM in 2013 shortly after the opening of Solaire, accusing the Las Vegasbased firm of just sitting on their laurels and allowing the billionaire’s management to do most of the leg work, including bringing in VIP gamblers from Macau and China.

But the international tribunal rejected the claim of GGAM that it was defamed by the heated statements of Razon against the firm.

The tribunal still has to make

a decision on the reliefs, remedies and cost, which it will organize in consultation with the parties.

Bloomberry said it was advised

by Philippine counsel that “an award of the Arbitral Tribunal can only be enforced in the Philippines through an order of a Philippine court of proper jurisdiction after appropriate proceedings taking into account applicable Philippine law and public policy.”

The Arbitral Tribunal reserved for another order its resolution on the request of GGAM: (a) for the award to be made public; (b) to be allowed to provide a copy of the award to Philippine courts, government agencies and persons involved in the sale of the shares; and (c) to require (Bloomberry) to inform Deutsche Bank AG that they have no objection to the immediate release of all dividends paid by (Bloomberry) to GGAM.

AseanFriday BusinessMirror

Friday, September 30, 2016 A5

Vietnam’s economy remains outperformer as GDP climbs 6.4% in Q3

V

ietnam’s economic growth accelerated this quarter, boosted by foreign investments and rising exports.

GDP rose 6.4 percent in the third quarter from a year earlier, up from 5.78 percent in the previous three months, the General Statistics Office said in Hanoi on Thursday. In the nine months through September, the economy grew 5.93 percent, compared with the median estimate of 5.83 percent in a Bloomberg survey of four economists.

Big picture

Grow th is being buoyed by rising foreign direct investment and exports, stronger credit demand and a slight recovery in agriculture following a crippling d rought. Viet na m’s economy has benefited in the past five years from companies, such as Samsung Electronics Co. setting up plants in the country, transforming it into a manufactur-

5.93% Vietnam’s GDP growth in the first three quarters

ing hub for electronics goods, including smartphones.

Economist takeaways

“We expect Vietnam to remain a growth outperformer, bucking regional weakness in trade,” said Eugenia Victorino, an economist at Australia and New Zealand Banking Group Ltd. in Singapore. “Reforms are slowly instituted, which should prop up potential growth further in the medium term.” “The jump comes from a rebound of the

agriculture sector after a droughtsuppressed growth,” said Trinh Nguyen, a senior economist for emerging-market Asia at Natixis SA in Hong Kong. “The industrial sector remains a key bright spot, with construction, manufacturing and electricity pulling through.

Vietnam manufacturing is, indeed, a regional bright spot—exports are expanding despite the regional and global gloom. Wage cost competitiveness is the key region that it is attracting capital from countries that have worsening demographic transitions in East Asia.

Other details

Manufacturing rose 11 percent in January to September from a year earlier, while agriculture rose 0.05 percent. In the first half of the year, farm output shrank. Disbursed foreign direct investment rose 12 percent in January to September from a year earlier. Exports increased 9 percent in September from a year earlier, with sales of electronics surging 29 percent. Vietnam posted a trade deficit of $100 million for September. For the first nine months of the year, it had a trade surplus of $2.77 billion. Bloomberg News

Duterte’s stance on South China Sea faces test in Hanoi trip

Lofty Southeast Asian stock valuations don’t deter Mark Mobius

V

President Rodrigo Duterte (left) and his Vietnamese counterpart Tran Dai Quang stand on a podium, as Vietnamese sailors from an honor guard parade during a welcoming ceremony at the presidential palace in Hanoi on Thursday. AP

P

resident Duterte’s stance on territorial disputes in the South China Sea faces a fresh international test, as he meets leaders in Hanoi a day after the United States and Vietnam started naval drills in the waters.

Mr. Duterte, who also plans to visit China and Japan next month, will meet with President Tran Dai Quang and Prime Minister Nguyen Xuan Phuc during the two-day state visit. The Philippine leader said he’ll look to solidify a “strategic partnership” between the nations, which, in recent years, have shared a common position in opposing China’s expansionism in the South China Sea. “We will seek to identify emerging areas of partnership particularly in the fields of maritime security and law enforcement,” President Duterte said before his departure on Wednesday. “As maritime nations with rapidly developing economies, we acknowledge the convergence of our strategic interests.”

Mr. Duterte has shaken up the status quo in recent weeks in calling for greater cooperation with China, while repeatedly attacking the US, the Philippines’s main security ally. Any negotiations with China over disputed territory in the South China Sea would have implications for fellow claimants, like Vietnam, that con-

test Beijing’s claims to more than 80 percent of the waters.

United front

The Department of Foreign Affairs said President Duterte was ready to discuss territorial disputes should the issue be raised during his Vietnam trip, according to local media reports.

Beijing has reclaimed thousands of acres of land in the waters and increased its military presence in recent years. In addition to being a strategic waterway through which more than $5 trillion in international trade passes each year, the waters are important fishing grounds that are also thought to be rich in oil and gas deposits.

The Southeast Asian neighbors had in the past pushed for a united front against China, which prefers that disputes be settled through one-on-one talks. They scored a major victory in July, when an international tribunal ruled that China’s claims were unlawful in a case brought by the Philippines—a decision Beijing refused to recognize.

Naval exercises

Since then, however, Mr. Duterte has softened toward China and offered conflicting stances

on the ruling. He’s indicated he’s open to direct talks with China provided there is an economic benefit for the Philippines, a departure from his predecessor Benigno S. Aquino III. China is the largest trading partner for both the Philippines and Vietnam, while the US is second.

President Duterte has also raised concerns in Washington by saying he would put an end to his country’s joint sea patrols with the US in the area.

The Philippine leader said on Wednesday that scheduled military exercises next month with the US would be the last time they take place, ABSCBN reported, citing a speech by the Mr. Duterte.

That contrasts with American efforts to expand naval engagement with Vietnam and Japan, which indicated this month it would step up activity in the South China Sea by carrying out joint training cruises with the US Navy.

China and Russia also held joint naval drills in the area this month.

The US and Vietnam announced on Wednesday the start of its seventh annual naval engagement. The drills beginning in Danang will include maritime exercises focused on communications through the code for unplanned encounters at sea, and a search and rescue operation, according to statement by the office of the US Commander Logistics Group Western Pacific. Bloomberg News

aluations at a 16-month high are taking the shine off some Southeast Asian stocks. Mark Mobius isn’t flinching.

The region’s equities still offer good value, according to the executive chairman of Templeton Emerging Markets Group, who added that political worries about some of the countries are overdone.

“They’re not really expensive in the environment that we’re in now,” Mobius said in a live interview on Bloomberg’s Facebook page at the Bloomberg Markets Most Influential summit in Hong Kong on Wednesday. “Southeast Asia is benefiting from the growth of China and increasingly from the growth in India.”

The 12-month price-to-earnings ratio for the MSCI South East Asia Index has risen from this year’s low of 12.5 in January to a 16-month high of 15.2 in August, amid a rally in emerging-market assets. It was 15 on Thursday, compared with 12.6 for a measure of developing-nation equities. The rising valuations have been a headwind for Southeast Asian equities this quarter, with the regional gauge rallying 2.2 percent since the end of June, compared with a 10percent increase in the emergingmarket index.

Overseas investors pulled money from the Manila bourse for 25 straight days through Wednesday, amid concern President Duterte’s abrasive style is deterring investors, while in Indonesia a disappointing tax amnesty has contributed to outflows. Investors are still pumping money into Thai equities, even amid uncertainty over the health of the 88-year-old king, who has been a source of political stability throughout this reign.

No downside

“ There are individual problems in each of the countries,” Mobius said. “There’s concern about [President] Duterte in the Philippines, which I think is overdone. There’s concern about reforms in Indonesia and the political environment in Thailand. I don’t see downside any where.”

Foreign funds have pulled $357 million from Philippine shares this month and $352 million from Indonesia, exchange data show, paring

inflows this year to $668 million and $2.5 billion, respectively. They’ve added $547 million to Thai equities in September and $3.8 billion so far in 2016.

The MSCI Southeast Asian gauge has dropped 2.4 percent since this year’s closing high in August. In the past month, the SET Index has fallen 4.2 percent, the Philippine benchmark measure is down 2.5 percent, the FTSE Bursa Malaysia KLCI Index declined 0.8 percent and the Jakarta Composite Index (JCI) rose 1.5 percent. Apart from the Philippines, the individual markets are up this quarter, with Vietnamese shares rising to the highest level since 2008.

The region’s emerging-market stocks rose on Thursday after the Organization of Petroleum Exporting Countries agreed to cut production. The Philippine Stock Exchange Index climbed 0.8 percent as of 10:05 a.m. in Manila, the JCI increased 0.6 percent and the Malaysian benchmark gauge gained 0.2 percent.

Southeast Asia’s fast-growing economies have been instrumental in supporting the region’s stock markets. Philippine gross domestic product increased 7 percent last quarter from a year earlier, Indonesia expanded 5.18 percent and Thailand grew 3.5 percent. It was the quickest expansion since 2013 for all three nations as their governments pressed ahead with aggressive infrastructure programs.

‘Very optimistic’

“I like the consumer sector in Southeast Asia because per capita incomes are going up,” Mobius said. “On a selective basis, I like technology.”

The Philippines remains a very investible market as there’s confidence the fundamentals put in place under the administration of former President Benigno S. Aquino III will continue, Ben Way, Macquarie Group Ltd. Asian CEO, said during a panel discussion at the Bloomberg summit on Wednesday.

“Despite what you read or see on TV at the moment, actually the story on the ground remains incredibly positive,” he said. “We are also very optimistic about Indonesia and Thailand, probably in that order, given the size of the economies and what both administrations are looking to do.” Bloomberg News

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The first time Congress has successfully challenged the president on a piece of legislation

Saudi to hit back at 9/11 lawsuit

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UBAI, United Arab Emirates—Saudi Arabia and its allies are warning that US legislation allowing the kingdom to be sued for the 9/11 attacks will have negative repercussions.

The kingdom maintains an arsenal of tools to retaliate with, including curtailing official contacts, pulling billions of dollars from the US economy, and persuading its close allies in the Gulf Cooperation Council (GCC) to scale back counterterrorism cooperation, investments and US access to important regional air bases.

“This should be clear to America and to the rest of the world: When one GCC state is targeted unfairly, the others stand around it,” said Abdulkhaleq Abdullah, an Emirati Gulf specialist and professor of political science at United Arab Emirates University.

“All the states will stand by Saudi Arabia in every way possible,” he said.

When Saudi Arabia wanted to pressure Qatar to limit its support for the Muslim Brotherhood group in Egypt, it spearheaded an unprecedented withdrawal of Gulf Arab ambassadors from Doha in 2014 and essentially isolated the tiny gas-rich nation within the GCC. When Sweden’s Foreign Minister Margot Wallstrom strongly criticized Saudi Arabia’s human-rights record last year, the kingdom unleashed a fierce diplomatic salvo that jolted Stockholm’s standing in the Arab world and threatened Swedish business interests in the Gulf.

Sweden eventually backpedaled. AP

Congress overrides Obama veto of 9/11 bill ASHINGTON—The GOP-led Congress has been angling for this moment: the chance to finally deliver President Barack Obama a stinging rebuke with the first veto override since he took office.

It may not be exactly the political score many Republicans had envisioned. The timing comes near the end of Obama’s presidency and on a bill—which would let 9/11 families sue the Saudi Arabian government— that some lawmakers concede is problematic.

But on Wednesday, the Senate voted 97-1 to override Obama’s veto of the Justice Against Sponsors of Terrorism Act. The House swiftly followed with an override vote of 348-77.

The override was the first time Congress has successfully challenged the president on a piece of legislation, despite Obama’s 12 other vetoes, including 10 when Republicans were the majority of both houses. In most instances, Congress didn’t even attempt an override.

The White House, which made modest gestures to prevent this week’s outcome with tough warnings from its national security team, blasted the vote as “embarrassing,” warning that lawmakers would have to answer to their constituents.

A cadre of blue-chip lobby shops was being paid top dollar by the Saudi government to try to derail the action. But the opposition was a long-shot effort that has little chance against the compelling stories of the 9/11 victims’ families and friends who have pressured Congress for almost a decade to pass the legislation.

“This rare moment of bipartisanship is a testament to the strength of the 9/11 families,” said Sen. Charles E. Schumer, Democrat-New York, one of the bill’s lead authors. “Overriding a presidential veto is something we don’t take lightly, but it was important in this case.”

After a personal appeal from Obama, Sen. Harry Reid of Nevada, the Democratic leader, was the lone vote against the override. Two other senators did not vote because they were on the presidential campaign trail in support of Hillary Clinton— Tim Kaine of Virginia, the Democratic vice presidential nominee and Bernie Sanders of Vermont.

The legislation would amend existing law to allow US courts to

hear terrorism cases against foreign states, narrowing the scope of immunity now granted to sovereign foreign actors.

Supporters say it will allow victims of terrorism their day in court.

But opponents, including the administration, warn that it could complicate US relationships abroad, impede national security investigations and open the floodgates to similar suits by foreigners against the US government.

The Central Intelligence Agency director warned the bill could have “grave implications” for national security, and Defense Secretary Ashton Carter said it could be “devastating” to the department and “undermine” counterterrorism efforts abroad.

The legislation has bounced around Washington for years, but it was never expected to advance.

Schumer, the brash New Yorker who is poised to become the Senate Democratic leader next year, succeeded in passing it through the Senate in spring on a voice vote, without a formal roll call.

The House seized the opportunity to corner Obama, and just before the 15th anniversary of the September 11, 2001, attacks, approved the measure on a swift voice vote.

In the weeks since, the White House and opponents—and even some reluctant lawmakers—have scrambled to play catch-up. Top lobbying firms employing former congressional leaders, including Trent Lott, John Breaux and others, were

hired quickly by the Saudi government, some on $100,000-a-month retainers, to fight the override vote.

Several key lawmakers have expressed concerns about the legislation, saying they are having second thoughts about supporting the bill.

But not enough were ultimately willing to stop it.

“The president feels strongly about this. He’s also aware of how challenging the politics are,” White House Press Secretary Josh Earnest told reporters on Tuesday.

The override vote not only is a public slap at the president, but a reminder of his often tenuous relationship with Congress.

Obama has been criticized for having little experience with Capitol Hill, and even less engagement. He outsourced too much of his legislating to staff, critics said, without investing in the personal relationships needed to bargain with lawmakers.

When Republicans became the majority in both houses in 2015, they envisioned turning Obama into a vetoer in chief, eager to force the president into the uncomfortable position of rejecting bill after bill from the new Congress.

The strategy was seen by former House Speaker John A. Boehner and Senate Majority Leader Mitch McConnell as a way to fire up their partisan GOP base and show the two parties’ different approaches to legislating.

But that never really happened.

Faced with their own party infighting, the Republican House

and Senate often struggled to find common ground and muster their own votes to send bills to the White House.

When they did, Obama easily swatted the bills back with a veto message. On the few occasions when Republicans mounted an override attempt, Democrats sustained the vetoes.

The closest Republicans came to a victory was on a bill to expedite construction of the Keystone XL pipeline that many Democrats also supported. But the override fell a few votes short of the 67 needed.

Obama even appeared to lament that he didn’t always have true sparring partners in the gridlocked Congress.

“I don’t generally even have to veto anything because they can’t get organized enough even to present the cockamamie legislation that they’re interested in passing,” Obama said at a recent New York fundraiser. Officials at the White House are downplaying the significance of this week’s votes, seeing the action as an outlier after nearly two years in which a Republican congressional majority failed to produce much landmark legislation for the president to sign, let alone veto.

While adamant that the 9/11 legislation could have far-reaching consequences and potentially hurt US alliances, not only with Saudi Arabia but with other allies, the administration does not appear to have made a full-court effort to stop it. TNS

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One big move by government has been the use of ‘bunker-buster’ bombs

Fight for Aleppo is turning point in the Syrian war

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amilies huddle terrified in basements, stalked by staggeringly powerful explosions shaking the streets above.

Wounded children writhe untreated on dirty clinic floors. Hospitals and rescue centers—a ravaged city’s last ragged line of defense— crumble daily into rubble, often appearing to have been methodically targeted.

Even by the brutal benchmarks of the Syrian conflict, Russian and Syrian bombardment of rebel-held districts in the northern Syrian city of Aleppo this last week has been marked by a degree of unparalleled savagery and suffering, according to longtime observers of the multisided fighting.

And geopolitical reverberations are growing at a parallel pace. Secretary of State John F. Kerry on Wednesday threatened to suspend “bilateral engagement” with the Kremlin in Syria, unless the aerial onslaught against Aleppo, once a cultural and historic jewel, is halted.

A suspension would likely be a death knell for American efforts to enlist Russia in the common fight against Islamic State (IS) militants.

As recently as last week, diplomat after diplomat at the United Nations General Assembly asserted that there was no military path to ending the conflict. With the war having devolved into a stalemate, Syrian President Bashar al-Assad and his Russian backers are seemingly attempting to seize the battlefield initiative by capturing the opposition-held sector of Aleppo, whatever the human cost.

A regime victory in Aleppo, once the country’s most populous city and its main commercial center, would deprive the Syrian opposition of its main urban stronghold, setting in motion a potentially decisive change in the course of the conflict. And the unbridled fierceness of the latest fighting is sending a new flood of refugees out into a world already beginning to stagger under the burden.

Until now, analysts say, the Assad regime had been deterred primarily by its own forces’ weakness. That state of affairs in some ways dovetailed neatly with international fears that an all-out battle for Aleppo’s east, where between a quarter-million and 300,000 civilians are believed trapped, would lead to a bloodbath unseen thus far in this war.

But newfound Russian willingness to deploy its warplanes in a ferocious bombardment of eastern Aleppo—with battlefield weaponry not previously used in a densely populated Syrian city—has dramatically altered the equation.

The aerial campaign signaled the start of a broad offensive against opposition-held Aleppo announced by the Assad government on September 22.

The push has included ground fighting in recent days—the first time since 2012 that Syrian government troops had crossed into those rebel-held areas.

One turning point in Aleppo has been the use—not acknowledged

by Russia or Syria, but publicly alleged by senior diplomats and the Syrian opposition—of “bunkerbuster” bombs, capable of penetrating heavily fortified underground installations.

“They’re actually a very strange choice to use against cities, unless you’re trying to hit something in particular, so they’re likely to be on the basis of specific intelligence— hitting things like buried supply tunnels, underground command centers,” said Justin Bronk, a military scientist with the Royal United Services Institute, a British think tank. “Or civilian shelters—they would go straight through.”

Analysts believe the employing of such weaponry, together with armaments—such as internationally outlawed cluster munitions—suggests that the Syrian regime not only believes it can root out and destroy the opposition’s leadership in Aleppo by such means, but that carnage involving civilians is simply not part of the calculus.

“What is equally criminal, in my view, is that those who are committing these crimes do so with a sense of impunity and immunity that is absolute,” Frederic Hof, the director of the Atlantic Council’s Rafik Hariri Center for the Middle East, said at a Washington forum this week.

“They have measured the reaction of the West to civilian slaughter over the past five years and they have concluded—quite rationally— that they may do as they wish, when they wish, to anyone they wish,” he said.

The Aleppo assault intensified on Wednesday, with humanitarian groups reporting that two hospitals—codenamed M2 and M10 by medical personnel to obscure their locations—were knocked out of commission by bombardment, sending debris showering onto the faces of terrified patients.

The international group Medecins Sans Frontieres, or Doctors Without Borders, which supported both facilities, said at least two patients died and two medical per-

sonnel were wounded. Only seven surgeons remain in the area that is under attack, the group said.

“We have never seen so much death and injury in our hospitals,” an orthopedic surgeon, Dr. Bakry Maaz, told the relief group USSOM. “This massacre is taking place before our eyes.”

Against a backdrop of starvation and deprivation, one of eastern Aleppo’s few remaining bakeries was hit in the latest bombardment, as well, witnesses and activists said.

As always in this war, the most vulnerable have borne the brunt.

The United Nations’ children’s agency, United Nations Children’s Fund, said that at least 96 children had been killed and 223 injured in eastern Aleppo since Friday.

“The children of Aleppo are trapped in a living nightmare,” the agency’s deputy chief, Justin Forsyth, said on Wednesday. “There are no words left to describe the suffering they are experiencing.”

At the UN, Secretary-General Ban Ki-moon could scarcely contain his outrage over the offensive, which began even as the world body was trying to shore up a failing cease-fire agreed to earlier this month. At a gathering of the Security Council on Wednesday, the outgoing UN chief made his strongest war-crimes accusation against the Syrian government and its ally, Russia.

“They know they are committing war crimes,” he declared.

“Imagine the destruction,” he said. “People with their limbs blown off, children in terrible pain with no relief…. Imagine a slaughterhouse.

This is worse.”

Frustration and fury on diplomats’ part have been building for days. Speaking to the council on Sunday, the UN’s special envoy for Syria, Staffan de Mistura, cited evidence pointing to the use of bunkerbuster bombs, coupled with reports of “incendiary bombs that create fireballs of such intensity that they light up the pitch darkness in eastern Aleppo, as though it was actually daylight.”

If confirmed, de Mistura said, “the systematic, indiscriminate use of such weapons in areas where civilians and civilian infrastructure are present may amount to war crimes.”

In Syria, where half the population has already been driven from homes, bombardment like that seen in Aleppo is the leading cause of forced displacement, a French nongovernmental organization said in a study released on Wednesday.

Drawing on refugee interviews and patterns of displacement, it said relentless use of artillery shells, rockets and aerial bombardment was the “overriding factor” behind the migratory wave that threatens to destabilize Syria’s neighbors and is roiling the European political scene. Los Angeles Times/TNS

Kerry warns: US may suspend cooperation with Russia in Syria

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ASHINGTON—US Secretary of State John F. Kerry on Wednesday threatened to suspend United States cooperation with Russia concerning the conflict in Syria, following heavy Russian and Syrian air strikes on civilian neighborhoods in the divided city of Aleppo.

The warning signaled growing frustration and anger in the Obama administration at what it sees as a widening Russian effort to prop up Syrian President Bashar al-Assad, rather than focus on defeating the Islamic State (IS) and other extremist groups in the country’s multisided civil war.

In a telephone conversation with Russia’s foreign minister, Sergey Lavrov, Kerry “expressed grave concern” over the “drastic escalation” of air attacks since the breakdown of a cease-fire last week, State Department Spokesman John Kirby

said. In recent days, air strikes with bunker-buster and incendiary bombs have killed hundreds of civilians in Aleppo, Syria’s largest city, and targeted hospitals, water supplies and air raid shelters, US officials say.

In addition to the devastation, desperately needed convoys of food, medicine and other supplies have been blocked from many besieged enclaves because conditions are deemed too dangerous. At least one aid convoy was attacked.

Kerry told Lavrov that “the United States is making preparations to suspend US-Russia bilateral engagement on Syria” unless Russia “takes immediate steps to end the assault on Aleppo and restore the cessation of hostilities,” Kirby said in a statement.

Kerry “stressed that the burden remains on Russia to stop this assault and allow humanitarian access to Aleppo and other areas in need,”

Kirby said. Asked later if Kerry had set a deadline for action, Kirby said the secretary had “made clear...the sense of urgency” that was expected in a response from the Russians.

Kirby said Russia’s failure to heed the warning would lead to greater chaos in Syria. Extremists will fill the void, he said, and Russia will have to “send its troops home in body bags.”

An estimated 250,000 people live in eastern Aleppo, an area that is controlled by rebel forces and has been the chief target of the onslaught by Syrian and government forces and their Russian allies.

Russia and the United States lead an international task force aimed at ending the civil war, and diplomats from Moscow and Washington helped broker a partial cease-fire early this year and again this month. Both efforts soon collapsed. TNS

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The World BusinessMirror

Friday, September 30, 2016 A9

Japan’s retail sales fall for 1st time in 3 months UN says EU may ratify (forecast minus 1.7 percent). Sales of department stores and supermarkets fell 3.6 percent from a year earlier (forecast minus 2.6 percent).

Big picture

The latest figures underscore the challenge Prime Minister Shinzo Abe faces in stoking economic growth and inflation. Even with the unemployment rate at the lowest level in years, slow growth in wages is limiting consumer spending, which accounts for about 60 percent of Japan’s economy.

The release on Friday of data for employment, household spending, industrial production and inflation will give a more complete picture of how the economy performed last month.

Economist takeaways

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Shopper walks inside Tokyo Fantashion, as Japan’s GDP contracts less than economists forecast. Bloomberg News

apan’s retail sales fell for the first time in three months, signaling that consumer spending is struggling to maintain traction.

Key points

Retail sales fell 1.1 percent in August from the previous month, when they rose 1.5 percent, according to a trade ministry report

released on Thursday.

The median forecast of economists surveyed

by Bloomberg was for a 0.6-percent drop. Compared with a year earlier, they fell 2.1 percent

Bad weather and fewer weekends in August were largely to blame for the downbeat results, said Junko Nishioka, chief economist for Japan at Sumitomo Mitsui Banking Corp.

(SMBC) in Tokyo.

She cautioned against an overly pessimistic view, noting that sales of automobiles remained solid compared with a year earlier.

“The labor market will likely continue to recover, but it doesn’t look like the improvement will accelerate,” Nishioka said. “Private consumption will probably stay flat in the months ahead.”

Junichi Makino, chief Japan economist at SMBC Nikko Securities Inc., said sales of durable goods are picking up from a long slump that followed a sales-tax increase in April 2014.

Bloomberg News

Paris Agreement soon

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NITED NATIONS—The Paris Agreement on Climate Change appears likely to enter into force, with India announcing that it has ratified the agreement and the European Union signaling it may ratify within the next few days, officials said.

The two ratifications would mean countries accounting for nearly 65 percent of the world’s greenhouse-gas emissions will have approved the accord, which is set to take effect 30 days after 55 countries accounting for 55 percent of emissions deposit their ratification instruments with the UN. Currently, 61 countries, accounting for nearly 48 percent of emissions, have joined the accord.

“We’ve heard that the European Union may deposit its ratification instruments with us much sooner than we had expected, which would be tremendous news, because that would put us over the top in terms of the percentage of emissions, because we’re already there in terms of the number of countries needed,” UN Spokesman Stephane Dujarric said on Wednesday.

If that were to happen before October 7, the next UN conference on climate change set to take place in Marrakech would begin on November 7 with the agreement

already in force, something Dujarric said “would send a very strong signal to the rest of the world.”

Indian officials, who declined to be identified because they were not authorized to speak with the press, said India, accounting for about 4.5 percent of emissions, ratified the agreement on Wednesday and planned to deposit the ratification instruments with the UN on October 2, the anniversary of Mahatma Ghandi’s birth.

Germany ratified the accord on September 23 but EU rules require European countries, responsible for around 12 percent of emissions, to deposit their ratifications as a bloc when all 28 members have approved the deal.

Diplomats and media reports said the EU hoped to speed the process at a meeting later this week and finalize approval

by October 7.

The Paris Agreement asks both rich and poor countries to take action to curb the rise in global temperatures that is melting glaciers, raising sea levels and shifting rainfall patterns. It requires governments to present national plans to reduce emissions to limit global temperature rise to well below 2 degrees Celsius (3.6 degrees Fahrenheit). AP

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Friday, September 30, 2016

A11

China bubble trouble risks missing lessons from Japan

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hina is turning Japanese. That’s the increasingly held view of observers comparing China’s frenzied real-estate market with the epic bust that more than two decades ago hobbled one of its biggest economic rivals.

While the two scenarios aren’t a carbon copy, similarities between China’s record credit boom in recent years and Japan’s bubble era have been made at various times by a number of economists and investors.

Now, those voices are being heard more often—even within China.

Huang Yiping, a Peking University professor who advises China’s central bank, warned on Saturday about leverage that continues to climb, saying that the top risk is more and more investment generates less growth.

“That’s exactly the story that unfolded in Japan.”

The worry is that China repeats Japan’s mistake of not reining in excess credit and shutting down insolvent borrowers quickly enough, exacting longer-term damage to growth in the world’s No. 2 economy.

With potential expansion rates coming down across developed nations, the global pain would be magnified.

“What really troubles me is that this extended real-estate bull market has gone hand-in-hand with an extended period of rapid credit growth, debt accumulation, and some questionable practices on the part of both lenders and borrowers,” said Russell Jones, who had a front-row seat working as an analyst in 1990’s Japan during that country’s demise.

Jones, now a London-based partner at the Llewellyn Consulting research group, says of China that “this potentially poisonous cocktail of price, credit and prudential disequilibria is, indeed, very redolent of Japan during its bubble years of the 1980s.”

What’s triggering concern is a surge in total debt since 2008 to 2.5 times GDP, as authorities unleashed cheap bank loans to shore up China’s expansion.

Now, much of the credit is finding

its way into property—helping fuel a 33-percent surge in house prices in major cities from a year ago. Meantime, regulators have been slow to force banks to recognize bad loans and to shut zombie companies. The government has put off a string of corporate defaults this year in an effort to sustain confidence.

‘Rushing’ in

“Japan’s experience suggests that the regulator should pay more attention to the capital bubble risk,” said Chen Gong, chief researcher at Beijing-based Anbound Consulting, which bills itself as the biggest independent strategic think tank in China. Chen called on China’s policymakers to “prevent that capital from rushing into the housing market.”

The dominance of state-owned lenders and developers in the property market would leave the government and taxpayers on the hook for soured loans, raising the risk of a fiscal crisis, Chen says.

Hardly a week goes by without a warning that China is stoking a new bubble only a year after a $5-trillion stock-market crash that rocked policy-makers. Curbs to cool demand have struggled for traction, and Chinese media outlets carry reports of panic buying.

A commentary published by a WeChat account affiliated to the People’s Daily, the Communist Party’s mouthpiece, on Monday said the real-estate boom is leading couples to divorce, as a move to pay less property-related taxes. It also said companies risk losing competitiveness as they focus on gaining from real estate rather than focusing on their own industry.

One example of a company benefiting from property: Nanjing Putian Telecommunication-B, a loss-making telecommunication equipment man-

A tableau of a real-estate project in China Bloomberg News

ufacturer, which is selling two apartments in the heart of Beijing’s school district to shore up its balance sheet.

The value of the residences is estimated to have risen more than tenfold since the firm bought them in 2004. At least 73 listed companies said they’re planning to sell or have sold properties to shore up cash, according to a Guangdong-based newspaper.

“I am big on the parallels,” said Roy Smith, the New York University academic who, as a banker in 1990, anticipated Japan’s decline. Japan’s market crash “led to a financial crisis that they never recovered from.

China probably faces a debt-led financial crisis, too, which could have significant consequences,” he said.

One big advantage for China over 1990’s Japan is that it’s at a less-advanced level of development—meaning there’s still room to reflate the economy if there’s a financial bust.

China’s urbanization rate reached 53 percent in 2013, a far cry still from Japan’s peak of around 77 percent in the late-1980s. China is estimated to have another 150 million migrants headed for the cities before the urbanization rate reaches 80 percent, underpinning construction for years to come.

Japan difference

“Japan’s economy was already at a much more mature stage, so the possibility of growing out of the bubble crash through a policy of forbearance was not possible,” said Peter Morgan, a senior consultant at the Asian Development Bank who worked as an economist in 1990’s Japan.

Israel’s leaders lay wreaths beside casket of Shimon Peres

Also, China’s property market isn’t uniform, with major areas of weakness along with regions that flash bubble signs. Even so, economy-wide measures underscore the concerns of many. An early-warning indicator of financial crises compiled by the Bank for International Settlements—the excess credit relative to GDP compared with the long-run trend—hit a record in the first quarter.

“China’s policy-makers are behind the curve,” said Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong. Though they “have studied the Japanese experience extensively, it remains to be seen whether they have drawn the right policy lessons.”

Still buying

Wherever the chips fall, some buyers are confident the government will bail them out no matter what.

Jasmine Sheng, who works at a foreign bank in Shanghai, found herself having to compromise earlier this year on her plans to move to more upscale digs in China’s financial capital after selling her dated apartment last year.

In May she ended up shelling out an extra 2.2 million yuan ($330,000) over the proceeds from her old place, for a flat that, though 20 square meters bigger, was more than a quartercentury old, and in the same area.

“I just don’t think home prices in Shanghai will fall in the near future,” said Sheng, 35. “Even when a time comes that it’s about to fall, the government will do everything it can to support it.” Bloomberg News

Rich world’s most indebted people caught in bubble mystery

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Israeli Prime Minister Benjamin Netanyahu places a wreath beside the coffin of former Israeli President Shimon Peres at the Knesset, Israel’s Parliament, in Jerusalem on Thursday. Peres died early Wednesday from complications from a stroke. He was 93. AP/Ariel Schalit

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ERUSALEM—Israeli Prime Minister Benjamin Netanyahu and President Reuven Rivlin put down wreaths beside the casket of Israel’s ninth President Shimon Peres on Thursday morning, as preparations for his funeral were under way.

Peres died on Wednesday from complications following a stroke. He was 93.

The casket, draped in a blue and white flag, will lie in state in the plaza

of Israel’s parliament throughout the day for Israelis to come to pay their respects. President Barack Obama, Bill Clinton and French President François Hollande are among scores of world leaders who will attend the funeral in the country’s national cemetery in Jerusalem on Friday. It is expected to be the largest such gathering in Israel since the funeral of Prime Minister Yitzhak Rabin, who was assassinated by a Jewish nationalist in 1995.

More than 60 private planes are expected to arrive ahead of the ceremony. The police have shut roads throughout Jerusalem in preparation.

Peres served twice as Israel’s prime minister. Over his seven-decade political career, he transformed from a hawk to a Nobel Prize-winning advocate of reconciliation with the Palestinians. As Israel’spresident, he cultivated admiration at home and abroad for his youthful optimism. AP

ubbles are generally impossible to see on the way in, and blindingly obvious in hindsight. But when an economy boasts the rich world’s biggest household debt burden, the stakes couldn’t be higher. In Denmark borrowers on average owe their banks about three times their disposable incomes (an Organisation for Economic Co-operation and Development record).

The country went through its most recent boombust cycle in 2006-2008, when home prices slumped more than 20 percent from peak to trough, triggering Denmark’s worst recession in a generation.

Now, prices in Copenhagen are higher than at the frothiest point of the previous boom. Nordea, the Nordic region’s biggest bank, says there’s reason to fear this might be the next bubble.

Danish households’ assets are still worth more than their debts. But “asset prices can fall and too high a debt, particularly if undertaken with variable loans, can be much more difficult to service if rates increase,” Helge Pedersen, chief economist at Nordea’s Copenhagen office, said in a phone interview.

“I am afraid that liquidity issues may show up,” he said. “High gross debt financed by variable loans can lead to a liquidity issue and problems to service debt. And if asset prices fall, that’s a bad cocktail.” So far, there’s little sign the housing market is cooling down. Apartment prices are now 7.4 percent above their 2006 peak, according to Statistics Denmark data.

House prices are fast approaching their pre-crisis peak after jumping 2.3 percent last quarter from the first three months of the year. Bloomberg News

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Friday, September 30, 2016 A13

Taiwan lenders setting up shop after Yuanta

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wo more Taiwan-based banks are setting up shop in the Philippines, adding up to the cluster of foreign banks already in the country since the government further liberalized the financial sector to offshore lenders.

According to Dr. Gary SongHuann Lin, Taipei Economic and Cultural Office ambassador to the Philippines, the Bangko Sentral ng Pilipinas (BSP) already approved of the entry of the banks that are even now testing the waters prior to fullblast operations.

The ambassador said there is a high probability the banks will open sometime before the end of the year.

He did not name the banks.

“There would be two more to officially open soon. Now, they are testing their operations here. I cannot announce on their behalf but, I believe very soon, maybe a few months from now,” Lin told financial reporters.

Lin said since his appointment as

ambassador, Taiwan has set up three banks in the country, including First Commercial Bank of Taiwan and Cathay United Bank of Taiwan, which, along with Cathay Life Insurance Co., holds a 22.71-percent stake in Rizal Commercial Banking Corp. (RCBC).

Yuanta Savings Bank formally announced full-service operations on Monday, following the official name change of its acquisition of local lender Tong Yang Savings Bank.

The ambassador elaborated the growth of Taiwanese banks was partly a reflection of the common effort to strengthen the ties among neighboring countries through banking and other financial services. With more Taiwanese banks

in the Philippines, Lin hopes that investors will be more confident in doing business with the ease of transactions and gaining financial support and other services from their local community.

“They perceive the Philippines as a growth engine, a future opportunity. That’s why Taiwanese banks set up shops here.”

Lin added, “Taiwan, financially, is in a position to provide financial services not only to Taiwanese investors but also to the local business sector. So the coming of Taiwanese banks should be welcomed, because it will strengthen the bilateral [relations], bring more investments, facilitate more business and serve the general public of the Philippines [better].”

In 2014 former President Benigno S. Aquino III signed Republic Act 10641, providing for the full liberal-

There would be two more to officially open soon. Now, they are testing their operations here.”—Lin

DENR probes ‘midnight deals’

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nvironment Secretary Regina Paz L. Lopez has ordered an investigation into alleged “midnight deals” involving some officials of her department and “erring” mining companies that were granted extension or expansion of their operations during the last days of the Aquino administration.

Acting on a complaint from the Alyansa Tigil-Mina (ATM), Lopez demanded an audit of all mineral product ion-sh a r i ng ag reement (MPSA), commonly known as mining license, approved by the Mines and Geosciences Bureau (MGB) in May and June.

The ATM, a watchdog group, deplored the continued and widened operations of unscrupulous firms that violate the country’s mining laws to the detriment of the environment.

In a press statement, Jayvee Garganera, ATM national coordinator, said a dozen mining firms were granted extension of their MPSA by then-MGB Director and now Undersecretary Leo Jasareno, despite former President Benigno S. Aquino III’s earlier executive order (EO) suspending issuance or renewal of

mining licenses in the country.

EO 79 states that no new mineral agreement shall be issued by the MGB, pending the approval of a legislation clarifying the existing revenue-sharing scheme and mechanisms for the mining industry.

“The extension of mining licenses by the MGB is questionable, since it was against the order of P-Noy, who was still the President at that time.

Worse, some of these licenses were expansion of contract areas, meaning expanded operations,” Garganera stressed.

He denounced what he termed as “midnight deals” on the approval for renewal of the licenses given only a few days were left before the term of the former administration ended.

The MGB’s web site shows Jasareno approved some of the licenses as late as June 28 this year, just two days before President Duterte assumed office.

The companies that were reportedly given an extension are Sinosteel Phils. H.Y. Mining Corp. on Dinagat Island; Surigao Integrated Resources Corp. in Surigao del Norte; Chromerock Development Corp. in

ization of the banking sector. It also allowed foreign banks to fully acquire any local bank, lifting the limit of a 60-percent stake.

Foreign banks were allowed to set up shop in the Philippines in the first wave of liberalization through RA 7221 passed in 2003. Data from the BSP show foreign banks account for 11 percent of the country’s financial industry assets.

Allen Wu, Yuanta Savings Bank executive vice president, said they have yet to determine whether the bank will expand its reach, focusing first on its operations in Manila.

“It will take time for us to know everything in detail about the Philippines. Then it will determine how [our] expansion will be in the Philippines, including the decision whether to operate Yuanta from a savings to a commercial bank,” the executive said. Mia Rosienna Mallari

EO 79

The executive order issued by former president Benigno Aquino III suspending the issuance of new mineral agreement Eastern Samar; and Mount Labo Exploration and Development Corporation in Camarines Norte.

Those awarded with license for expansion of operations are Adnama Mining Resources Inc., Holcim Mining, Shangfil Mining and Trading, Kingking Mining, Core Mining Corp., Stagno Mining, Sinophil Mining; Quarry Ventured Phils. Inc.; Rapid City and Dev. Corp., Global Mini-Met Resources, Parvisgold Inc., Mina Tierra Gracia Inc., Investwell Resources Inc., Surigao Integrated Resources Corp., Shuley Mine Inc., Mount Labo Exploration, and Westchinamin Corp.

Lopez, in ordering the probe, wants to find out who gave Jasareno the go-signal to grant the said expansion permits.

Plainclothes agents start going around party places in BGC in antidrugs drive We sent agents inside the bar starting last week during a spectacular event attended by a lot of young people.”— Villanueva

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perators of at least two popular party places in the posh Bonifacio Global City (BGC) have forged a partnership with the Philippine Drug Enforcement Agency (PDEA) and the Philippine National Police (PNP) to stop the proliferation of so-called party drugs in the area.

In support to the Duterte administration’s anti-illegal drugs campaign, the owners of Valkyrie and The Palace requested both the PNP and the PDEA to deploy plainclothes agents every night to monitor and prevent the sale and use of drugs inside each venue.

A memorandum of agreement was signed between the management of the two bars and the PNP’s National Capital Regional Police Office for the deployment of law enforcers in the area every night.

PDE A E xe c ut ive D i re c tor Wilkins Villanueva confirmed the deployment of a team in civilian clothes to mingle with the customers of the high-end nightclubs.

“We sent agents inside the bar starting last week during a spectacular event attended by a lot of young people,” Villanueva said.

Valkyrie and The Palace are favorite party places of foreigners, young professionals and local celebrities.

Villanueva said the establishments’ owners requested the deployment to boost security, as well as prevent a repeat of the tragedy in a concert in Pasay City several months ago where several partygoers succumbed to drug overdose.

The plainclothes operatives inside these clubs are complemented by a K-9 squad at the entrance of each bar, in cooperation with the bars’ private security, in checking the personal belongings of arriving clients.

A14 Friday, September 30, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

A new foreign relations path

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rue to his policy of pursuing a more independent foreign policy, President Duterte has announced that the Philippines will seek closer ties with Russia and China. Mr. Duterte announced that “I think I’m about to cross the Rubicon between me and the United States, at least for the six years.” A pronouncement followed that it will be a point of “no return” and how the Philippines would need help in everything from trade and commerce and a willingness to open up to new allies.

The Philippine government later clarified that this will not equate to cutting ties with the US. However, President Duterte recently announced that he wants to end the annual military exercises between the Philippines and the US. Critics immediately jumped in saying the President’s decision to reduce dependence will have severe effects to the country’s socioeconomic fabric. A commentary recently highlighted the importance and advantages of stronger American relations and the disadvantages of stronger Russian ties. According to the article, the Philippines stands to lose about $1.3 billion in foreign direct investments (FDI) and $150 million in development aid if we decrease our ties with the US. A comparison was also made between the amount of goods the Philippines exports to the US and Russia, where we export $8.3 billion to the former, while we only export a mere $42.68 million to Russia. Total investments from Russia only totaled an insignificant $110,000, while the Philippines runs a trade deficit of $270 million.

At first glance, it might be foolish to wean our dependence on the US and trade it for the advantages closer ties with Russia or even China have to offer. But should we completely dismiss the notion of building stronger ties?

We need to look at the facts to objectively assess our decisionmaking. While people easily talk of the supposed great losses in trade between the US and the Philippines, the United States is only our second- (or third-) largest trading partner. Japan is currently the Philippines’s biggest trade partner, accounting for over $12 billion, or 21 percent of total Philippine exports. It is also the largest Official Development Assistance donor to the Philippines.

US FDI is largest in the manufacturing and business-process outsourcing sectors. However, American investments in the manufacturing sector are negligible in the overall Philippine manufacturing industry. Despite hosting the US military bases, the Philippine military has lagged behind its neighbors, with World War II and Vietnam War era equipment on the frontline. While dependent on military aid, in reality, the amount the Philippines receives is minimal when compared to other nations.

In the 21st century, practical foreign relations may force changes in current policy. The Philippines needs to get the “best deals” and that might entail doing what other nations have done. Turkey, for example, was a strong ally of the US three years ago. Now Russia and Turkey are lining up as “best friends”. Foreign relations that worked in the past may not be the best path for the future.

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Crowdsourcing debate questions James Jimenez

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spox

or the first time in more than two decades, the Commission on Elections (Comelec), prior to the May 2016 national and local elections, spearheaded the staging of a series of presidential and vice-presidential debates and called it the PiliPinas Debates 2016. While the debates were aired on all major networks, very little mention has been made of the fact that the debates also represented a major milestone in the emergence of social media as a platform for political discussion. Until now.

A recent report on Re-Thinking Debates, by Civic Hall (civichall. org), an online community based in New York’s Silicon Alley and touted as “a one-of-a-kind community center for the world’s civic innovators,” and “a space where social entrepreneurs, change-makers, government employees, hackers, academics, journalists and artists can share knowledge, build tools and solve problems together,” cited the Philippines as an example of social media being an engine of innovation.

“In countries that have a higher level of Internet and smartphone

penetration, their first presidential debates—or, as in the case of the Philippines, the first debates in nearly 25 years—have been more likely to embrace social media, both as a form of messaging between the campaigns and the voters and as a social space to discuss and debate the election. They have skipped directly to a style of debate that mirrors current media/technology partnerships in the United States, sometimes even surpassing it.”

The report goes on to say: “Facebook, which says it has 47 million users in the Philippines—only

“On April 24 the last of the three presidential debates generated more than 1.9 million tweets using the hashtag #PilipinasDebates2016. It was “the highest engagement on Twitter for a presidential debate this year. By the end, more than 35 million electionrelated tweets and more than 268 million election-related interactions on Facebook had been registered.”

7-million fewer than the total number of people registered to vote there—partnered with the Comelec, as well as with different broadcasters hosting the election debates, to provide data to help inform the questions moderators might ask the presidential candidates.

“This included conversational trends, such as the top political issues people were discussing in different parts of the country.

Facebook and Twitter, another Comelec partner, also assisted with crowdsourcing questions ahead of the debates.

“On April 24, the last of the three presidential debates generated more than 1.9 million tweets

using the hashtag #PilipinasDebates2016. It was “the highest engagement on Twitter for a presidential debate this year.”

By the end, more than 35 million election-related tweets and more than 268 million election-related interactions on Facebook had been registered.”

To say that this mention made my day is an understatement. But what made it particularly “suhweet” was that the report’s major recommendations mirrored an initiative that I strongly pushed for, but which was ultimately sidelined: voter-generated questions.

More specifically, Civic Hall recommended “crowdsourcing questions online—not only to achieve a mix of questions from voters, but to learn which questions matter the most. Online platforms can be set up relatively easily, but it’s important to prioritize transparency, which is essential for securing voters’ trust in the process, and moderate submissions.”

In the case of #PiliPinasDebates, this approach was passed over for the more traditional reliance on journalistic methods for question generation. Apparently, it was considered too much work to slog through the hundreds of tweets we received from netizens.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Markets and foundations

Miss Salceda

ne does not go home to a house always; one goes home to a person, as well.

That homecoming happened to us one night, as the reunion of the high-school batch 1966 of Ateneo de Naga came to a close. I do not belong to the batch because, as I emphasized in the meetings, I am way younger to the mock amusement of the said group.

I believe some of us in the 2A prayed and promised to the heavens that we would be good boys (we were not ready to call ourselves gentlemen) so long as she was assigned to us. The teachers for the first year were called. “Now, we go to the second year, was it Fr. Andres Bolinas, SJ, announcing? Her name was called. Miss Salceda was ours!

Your Miss Salceda will be around.”

Our Miss Salceda—that ownership is of memory and not of the person. It was charming to know that people think she belongs to us.

We were 14 or 15 when Miss Salceda came to our life. We were in second year.

It was the tradition in that Jesuit high school that, on the first day of classes, all the high-school faculty members were to be formally introduced to the entire community.

They were all seated on stage, in the vast gymnasium. We were all lined up below them, each column marked by the name of the section we would belong to. All of us were curious who would be our moderator that year. All of us—from the first year to the fourth—were also interested who was that young, lovely lady up there smiling.

No way the senior classes would get her. Anxious as we were, we remembered an unwritten policy that no young, pretty, female teacher was ever assigned to the seniors. We held on to that dark juvenile rule.

I believe some of us in the 2A prayed and promised to the heavens that we would be good boys (we were not ready to call ourselves gentlemen) so long as she was assigned to us. The teachers for the first year were called. “Now, we go to the second year, was it Fr. Andres Bolinas, SJ, announcing? Her name was called. Miss Salceda was ours!

Miss Salceda became our moderator and taught English composition and literature.

On one of those chilly mornings in November, she asked us to go out and write a poem. I do not know whether she asked us to be under the trees and gray sky, because

Tito Genova Valiente

annotations

Alvin Ang

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EAGLE WATCH

he last weeks have seen weakening in the financial markets. The stock-market index has lost roughly 300 points from July 1, or 3.6 percent. This was after it has reached a peak of 8,100 in end-July. The peso-dollar rate, meanwhile, hit a nine-year high of 48.26. At this level, the peso has depreciated by about 2.4 percent from the start of the year. These “weakenings” have been attributed to the political noises that have been hugging the headlines. No doubt they have stoked worries among local and foreign investors.

It is important, therefore, to look into the details of what has been happening in a broader and a longer context. Ultimately, we need to look at the strength of the foundations regardless if the storm is political, local or international.

It would be helpful to look at one of the key balances of the economy, which is the balance of payments (BOP). This balance, more or less, provides us the fundamental direction of the foreign exchange. The BOP consists of a capital account and a current account. The capital account includes direct and portfolio (stocks and bonds) investments or financing, while current account includes our trade transactions (exports and imports), overseas Filipino workers (OFW) remittances, tourism and business-process outsourcing (BPO) services.

The current account represents our regular transactions with the world. In here, imports have historically been larger than exports, leading to a current-account deficit.

The deficit requires that we need more foreign exchange to bridge this gap. In the past, our lack of foreign-exchange sources, other than exports, has pressured the currency to depreciate or even deva lue. However, beg inning the mid-2000s, we have been reflecting current-account surplus.

Meaning, even if our imports are larger than our exports, other sources have been funding the differences. These are our OFW remittances and, recently, BPO inflows and tourism. Last year these three sources have approximately provided about $60 billion to the economy. Hence, this means that there is enough foreign exchange to pay for our global transactions.

In fact, our current level of gross international reserves (GIR) has now reached $85.6 billion, which is good enough to pay more than 13 months of our import requirements. In the past, when devaluations occurred, our GIR was not even enough to pay three months of our imports. The import value of our GIR is much better than Indonesia (10), Malaysia (7) and Singapore (10). Hence, from a fundamental perspective, the pesodollar rate is not pressured by lack.

But why is the peso weakening against the dollar? The foreign exchange is just like any other product that has a value. The value is determined by the demand and supply for it. It is determined daily. The daily users of foreign exchange are mostly firms engaged in exports and imports, families of OFWs and investors (particularly portfolio—which can go in and out

of our markets at any time).

Any of these three groups could strongly drive the daily direction of the exchange rate. In the last three years, the peso has been depreciating against the dollar (0.51 percent in 2013, 4.4 percent in 2014 and 2.4 percent in 2015) despite the inflows. This is mainly due to external factors, primarily the possible US interest-rate hike, which has been inviting back investments. In this recent episode of depreciation, it is interesting to look at the volume of trade. The volume of trade from September 23 up to 27 were high, but went down on September 28, when it appreciated. It is possible that the weakening of the peso was driven by import payments for stocks for the Christmas season or capital importation. This seems to be the pattern in the last four months of the year as reflected in 2014 and 2015. In fact, it was expected that the peso would appreciate in November and December due to remittances, which are seen strongest during these months, but the inverse happened. Hopefully, the weakening of the peso, if mainly due to imports, will contribute to better economic growth in the coming years. We note that in the period January to June 2016, imports of capital goods have increased 60 perecent, based on PSA data.

In regard to the stock market, we have maintained our view at the start of this year that the PSEi is expensive. Our year-end estimate is 7,500, or a full-year return of about 7 percent. This is just about the same as GDP growth. The average priceearnings (PE) ratio of the PSEi is 16.5x. At 8,100 it has reached 22x.

This is the most expensive in Asean and this is also making investors take a second look at our valuations.

What about the political noises? The chart below shows the market valuation through the years. It would seem that politics play a smaller role in relation to values rather than external factors.

At the moment, the factors above may be the ones driving the markets. It may be early to judge said noises as the main factors for weakness. Nonetheless, it is important to note that confidence is more important than valuations in a global environment. Thus, when expected fundamental valuations are breached, that is another story.

Friday, September 30, 2016 A15

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Earlier on the first day of the reunion, after the batch had turned over the fund for a special library that will be devoted to Bikol books, I already met her. As I stepped down from the podium, a lovely lady turned to me and said: “I think I know this boy.” I looked at her politely and intently.

Those were a few seconds, but in that odd, small silence, she saw that I did not know her at first.

But then, I blurted, “Miss Salceda.” She smiled and remarked: “Ah no, you did not recognize me fast. You owe me one.” We talked some more, but there were distractions. There were many guests and I had to attend to them. Soon she was gone.

On the last day of the reunion, I got an SMS from Greg Castilla of that batch. “Please be our guest.

When a D meets a D Siegfred Bueno Mison, Esq.

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THE PATRIOT

ithout tenacity or what I prefer to call as dogged determination, a leader cannot be transparent (fear from exposure), cannot be innovative (fear from failure), cannot be resilient (fear from pain), cannot be accountable (fear from liability), to name a few. Developing tenacity takes time, and myriad of situations allow a leader to acquire experience, emotional maturity and “intestinal” fortitude. As author John Maxwell puts it, “The good news is that your leadership ability is not static.

No matter where you’re starting from, you can get better.”

Much has been said about President Duterte and Sen. Leila M. de Lima. Both products of San Beda College of Law, they are two tenacious leaders on a collision course as they take their respective advocacies to a higher level. Mr. Duterte vows to improve peace and order in the country by stopping drugs, corruption and criminality; de Lima vows to protect human rights amid the intense drive against illegal drugs and criminality. To me, they are both patriots.

Patriotism is generally defined as dedicated love for country. President Duterte has exhibited his love for country with much audacity by showing the Filipino people and the rest of the world that he is willing to die in his quest to end the drug menace in the Philippines. From his Davao City experience, he developed his hands-on, devil-maycare, relentless leadership style. He will do anything and everything to accomplish the mission, regardless

of the cost. It has worked in Davao City, and, judging by the large number of drug addicts, users and even pushers who have surrendered, it is working all over the Philippines, as well. From mayor to president, Mr. Duterte has taken on a much larger role with a much larger audience, which now even includes the international community. Unpresidential though some say, he was and is never afraid to speak up his mind, profanity included. As he leads the country in the same fashion that he led Davao City, he with his “politically untrained” mouth, however, has earned the ire of a few people and organizations, here and abroad. His ardent supporters say his courage shows absence of fear. In his book, A Good Lawyer, Bobby Quitain quoted Mark Twain in defining courage as “resistance to fear, mastery of fear.”

Without doubt, our President has a Ph.D. in Resistance to Fear.

Senator de Lima, despite having been recently unseated as chair-

Sen. Leila de Lima, despite having been recently unseated as chairman of the powerful Senate Justice Committee, has exhibited a different level of courage as she unyieldingly pursues her advocacy of protecting and preserving human rights. Like President Duterte, she wants a better Philippines in terms of peace and order. Already vilified and maligned by many, de Lima displays no fear despite impending threats of impeachment, criminal cases and removal from the Senate. man of the powerful Senate Justice Committee, has exhibited a different level of courage, as she unyieldingly pursues her advocacy of protecting and preserving human rights. Like President Duterte, she wants a better Philippines in terms of peace and order. Already vilified and maligned by many, de Lima displays no fear despite impending threats of impeachment, criminal case and removal from the Senate.

John Lewis said, “Courage is not rooted in reason, but rather, courage comes from a divine purpose to make things right.” De Lima is doing her best to make things right, at least from her point of view and that of similarly minded citizens.

Patriotism is love for country and not for any person, including one’s own leader. For instance, Gen. Antonio Luna stood against his own leader Gen. Emilio Aguinaldo soon after the Americans took over the

it was drizzling or did it start to shower—one of those gentle droplets that looked like errant tears from a heartbroken angel—when we started writing. We stayed outside to write. We wrote tiny lines, small verses. I felt they were good because she had crisp, beautiful comments about them.

We did not see her in third year.

Soon, we graduated. We forgot about her.

“Is Louie still coming?” Miss Salceda asked. Louie came indeed and upon seeing her, shouted “Ma’am.”

We were boys again that night.

We had our photos taken. Soon, Louie was pulling me to their direction. Miss Salceda was asking us if we knew why she left the school after one year. We listened to her.

Above the loud music, we listened to her.

That night, we were men, not boys listening to her. Miss Salceda, lovely as ever. We told her everybody was in love with her. Louie was telling her this, even as Louie remained shy that night. I kissed Miss Salceda good-bye. Upon seeing that, Louie hugged and kissed her, too.

We were home a thousand times that night. We were with our Miss Salceda, the sense of ownership a sense of gratitude for one who taught us the beauty and honesty of words, for she was as beautiful and as sincere as those words we wrote a hundred years ago.

country from the Spaniards. He did it neither to spite General Aguinaldo nor to disobey him; he did so out of love for his country. In the words of the US. President Theodore Roosevelt, “Patriotism does not mean to stand by the president or any other public official, save exactly to the degree in which he himself stands by the country. It is patriotic to support him insofar as he efficiently serves the country. It is unpatriotic not to oppose him to the exact extent that by inefficiency, or otherwise, he fails in his duty to stand by the country. In either event, it is unpatriotic not to tell the truth, whether about the president or anyone else.”

By exposing the alarming number of extrajudicial killings, Senator de Lima is simply calling a spade a spade, although in her own doggedly determined way. And if in the process, her political career, as well as her personal life are put at risk, she appears to be willing to pay the ultimate sacrifice for being a patriot.

Best-selling author and journalist Mitch Albom said, “Sacrifice is a part of life. It’s supposed to be. It’s not something to regret. It’s something to aspire to.” Both the lion [President Duterte] and the lioness [de Lima] have offered to sacrifice their lives to make things right for our country. Disagreements and conflicts in a democracy are expected. However, it is our country that stands to lose if these two diverse, different and distinct leaders—Mr. Duterte and de Lima—exhaust their respective energies in destroying and demolishing each other instead of focusing on nation-building. After all, they are both determined and dedicated patriots who love our country, and I admire them both for that, tenaciously.