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The [Philippine] economy accelerated in the second quarter of 2013 to 7.5% from 6.3% the previous year, boosting firstsemester growth to 7.6% from 6.4% in the first half of 2012. ~ National Statistical Coordination Board

cenSEI T H E

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Strategic Analysis and Research by the Center for Strategy, enterpriSe & intelligenCe While expansions in other countries are fading, Philippine GDP growth remains very much robust … Infrastructure investment is imperative in sustaining the trajectory in the next few years.

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~ Standard Chartered Bank economist Jeff Ng

Volume 3 • Number 15

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August 26 - September 8, 2013

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what’s hot what’s cool perspective

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China and Japan: On the Economic Seesaw

• Debt time bomb: China’s rising debt level continues to loom like an iceberg under the horizon. Can it – and the world – navigate around it?

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Charter Change, Part 2: Bangsamoro Promises and the Devil in the Details

If the government figures a self-governing Muslim state or sub-state is the solution to quell Mindanao insurgents, it might have to consider charter change seriously

Center for Strategy, Enterprise & Intelligence provides expertise in strategy and management, enterprise development, intelligence, Internet and media. For subscriptions, research, and advisory services, please e-mail report@censeisolutions.com or call/fax +63-2-5311182. Links to online material on public websites are current as of the week prior to the publication date, but might be removed without warning. Publishers of linked content should e-mail us or contact us by fax if they do not wish their websites to be linked to our material in the future.

SOCIETY

Infertility – The Overlooked Problem

Family-planning and reproductivehealth issues tend to reflect an overarching concern with population management, while infertility affects an estimated 180 million couples around the world

As the world undergoes a still-sluggish economic recovery, Asia’s two leading economies represent different sides of the story

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Rage over a Barrel of Pork Filipinos staged the biggest protests under President Aquino over billion-peso corruption in congressional project funds • Is Aquino’s reform working? Only 2% of Filipinos see a big drop in corruption, reports Transparency International

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The dramatic events and exposes rocking the Philippines since June, culminating in the August 28 surrender to President Benigno Aquino III of accused corruption wheeler-dealer Janet Lim-Napoles, poses challenges to strategic thinkers and researchers. Some key questions to ponder: What’s of paramount importance in the stream of reports, rumors, revelations and research? When should one stop compiling and analyzing information and just conclude the article? How to effectively and strategically address the issues?

One man’s Cronut is another man’s Squat, Dossant, Crullant, or Cray-nut. New York pastry chef Dominique Ansel may have invented the “cronut,” a creative fusion of a doughnut and a croissant – not to mention copyrighted the name – so if you’re looking for one but aren’t going to be in Manhattan anytime soon, too bad, right?

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What’s the Real Issue?

Sometimes, however, assembling that array of information and recommendations is the easy part. Especially when major events are unfolding with high strategic impact on the issue in question, possibly even totally recasting it, how one approaches the situation can radically change can also shift drastically. So it was with the pork barrel issue. Since mid-August, massive media coverage plus hundreds of thousands of online and text messages spreading through the Philippines stirred citizens’ anger over the multibillion-peso theft of public funds coursed through legislators, the much-maligned Priority Development Assistance Fund.

Au contraire, nos amis. The pastry that took New York City by storm in May has since spawned imitators with their own variations on this theme, turning the cronut into a worldwide phenomenon in just about no time, per National Geographic’s Aug. 19 report in its Daily News section.

That mass and social media barrage channeled public outrage over PDAF to a red-letter date: August 26, National Heroes Day. On that Monday, Filipinos fuming over graft were called to express their rage in peaceful but packed assembly at Manila’s Rizal Park and other public areas in cities across the archipelago.

The report provides a link to imitations around the world, courtesy of Thrillist, complete with interactive Google world map. (Local readers might be tickled pink to know that there are three local outlets offering their take on the cronut: Dunkin’ Donuts’ local franchisees, per a Huffington Post report, along with Wildflour Cafe + Bakery and Le Coeur de France, per the Thrillist link.)

How the Aquino administration, especially the President and the heads of the Senate and the House of Representatives — the first, third and fourth highest officials in the land — respond to the mounting public unrest will determine whether the prevailing issue of congressional corruption would be superseded by a more urgent and far graver one: national stability and control.

As it happened, the Chief Executive, with the chief legislators at his side, announced on the Friday before the protest day: “It is time to abolish PDAF.” While Aquino still maintained that the fund would not be scrapped, but merely allocated more stringently and better monitored, his speech served to lessen the citizenry’s agitation, as seen in the rally attendance well below the million-strong target. To be sure, there is still much reform to be done before the nation’s anger and pain are assuaged. But the issue has been kept to the containing of corruption, and has not metastasized into regime instability. And that was why this issue had to wait beyond usual deadlines for events to unfold and show the real issue we’re dealing with.

Source: “The world’s first interactive Cronut- (and Cronut impostor-) finding map,” Bianca Prum blog post on Thrillist.

Mixing drinks and film (and literature). Don’t drink and drive, we’re well aware, but who says you can’t enjoy a good drink or two while watching the movie (or video) that popularized or maybe even introduced it to millions of viewers or readers?

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Plainly, if President Aquino and his allies running the legislature persist in their longstanding opposition to scrapping pork barrel, then the Monday rallies could escalate into uprising.

With that in mind, if anyone’s still going to NYC anytime soon, we’d gladly pay you Tuesday for a pastrami on rye with plenty of mustard, with a properly sour pickle on the side (straight out of the barrel, please).

The previously mentioned Brooklyn-based Pop Chart Lab provides a most entertaining guide to mixed drinks from popular film and literature: “The Cocktail Chart of Film & Literature,” a poster-sized chart of classic drink recipes from a wide assortment of films, books, and even TV shows, ranging from the Old Fashioned (Don Draper’s drink of choice on Mad Men) and the White Russian (immortalized by The Dude in The Big Lebowski) to the Smoking Bishop (Ebenezer Scrooge’s concoction from A Christmas Carol) and even the heretofore theoretical Pan Galactic Gargle Blaster (Zaphod Beeblebrox’s extremely potent potion in A Hitchhiker’s Guide to the Galaxy). Whether you’re looking for ideas for viewing nights or just one gigantic bar guide covering popular drinks, this is cool.

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The Thick Red Line ‘The Syrian government in fact carried these [gas attacks] out.’ U.S. President Barack Obama

On the heels of an Aug. 21 chemical-weapons attack in a suburb of Damascus, as reported by Reuters, the United States appears to be moving closer to taking military action in Syria’s 2.5-year-old civil war. Although the number of casualties from the attack has not been confirmed, the range of estimates was anywhere from 100 to 1,300, according to an Aug. 21 report from Lebanon-based NOW, which also reported that the Syrian government was preventing United Nations chemical experts already in Syria from going to the site to investigate this latest attack. The attack was said to have been the worst chemical attack in the Middle East since the late Saddam Hussein’s use of poison gas on 3,000-5,000 Iraqi Kurds in 1988, per the Reuters report. An Aug. 22 Agence FrancePresse report on Yahoo’s United Kingdom & Ireland news portal carried some skeptical reactions, including those of some chemicalweapons specialists. “At the moment, I am not totally

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convinced because the people that are helping them are without any protective clothing and without any respirators,” Paula

Vanninen, director of Verifin, the Finnish Institute for Verification of the Chemical Weapons Convention, was quoted as saying. “In a real

case, they would also be contaminated and would also be having symptoms,” she added.

The AFP report carried a denial from state news agency SANA, which dismissed the reports as “totally false” and

“an attempt to prevent the UN commission of inquiry from carrying out its mission.” The report also carried a similar reaction from Moscow’s foreign ministry, which said that allegations pegged on the new attack, coming just as U.N. inspectors arrived to investigate previous allegations, “makes us

think that we are once again dealing

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with a premeditated provocation.” On Aug. 24, an Associated Press report on Yahoo’s U.S. news portal carried the Syrian government’s charge that it was the rebels who were using chemical weapons. The report also carried a warning from Syria’s Information Minister Omran al-Zoubi against U.S. military involvement: “The

basic repercussion would be a ball of fire that would burn not only Syria but the whole Middle East … An attack on Syria would be no easy trip.” On Aug. 25, NBC News reported that the Syrian government promised to observe a ceasefire at the site to allow the U.N. team to engage in on-site fact-finding activities beginning Aug. 26. Despite the announcement, however, a senior U.S. government official was quoted as saying, ““Based on the reported number of victims, reported symptoms of those who were killed or injured, witness accounts, and

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other facts, there

is very little doubt at this point that a chemical weapon was used by the Syrian regime against civilians in this incident.” The official characterized the Syrian government’s decision as “too late to

be credible … because the evidence available has been significantly corrupted as a result of the regime’s persistent shelling and other intentional actions over the last five days.” White House officials also pointed out that the attack was on rebelheld territory, with rockets that the rebels do not possess.

The latest Syrian chemicalweapons episode came exactly one year after U.S. President Barack Obama announced his “red line,” beyond which he would consider more direct U.S. involvement in the Syrian

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civil war, as reported in The Washington Post at the time.

“We have been very clear to the Assad regime, but also to other players on the ground, that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized. That would change my calculus.” The report

why the width of Obama’s red line has been over a year thick, so to speak. Then again, sometimes a punch in the face might be the only language a totalitarian will understand.

indicated while U.S. and other Western nations were not providing military assistance to the Syrian rebels, they were supplying rebels with humanitarian assistance and communications gear. Considering the U.S.’ distaste for military intervention following the protracted wars launched by Obama’s predecessor, George W. Bush, in Iraq and Afghanistan, one might understand

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Growth slows in China and other emerging markets: Is the honeymoon over?

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Growth Slows in China and Other Emerging Markets Is the Honeymoon Over? The implications of slower growth in emerging markets for the rest of the world

STRATEGY POINTS China’s economy slows to 7.5% due to weak overseas demand, which weighed on output and investment The balance of economic growth is tipping—emerging markets slow down as developed economies begin to recover As China shifts to a consumption-led growth, commodity producers lose, while consumer brands win

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fter the impressive double-digit growth rates of recent years, the Chinese economy is decelerating. In the second quarter of this year, China’s GDP growth slowed to 7.5% year-on-year due to weak overseas demand weighing on output and investment. A July 15 Reuters report points out that the country’s growth has slowed down in nine of the last 10 quarters. The government’s official 2013 growth target is 7.5%, which, while still impressive by world standards, will be the slowest pace for China in the past 23 years. Still, China’s statistics bureau says the economy’s performance in the first half of the year was stable overall and that indicators were within reasonable range.

By Marishka Noelle M. Cabrera

Zhou Hao, an economist at the ANZ Bank in Shanghai, says in the report, “These figures are not surprising, adding to signs of downward pressure on China’s economy.” The main worry of Chinese leaders, the report notes, is if the slowdown leads to high unemployment, triggering social unrest. So far, the government says employment is stable. China has been among the world’s fastest-growing countries over the past three decades, but the country now faces a long-term decline in its economic growth, according to a top political and economic strategist. In an August 11 piece in Forbes, Andy Rothman, China macro strategist at brokerage firm CLSA, predicts

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growth will taper off to 5-6% annually by the end of the decade. Private sector companies, he says, will be the engine of growth for the country, rather than state-owned firms.

Other emerging economies are slowing down, too. It’s not just China facing an economic slowdown, however. Emerging economies, such as the rest of the BRIC (Brazil, Russia, India, and China) economies are taking a break from their impressive growth rates. “After a decade of surging growth, in which they led a global boom and then helped pull the world economy forwards in the face of a financial crisis, the emerging giants have slowed sharply,” The Economist says in a July 27 piece. As cited in the report, growth in India is around 5%, while Brazil and Russia are at around 2.5%. Economist and New York University (NYU) professor Nouriel Roubini mentions, in a July 22 Project Syndicate article, several factors ailing the BRICS and other emerging markets. One is that most emerging-market economies were overheating in 2010-2011—growth was above potential and inflation exceeded targets. As such, many of them tightened monetary policy in 2011, which affected growth in 2012 and carried over into 2013.

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Growth slows in China and other emerging markets: Is the honeymoon over?

Another reason is that “the idea that emergingmarket economies could fully decouple from economic weakness in advanced economies was far-fetched.” The euro zone’s recession, nearrecession in the U.K. and Japan in 2011-12, and sluggish economic growth in the U.S. were factors that could always adversely affect emerging markets through trade and financial links, as well as investor confidence. Roubini also says, “[M]ost BRICS and a few other emerging markets have moved toward a variant of state capitalism.” He explains, “This implies a slowdown in reforms that increase the private sector’s productivity and economic share, together with a greater economic role for stateowned enterprises (and for state-owned banks in the allocation of credit and savings), as well as resource nationalism, trade protectionism, import-substitution industrialization policies, and imposition of capital controls.”

Balance of world economic growth is tipping. For developed economies, on the other hand, the future is looking bright—at least in a post-crisis situation. The balance of world economic growth, the New York Times reports in an August 14 story, is tipping in another direction. Just as economists have begun lowering their forecasts for China, it says, developed economies are starting to pick up. The American economy is bouncing back from the mortgage finance meltdown of 2008-2009, while Japan is on the road to ending almost two decades of deflation. Data from Europe indicate many countries in the euro zone may be starting to come out of recession.

Germany and France grew faster than expected, pulling the euro zone out of a recession of a year and a half, if not by much, according to an August 14 Reuters report. The German economy expanded

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0.7%, while France’s economy grew 0.5%. The increased pace, the report says, was primarily driven by renewed business and consumer spending in the bloc’s two largest economies. To be sure, the eurozone economy is fragile overall, with Spain, Italy, and Greece still struggling. European Economic and Monetary Affairs Commissioner Olli Rehn stresses in the report that there is no room for complacency and to maintain the pace, they must “avoid new political crises and detrimental market turbulence.” Meanwhile, economic growth in the United Kingdom will continue to strengthen as 2013 progresses, according to the Organisation for Economic Cooperation and Development (OECD). An August 8 report in The Guardian reveals the Paris-based think tank believes the U.K.’s growth was “firming” after a rise in its composite index from 100.6 in February to 100.8 in June, with a reading of 100 indicating that the country is running at its expected growth rate in the economic cycle. In addition, Howard Archer, chief U.K. and European economist at IHS Global Insight, notes the U.K. was moving ahead smoothly as the economy entered the second half of the year, and he expects growth to be 1.3% this year and 2% in 2014. Moreover, the OECD says, in the report, that the loss of momentum in emerging economies contrasted with the U.S. and Japan, “which jointly laid claim to the highest growth ratio compared with the long-run trend, with index figures of 101.2.” The central banks of the two nations have pumped trillions of dollars into their economies, which emerging countries cannot match.

Japan recovering, but growth is slower than expected. Notably, Japan, the world’s third-largest

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economy, experienced slower than expected growth of 2.6% in the second quarter, owing to a tight rein on investment by companies wary about the sustainability of its nascent recovery. In an August 12 Associated Press report published in The Guardian, the weaker growth is likely to increase pressure on Japanese Prime Minister Shinzo Abe to push ahead with unpopular reforms to boost the country’s competitiveness and sustain long-term growth.

A May paper from new Zealand-based AMP Capital suggests that while the economies of China, India, Brazil, and Russia do not suffer the same structural weaknesses as the major developed economies, they do suffer some of their own. For instance, weak domestic demand and soft exports due to vulnerabilities in developed economies continue to hamper a more robust recovery. Still, it continues to expect a cyclical recovery in emerging markets.

Masamichi Adachi, economist at JP Morgan in Tokyo, notes in the report that public spending did not rise as quickly as planned in the April-June quarter. Thus, extra money for projects in the pipeline is likely to boost growth in the coming months.

“The developing world has reached a crossroads in the search of a new economic model to replace an existing approach which, despite its success to date, has run its course,” posits a July 15 Financial Times piece. Framed around economic and financial selfsufficiency, the economic model that was developed after the 1997-98 crisis, it says, consisted of cheap currencies, export-led growth, the accumulation of U.S. dollar reserves, and the development of nonU.S. dollar sources of funding, especially through local currency debt markets. Emerging markets now need to move toward structural reform and take steps to revitalize domestic competition.

“We can expect accelerated spending in the latter half of the year,” he explains. “This is decent enough to say the Japanese economy is maintaining solid momentum.” Earlier in July, the country’s central bank said that economic conditions were starting to recover, signifying that Japan may be on the cusp of a longwaited turnaround, according to a July 11 New York Times report. It was the first time since January 2011, the report notes, that the Bank of Japan used the word “recover.” A rebound in the country’s mainstay exports, a weaker yen, and some signs of a broader recovery in consumer spending helped buoy the bank’s optimism. Led by its governor, Haruhiko Kuroda, the bank has pledged to pump 60-70 trillion yen ($600-700 billion) into the economy annually.

Era of high growth over? Despite the stirrings of

economic recovery in the West and Japan, and with the slowdown in emerging markets, The Economist believes that “the days of record-breaking speed are over.” Because of China’s prosperity, for instance, its economy will have less room for catch-up growth.

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Indian economist Ruchir Sharma believes the era of BRICS is over, and explains it in his book, “Breakout Nations: In Pursuit of the Next Economic Miracles.” Sharma, who heads emerging markets and global macro at Morgan Stanley, explained, in a July piece in The Economic Times, that China is the only nation of the five-member bloc with realistic prospects of eluding the middle-income trap. The middle-income trap, the report says, is an economic situation where a country attains a certain income level due to given advantages and gets stuck there. “I think it is a fair assumption that it will get to the next level and if its economy grows at 5 to 6 per cent over the next 15 years, its per capita income is likely to more than double to around USD 20,000, making it firmly high income,” he says. More importantly,

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Growth slows in China and other emerging markets: Is the honeymoon over?

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China’s mounting debt problem

the slowing growth in China may no longer result in higher unemployment and other social problems.

Has China reached its limit? China doubters,

including George Friedman of Stratfor Global Intelligence, think China no longer works. The Chinese economy surged in the past decade, but it may have now reached its limits. In a July 23 piece in EconMatters, Friedman cites several weaknesses in the country’s economic system. Chinese wages, for instance, were far lower than in the West. As such, the Chinese built businesses around this, while Western companies, the article says, built factories in China to take advantage of the differential. But since Chinese workers’ low wages prevented them from purchasing many of the products they produced given their wages, the country built its growth on exports. Fearing unemployment and social unrest, government policy, manifested in bank lending policy, “stressed preventing unemployment by keeping businesses going even when they were inefficient.” As businesses become inefficient, the article notes, production costs rise, leading to inflation.

Apart from the need to shift from an investment-driven to a consumptiondriven economy, China must deal with its debt. An April 28 piece in Time points out: “The economy requires more and more debt to produce the same amount of output. In order for China to keep its current growth model running, therefore, debt levels must continue to rise — to ever more dangerous levels.” Citing rating agency Fitch, China’s credit relative to GDP reached 198% at the end of 2012 from 125% in 2008. Local government debt, the article notes, has escalated in recent years to 25% of GDP or around $2 trillion.

Shifting to these sources, it stresses, will mean more expensive funding, thus, increasingly unfeasible projects in a lower growth regime. One chart in the piece illustrates the increasing debt-to-GDP ratio, from 195% in 2009 to 209% in 2012, and is projected to rise to 240% in 2015. Another shows the growing trend of shadow banking in China as a percentage of total corporate and consumer debt and of GDP.

China’s Debt Problem

An August 7 piece in EconMatters notes that one critical concern for the global markets has to do with the rapid pace of China’s credit expansion since the global financial crisis. It highlights one major source of this credit expansion to be the shadow banking sector, which is seen as “inherently more risky and less transparent.” The article says, “The speed of credit expansion exceeds that seen prior to other credit crises in history, this expansion has not been matched by economic growth, and, of course, the more “shadowy” sources of much of the credit growth raise doubts about its soundness.” Charts from EconMatters

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Growth slows in China and other emerging markets: Is the honeymoon over?

Still, Friedman believes China will not completely collapse economically, but it will behave differently than before. “No one country can replace China, but China will be replaced. The next step in this process is identifying China’s successors,” he says.

Emerging economies may still overtake giants. The current slowdown notwithstanding,

a January PricewaterhouseCoopers (PwC) report projects China will overtake the U.S. as the largest economy by 2017 in purchasing power parity (PPP) terms and by 2027 in market exchange rate terms. India, meanwhile, is poised to become the third economic global giant by 2050, and Brazil is expected to move up to fourth place ahead of Japan. By 2020, Russia could overtake Germany to become the largest European economy in PPP terms and by around 2035 at market exchange rates, the report finds. Moreover, emerging economies Mexico and Indonesia could be larger than the U.K. and France by 2050, and Turkey larger than Italy. “Outside the G20, Vietnam, Malaysia and Nigeria all have strong long-term growth potential, while Poland should comfortably outpace the large Western European economies for the next couple of decades,” the report notes. But we can be sure that emerging markets can no longer make up for weaknesses in the developed world, as The Economist posits in the aforementioned article. Global growth will feel sluggish without a stronger recovery in the U.S. or Japan. As the IMF reported in July, the slowdown in emerging markets will contribute to global economic pain. “Global growth is now projected at 3.1 for 2013 and 3.8 percent for 2014, a downward revision of ¼ percentage point each year compared with the forecasts in the April 2013 [World Economic Outlook],” the Fund notes. Other factors adding to

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the world economy’s underperformance are a deeper recession in the euro area and a slower than expected U.S. expansion.

Who wins and who loses? As China shifts to a

more consumption-driven economy from its previous investment-led growth, demand for raw materials in building infrastructure will begin to relax. In the past, China poured in resources to build factories and infrastructure and employ millions of people in manufacturing. But with China’s aging population, rising wages, and structural weaknesses, finding new sources of growth becomes imperative. “China’s investment boom has been the key driver of stronger demand for copper, iron ore and steel over the past decade,” according to a July 27 International Business Times article. As such, big commodity producers that sell to China will be the first affected by its slowdown. The article explains, “In the past 15 years, China has built 90 million new homes -- enough to house the populations of the U.K., France and Germany combined. A quarter of global steel demand is for Chinese property and Chinese infrastructure -- its share demand rose from 16 percent in 2000 to 44 percent 2012 (in nickel, its share jumped from 6 percent to 45 percent).” Commodity prices rose to record highs, but, as the article finds, “copper, iron ore and coal have all fallen 30 percent to 50 percent from their 2011 peaks.” Conversely, makers of consumer goods, especially those with strong brand identities, will be the winners in this rebalancing scenario. A December 2012 McKinsey & Company report, “What’s Next for China?” suggests the country’s expanding cities will play a major role in China’s growth. It finds that, by 2030, “consumption growth will be dominated by rapidly growing middle- and higher-income urban population groups.” Businesses in China will benefit from people’s higher incomes, lower savings, and broader prosperity, all of which add up to more purchasing power.

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This edition features not just one but two supergraphics, from the Brooklyn-based, pop-culture design firm Pop Chart Lab, which develops awesome infographics, then sells them in prints, t-shirts, or, in some instances, houseware items. Among the presentations that caught our eye this time around: “The Various Varieties of Fruits” categorizes just about any fruit you can imagine, with a dizzying array of types and subtypes, from pome fruits (apples and pears) and all sorts of berries to fruits native to the various continents of the world, from Asia to North America, South America, and even the Mediterranean and Oceanian regions.

Meanwhile, “The Charted Cheese Wheel” provides a guide to popular cheeses around the world, classified by milk of origin (cow, goat, buffalo, or sheep), and then by texture (soft to hard, with gradations inbetween), and including rough graphic representations around the wheel. In short, just about everything you need to know the next time you’re shopping for cheese at your favorite deli counter.

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Constitutional Concessions: Towards a Workable Bangsamoro Transition POINT & CLICK Access online research via your Internet connection by clicking pictures, graphics, and words in blue

Constitutional Concessions

Second of Three Parts

Towards a Workable Bangsamoro Transition With the difficulty being faced by the government in forging a lasting Mindanao peace pact that is compatible with the present Constitution, is it time to adjust the fundamental law to make sure that elusive peace is finally achieved? By Atty. John Carlo Gil M. Sadian

Constitutional change advocates promise a boost in foreign investment if strict economic provisions in the 1987 Constitution are liberalized. But that clamor has been stanched by fears of politicians’ vested interests taking over if the charter is opened for amendments. That underlying concern has led to President Benigno Aquino III’s allies in Congress to push for charter change in Joint Resolution No. 1, which specifies that proposed amendments would cover only economic provisions. While fears of vested political interests are not entirely without basis (cf Ramos in 1997 and Arroyo in 2005), the Aquino administration should also consider that amending political provisions in the charter might hold the key to accomplishing its most ambitious initiative: peace with the Moro separatists.

The Transition Commission and the Constitution. It should be remembered that in

(L-R back row) Moro Islamic Liberation Front (MILF) chairman Al Haj Murad Ebrahim, Malaysian Prime Minister Dato Sri Mohd Najib Bin Tun Abdul Razak, Philippine President Benigno Aquino III, Presidential Peace Adviser Teresita Quintos-Deles, and (front center) Organization of Islamic Cooperation SecretaryGeneral Ekmeleddin Ihsanoglu witness MILF Peace Panel chairman Mohagher Iqbal and Government of the Republic of the Philippines Peace Panel chairman Marvic Leonen exchange copies of the GPH-MILF Framework Agreement in a ceremony at Malacañan Palace on October 15, 2012. Malacañang Photo

STRATEGY POINTS The government’s 2012 Framework Agreement on the Bangsamoro recognizes at least the possibility that constitutional amendments might be necessary to achieve some of the points in the agreement Replacing the Autonomous Region in Muslim Mindanao with a Bangsamoro entity might require constitutional revision if that entity is to be regarded as a “state” or “sub-state” under the current unitary political system Issues of a Shari’ah-based justice system, and of land ownership and exploitation of natural resources in a Bangsamoro entity might run counter to basic constitutional doctrines

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the 2012 Framework Agreement on the Bangsamoro trumpeted by President Aquino in October of that year, government negotiators took care to “reserve” for a yet-to-be-formed Transition Commission the power to “work on proposals to amend the Philippine Constitution for the purpose of accommodating and entrenching in the constitution the agreements of the Parties.” This was to avoid the fate of the Arroyo administration’s Memorandum of Agreement on Ancestral Domain (MOA-AD), which was invalidated by the Supreme Court because of its categorical “commitment” on behalf of the government to implement provisions that would require constitutional amendments. Being too careful might have made the Framework Agreement so vague that it failed to directly address the real issues surrounding the Moro rebellion. Indeed, Dean Raul Pangalangan of the UP College of Law thought that “The Framework says little but the public has been conditioned to believe it says everything.”

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This concern was echoed by Ateneo School of Law dean emeritus Fr. Joaquin Bernas, who expressed that, “I found that somewhat amusing because one of the clearest characteristics of the agreement is its lack of clarity. It leaves so much unsaid.” The signing of the Annex on Revenue Generation and Wealth Sharing last month might be the answer to some of the vague provisions of the Framework Agreement, but there still is a long way before all loopholes are addressed, especially since its predecessor MOA-AD proved incompatible with constitutional standards.

Just a matter of status. Probably the most

important political aspect of the Framework Agreement is Article I, with Section 1 providing that “The Parties agree that the status quo is unacceptable and that the Bangsamoro shall be established to replace the ARMM.” According to Judge Soliman Santos, an authority on the Mindanao peace process, this is the “most significant consensus point substance-wise” as it would lead to a “qualitatively higher form of self-determination/selfgovernance than the level of the ARMM.” Put under the perspective of the present Constitution, the proposition of an entity that would “replace” the ARMM naturally arouses suspicion. As observed by Philippine Council on Islam and Democracy (PCID) director Amina Rasul, “the previous MILF demand for a sub-state in place of the present autonomous region was poisoned from the first, as the term evoked visions of an independent Bangsamoro nation within the Philippines.” This is probably the reason why the Supreme Court itself rejected the sub-state proposed in the botched MOA-AD that introduced the “associative” relationship between the Philippine government and the abandoned Bangsamoro Juridical Entity.

‘Asymmetric’ replaces ‘associative.’

Meanwhile, under Section 4 of Aquino’s Framework Agreement, “the relationship of the Central Government with the Bangsamoro Government shall be asymmetric.”

• August 26 – September 8, 2013

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Constitutional Concessions: Towards a Workable Bangsamoro Transition

Recapping the run-up to the Framework Agreement Three decades before this Framework Agreement, the Philippine government had already forged a number of agreements with Muslim secessionist groups, the most significant of which was the Muammar Gaddafi-sponsored Tripoli Agreement inked by the administration of Ferdinand Marcos with Nur Misuari’s Moro National Liberation Front (MNLF) in 1976. Up to this time, the 1976 Tripoli Agreement stands out as the framework for future negotiations with Muslim rebels. However, its express recognition of “the sovereignty and territorial integrity of the Republic of the Philippines” fragmented the Muslim separatist movement early on, with a faction to be known as the Moro Islamic Liberation Front (MILF) breaking away from the MNLF. The administration of Corazon Aquino later on took over the task of implementing the Tripoli Agreement under a newly crafted Constitution, which mandated the creation of an autonomous region in the Muslim areas of Mindanao. Implementing this constitutional mandate, Congress enacted Republic Act 6734 calling for a plebiscite in 13 provinces and 9 cities claimed by the MNLF as part of the historical extent of “Bangsamoro.” Government support for the autonomy of these provinces

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and cities notwithstanding, only the provinces of Lanao del Sur, Maguindanao, Sulu and TawiTawi voted to be included in the Autonomous Region in Muslim Mindanao (ARMM). As the administration of Fidel V. Ramos inked the Final Peace Agreement with the MNLF in 1996, exploratory talks with the breakaway MILF was also started. By 1999, the peace process would collapse as Ramos’ successor, Joseph Estrada, implemented an all-out war policy against the MILF. This would later be reversed by the administration of Gloria Macapagal Arroyo, who implemented a policy of reaching out to all rebel groups in the country. Seven years of on-and-off talks with the MILF finally reached a “breakthrough,” when the Arroyo administration announced that the peace panels of the government and the MILF finally agreed on a draft accord on the Ancestral Domain Aspect of the Tripoli Agreement (MOA-AD) scheduled for signing on August 5, 2008. The most important feature of this MOA-AD was the creation of an “associative” relationship between the government and the new political entity to be crafted out of the present ARMM and future additional territories.

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While this MOA-AD could have been the government’s most successful accomplishment in four decades of seeking peace in Mindanao, local leaders in Christian-dominated areas of North Cotabato, Zamboanga del Norte, Sultan Kudarat, and the cities of Zamboanga, Iligan, and Isabela challenged its legality before the Supreme Court. The Court would eventually nullify the MOA-AD, ruling that the “associative” relationship between the Philippine government vis-à-vis the Bangsamoro Juridical Entity, together with the method for its implementation, was unconstitutional. According to the Decision written by Justice Conchita Carpio Morales, “the Constitution does not recognize any state within this country other than the Philippine State, much less does it provide for the possibility of any transitory status to prepare any part of Philippine territory for independence.” Likewise, the Court held as unconstitutional the guarantees under the MOA-AD that the government would implement the necessary constitutional amendments to create a framework for its implementation. According to the Court, the Peace Panel (and even the President) does not have the authority to make such guarantees because they do not have the power

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to propose amendments to the Constitution, such power being vested exclusively in Congress. The three-year impasse that followed the Court’s junking of the MOA-AD was characterized by violence, as clashes between government troops and rebel forces escalated. It was during the 27th Round of Exploratory Talks that new hope sprung forth as a document entitled “Decision Points on Principles” surfaced with much enthusiasm from both sides. These Decision Points became the basis of the Framework Agreement that would introduce a “new autonomous political entity” governed by a “ministerial form of government” to replace the current ARMM. This new setup would be introduced during “a transition period” through the “institution of transitional mechanisms” under the new entity, which would have “powersharing and wealth-sharing” rights vis-à-vis the national government, with an accompanying power to “to create its own sources of revenue,” i.e., to levy taxes. The Framework Agreement also mentions of a “Bangsamoro Basic Law” which would cover the to-be strengthened Shari’ah justice system.

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Fr. Joaquin Bernas, who was one of the framers of the 1987 Constitution, does “not know what this is meant to hide.” He further asks, “Could it be that the framework is just avoiding the term ‘associative’” rejected by the Supreme Court in the MOA-AD case? For former Arroyo administration official and ambassador Rigoberto Tiglao, the answer is simple. The “use of the term ‘asymmetric’ is the Aquino administration’s clumsy attempt to go around the term ‘associative’ used in [Arroyo’s MOAAD].” Thus, considering that the use of the term “asymmetric” in describing the relations between the Bangsamoro and the Philippines “assumes the existence of states,” it also suffers the same defects that led to the demise of the MOA-AD. Amid all these complications, the problem with the status of a Bangsamoro entity is really very simple. It just has to be compatible with the Constitution. The solution is, therefore, also simple: Open Article X of Constitution to an amendment or revision that would categorically classify the Bangsamoro as a “sub-state,” or a “federated state,” or an “associative state,” or whatever name they want to call it.

Questions on form of government, justice system, military. Aside from the political status of the proposed Bangsamoro entity, the Framework Agreement also arouses constitutional issues

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on the proposed form of its own government, its expanded Shari’ah justice system, and most importantly, its military force. As to the highly-sensationalized wealthsharing annex of the Framework Agreement that was signed last month, any debate on constitutional issues should be considered moot, considering that revenue-sharing between the national government and autonomous regions was placed by the present Constitution in the hands of Congress anyway. The Framework Agreement states that the Bangsamoro government shall be ministerial, which means that its chief executive, presumably a chief minister, shall come from and be accountable to the legislative assembly. Fr. Bernas thinks that this “really makes no problem because, while the Constitution specifies a presidential form of national government, it does not have the same prescription for local governments.” He even cites as an example the form of government that ran Metro Manila in the past, saying that “Metro Manila had a ‘commission form’ of government which was neither prescribed nor prohibited by the 1973 Constitution.” But of course, a constitutional amendment that would categorically give the Bangsamoro the freedom to choose its own form of government would make this discussion moot and academic.

• August 26 – September 8, 2013

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Constitutional Concessions: Towards a Workable Bangsamoro Transition

Contradicting fundamental concepts regarding church and state. There was also a

concern about the proposed expansion of the Shari’ah justice institutions which, according to Judge Santos, “may entail a constitutional amendment since the 1987 Constitution, Art. X, Sec. 18 refers to ‘the basic structure of government for the region consisting of the executive department and legislative assembly’ and allows for ‘the special courts with personal, family, and property law jurisdiction consistent with the provisions of this Constitution and national laws.’” Aside from that, there is this fundamental issue that the Shari-ah justice system “also goes to the core of the Islamic aspiration since Shari’ah is Islamic law, where there is, among others, no principle of inviolable separation of Church and State but, on the contrary, the integration of religion and politics.” This matter would certainly be contentious because of the contrast between the present constitutional mandate of a secular government on one hand, and the religious character of Islamic law on the other. While an amendment to the charter may accommodate an expanded Shari’ah justice system, it is highly doubtful that a rewritten Philippine constitution would drop the principle of separation of church and state.

Money matters: revenue generation and wealth-sharing. At midnight of July 14, a sudden

turn of events led to the signing of the Annex on Revenue Generation and Wealth Sharing to form part of the 2012 Framework Agreement. Three days before the signing, the MILF delegation walked out of the negotiating session. According to MILF chief negotiator Mohagher Iqbal, they left the table because they perceived the government’s stand on revenuesharing as “too rigid as if their mandate is cast in stone.” He also said that there was a “limited chance we return” to the negotiating table. Iqbal would retract this statement the next day.

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This deadlock was the reason for suspicions that there was pressure to sign the Annex so that it could be part of the president’s State of the Nation address to be delivered a week later. Government peace panel head Miriam Coronel-Ferrer denied such allegations, saying that “The process was driven by its own dynamics... There is no short-term interest that had to be satisfied by this, except for the desire that the peace will be kept, especially on the ground.” At any rate, the eight-page Annex went on to radically change the current scheme covering revenue generation and wealth-sharing between the national government and the ARMM under the Constitution and Republic Act 9054, or the 2001 ARMM Expansion Act. The taxing power of the ARMM is explicitly recognized under Section 20(2), Article X of the Constitution. Further, Section 5 of the same article gives the ARMM “the power to create its own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments.” Meanwhile, its right to get a share in the revenues of the national government is expressly granted by Section 6, Article X, which mandates that “Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.” Section 7, Article X also guarantees the ARMM’s entitlement to an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas, in the manner provided by law, including sharing the same with the inhabitants by way of direct benefits.” Thus, under the current constitutional regime, the ARMM is empowered to levy its own taxes and is entitled to receive its share of the revenues of the

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national government. This, of course, is subject to the limitations provided by the Constitution itself and other related laws. A brief review of the status quo would give us an idea on these limitations. RA 9054 governs how the ARMM partakes of its share in the revenue of the national government. Section 5(b) of RA 9054 is a specific provision concerning taxes derived from the use and development of the strategic minerals, which is split 50-50 between the national government and the ARMM. Section 5(c) further divides the 50% share of the ARMM into component parts: 30% to the ARMM, 20% to the province, 15% to the city, 20% to the municipality, and 15% to the barangay. As to its share in the national government’s collections from income taxes and taxes from natural resources, Section 9 of RA 9054 splits the share this way: 30% to the national government, 35% to the ARMM, and 35% to the province or independent city. The 35% share of the province is further partitioned so that 45% goes to the province, 35% to the municipality, and 20% to the barangay. An independent city, on the other hand, would split its 35% allocation equally between the city and the barangay. Now, under the wealthsharing Annex, the Bangsamoro would not only exercise the taxing power already granted under RA 9054, it would also have the power to levy capital gains tax, documentary stamp tax, donor’s tax, and estate tax within its territory. This power was previously withheld from the ARMM by Section 7 of RA 9054.

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SUMMARY for revenues from the EDU of natural resources in the region

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Aside from these, the Annex also expands the taxing power of the Bangsamoro to cover the other taxes, fees and charges currently collected by the national government within the Bangsamoro territory (excluding tariff and customs duties which shall remain with the national government) which will now be split this way: 75% to the Bangsamoro and 25% to the national government.

The problem of the regalian doctrine.

While taxation is actually a matter that does not require constitutional amendments since Congress can simply expand the powers/rights of the ARMM/Bangsamoro by mere legislation, the exploitation of natural resources and ownership of land is an entirely different matter. Section 2, Article XII incorporates the regalian doctrine as one of the core principles in the Constitution. This provision provides that “All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State.”

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Annex

50-50 on “revenues derived from the use and development of strategic minerals” (In a latter provision of RA 9054, this Note: There is no more category of “Strategic Minerals” is “revenues, taxes and fees”.) in the wealth sharing annex

50-50 on government income from EDU of fossil fuels (petroleum, coal and natural gas) and uranium

Non-strategic minerals/ resources other than fossil fuels and uranium

100% on government income from EDU of non-metallic resources, in favor of the Bangsamoro

“Strategic Minerals” under RA 9054

70-30 on “taxes imposed on natural resources”, in favor of the ARMM

75-25 on government income from EDU of metallic resources, in favor of the Bangsamoro Chart from “The ‘unacceptable status quo’ and the Annex on Wealth-Sharing,” by Johaira Wahab, Bangsamoro Transition Commission, as published on the Institute for Autonomy and Governance site

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wow tech

Constitutional Concessions: Towards a Workable Bangsamoro Transition

SUMMARY for taxes, fees and charges (TFC) due within a region

Status Quo

100% in favor of the Bangsamoro

TFC imposed by National Government

75-25, in favor of the Bangsamoro

70-30, in favor of the ARMM

A/C to go. In what we might otherwise be tempted to call a cool development, a Chinese businessman-inventor has come up with a “personal air-conditioner,” in the form of a vest that just requires compressed air, according to an Aug. 15 China Daily report.

Annex

TFC imposed by Regional Government 100% in favor of the ARMM

Wang Yan’s air-conditioned vest, which lowers the temperature around the wearer up to 20 degrees Celsius, works through a built-in vortex tube through which compressed air is pumped, and which comes with intake and output control valves. The vest itself is made of impermeable fabric to keep in the cool air, which is distributed within the vest through small tubes with tiny holes.

Chart from “The ‘unacceptable status quo’ and the Annex on Wealth-Sharing,” by Johaira Wahab, Bangsamoro Transition Commission, as published on the Institute for Autonomy and Governance site

For the Bangsamoro, the regalian doctrine is unacceptable because they trace their marginalization from this “traditional system of owning lands.” In fact, Iqbal revealed that the most contentious issue in the negotiations on the wealth-sharing Annex is not the percentages of shares between the national government and the Bangsamoro, but the application of the regalian doctrine to the Framework Agreement. According to the MILF lead negotiator, the regalian doctrine “is the reason why we lost our lands in Mindanao, because our lands are controlled by the state. Our sultanates, our leaders, they all lost their lands because what we were following then was the traditional system of owning lands.” In the end, no reference in the final draft was made regarding the regalian doctrine. Knowing that this regalian controversy was merely swept under the rug by the peace panels, we cannot help but worry, because this concept involves a core principle in our constitutional system. Much like the concept of separation of church and state, the government can concede an amendment to the charter to accommodate the MILF’s beliefs regarding land ownership, but it is highly doubtful that revised constitution would drop the regalian principle.

The Commander-in-Chief power is nonnegotiable. One of the most controversial issues

surrounding the Framework Agreement is the disarmament of the MILF rebel force. While Article VIII Section 5 of the Framework Agreement provides that “The MILF shall undertake a graduated program for decommissioning of its forces so that they are put beyond use,” Section 6 nonetheless provides that “In a phased and gradual manner, all law enforcement

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functions shall be transferred from the Armed Forces of the Philippines (AFP) to the police force for the Bangsamoro.” Which is which? How can the MILF “put beyond use” their forces when they would eventually take over law enforcement from the AFP? Amidst the vague and inconsistent positions of the government and the MILF regarding the decommissioning of forces, it must be stressed that the issue on military force is a sensitive matter because it touches on the commander-in-chief powers of the president under Section 18, Article VII of the present Constitution. We can be certain that whatever sweeping constitutional revisions are made to the charter, there will still be no substantial change that will be introduced to diminish the power of the president over the armed forces. Clearly, a Bangsamoro police force that would “take over” the AFP must and should be under the command of the Philippine president. Thus, if the Constitution is amended to accommodate the MILF’s demand for their own military force within their territory, it would be certain that this force will be at least similar to the Moro National Liberation Front (MNLF) force that was “integrated” into the regular force of the AFP and remained under the command of the President of the Philippines. In fine, any proposed constitutional revision necessary to ensure a viable Bangsamoro entity simply needs to categorically state that it is under the sovereignty of a democratic Republic of the Philippines. After that, the framers can liberally spell out the role of the new entity and its rewritten relationship with the entire Filipino nation.

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China Daily

To be sure, this is not exactly a new invention, as Wang actually came up with his air-conditioned vest last year, but his invention has drawn new attention, with this year’s heat wave in southern China. Wang says he has sold 4,000 vests in the last three months, 40% more than last year’s total. According to a vendor, the vest is well-suited (ok, pun intended) for use in shipyards, container producers, and other manufacturing companies.

Tablet prescribed during surgery. Instead of your doctor

telling you to take two tablets and call them in the morning, here’s one tablet the doctor takes, and while they’re operating on you, at that. An Aug. 15 Reuters presentation posted on Yahoo’s portal reports on Dr. Karl Oldhafer of Asklepios Hospital HamburgBarmbek, in Germany, performing liver surgery with the help of an iPad equipped to film the liver and overlay it with virtual 3D models reconstructed from the liver. Developed by German medical-image computing specialist Fraunhofer MEVIS, the augmented-reality application helps locate critical structures such as tumors and vessels in real time, and as such, is expected to help surgeons carry out their pre-operation surgical resection plans. If the best-laid plans of mice and men are said to often go awry, we trust the best-overlaid plans of your surgeon should minimize the chances of that happening to you.

Photo credit: Reuters, Fraunhofer MEVIS, and Yahoo

‘Split-second timing’ gets a new definition. From the sweep of an

analog watch’s mechanical second hand to electronic timers stopping time down to the thousandth of a second, time measurement has become more precise with the march of technology. An Aug. 22 National Public Radio report features Andrew Ludlow, a physicist at the United States’ National Institute of Standards and Technology, who has developed what is said to be “the most precise atomic clock ever built.”

Go ahead and try strapping THIS to your wrist. Photo credit: NIST and NPR

As discussed on the HODINKEE site, the clock measures time by using lasers to measure the oscillations of 10,000 ytterbium atoms – each atom is said to generate 518 billion oscillations per second -- and is said to be accurate to one part per quintillion (the power of 10 to the 18th). Put another way, it would lose a second every 100 million years. How’s that for steady and accurate time-keeping?

The NPR report goes on to suggest possible applications outside simple time-keeping – you just knew they wouldn’t build such a device just for that, didn’t you? – including more precise GPS and faster telecommunications networks, and testing Einstein’s Theory of Relativity, which is predicated on the immutability of certain physical properties, properties which a more precise atomic clock is equipped to test vigorously.

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One Way or Another: The Growing Business of Making Babies

One Way or Another The Growing Business of Making Babies Options exist for infertile couples, but high costs and ethical concerns are prohibiting factors By Pia Rufino

A

bout 48.5 million couples worldwide were unable to have a child after five years of trying, and the numbers have hardly changed over the past two decades, suggests a study published in the medical journal PLOS Medicine last year. Findings from an analysis of 277 national health surveys suggest that global infertility rates remained the same between 1990 and 2010. “Infertility, the inability to conceive after a prolonged period (the length of time varies in different definitions) of unprotected intercourse, is a critical but much neglected aspect of reproductive health,” says the study, which also notes that reproductive health – or more precisely, universal access to it – is one of the United Nations’ Millennium Development Goals. Moreover, the study says infertility “affects couples worldwide and causes emotional and psychological distress in both men and women.”

Declining in the U.S.. In the United States, a

STRATEGY POINTS The demand for fertility treatments is increasing, driven by women trying to have children in their later life, when female fertility declines, as well as by the difficulties of adoption Infertility care is probably the most neglected and underestimated health-care issue in developing countries where most childless couples live, a study maintains Global infertility rates have remained practically the same over the past two decades

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recent government survey shows that the numbers have slightly declined in the U.S. for the past 30 years. The results of the National Health Statistics Report released this month show that the percentage of married women aged 15 to 44 who were infertile fell from 8.5% in 1982 to 6% in 2006-2010. The figures represent a drop from 2.4 million to 1.5 million. The report is drawn from in-person interviews of 22,682. The agency defines infertility as the “lack of pregnancy in the 12 months prior to the survey, despite having had unprotected sexual intercourse in each of those months with the same husband or partner.” The downward trend comes as a surprise for many people because of the prevalence of medical options to treat infertility, says the report’s lead author, Anjani Chandra, a health scientist at the National Center for Health Statistics, as cited in a USA Today Aug. 14 report on the study results.

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“People seem to think it’s going up, when the fact is that it’s remarkably stable, despite the preponderance of medical services,” Chandra says. “The level of infertility is being counteracted by their pursuit of medical help to have a child. Both together are bringing down the percentage we see as infertile when we do our survey.” Chandra associates the age at which a woman tries to have her first child as the single most important factor linked to with fertility problems. The drop of infertility rates for women aged 35 to 44 is due to both the likelihood of medical treatment as well as the smaller pool of people trying to become pregnant at those ages, she says.

Most neglected in developing world. In

the developing countries, however, one in every four couples is said to be affected by infertility, according to the World Health Organization (WHO). Yet, “infertility care is probably the most neglected and underestimated health care issue in developing countries,” writes Willem Ombelet in a 2012 article on global access to infertility care in the developing world. “The consequences of involuntary childlessness are much more dramatic in developing countries and can create more wide ranging societal problems compared to Western societies, particularly for women,” says Ombelet, the coordinator of the Special task Force on ‘Developing countries and infertility’ of the European Society of Human Reproduction and Embryology. “Negative psychosocial consequences are often severe and childless women are frequently stigmatised, isolated, ostracized, disinherited and neglected by the entire family and even the local community. This may result in physical and psychological violence and polygamy.” Moreover, the author says childlessness has to be regarded as a social and public health issue and not

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just an individual medical problem, since many families in developing countries completely depend on children for economic survival. Despite these consequences, the international community and local health providers show low interest in infertility management, since health strategies have always focused on reducing fertility rates. In addition, overpopulation and limited resources hinder developing countries in treating infertility, which afflicts an estimated 180 million couples.

Low awareness in Asia. In Asia, most women are unaware of the prevalence of the fertility problem, and majority of couples remain untreated. Findings from “Starting Families Asia,” a 2012 regional study commissioned and sponsored by Switzerland-based pharmaceutical company Merck Serono and endorsed by the Asia Pacific Initiative on Reproduction, show that Asian women don’t suspect they may have fertility problem, and an even higher percentage do not suspect potential problems with their husband’s fertility condition, which indicates lack of awareness of the fertility problem. The Merck study surveyed 1,000 women across 10 Asia-Pacific countries – China, Hong Kong, India, Indonesia, Korea, Malaysia, Singapore, Taiwan, Thailand and Vietnam – to gain insights regarding fertility treatment and barriers to seeking help. The results show that 56% of the couples suffering from infertility seek treatment, while only 22% receive medical care. “In Asia, with persisting social and personal barriers, low fertility awareness and limited access to treatment, the figures are even lower,” the report explains. In addition, governments in most countries in the region do

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One Way or Another: The Growing Business of Making Babies

not support advanced fertility treatments. In Asia, partial coverage of assisted reproductive technology treatments is available only in Korea, Singapore and Japan. Meanwhile, the study noted that fertility rates are declining in Asia, which poses socio-economic challenges. According to a May 2010 paper from U.S.-based think tank East West Center, four of the world’s most prosperous economies of late -- Japan, Singapore, South Korea, and Taiwan – have among the lowest birth rates in the world. “With women having on average one child each, these society have expanding elderly populations and a shrinking workforce to pay for social services and drive economic growth.”

body or donating them to another woman, the Centers for Disease Control and Prevention (CDC) explains.

known to be related to a rising infertility level in China, according to him.

ART has been used in the U.S. since 1981, most commonly through IVF, as reported in a May 2012 blog post by Forbes contributor Jack Perkowski, who cited the CDC in reporting that 154,417 ART cycles were performed at 443 reporting clinics in the U.S. in 2010, resulting in 47,102 live births (deliveries of one or more living infants) and 61,561 infants.

An IVF cycle in the U.S costs $12,400 on average, according to the American Society for Reproductive Medicine.

“Although the use of ART is still relatively rare as compared to the potential demand, its use has doubled over the past decade. Today, over 1 percent of all infants born in the U.S. every year are conceived using ART,” Perkowski reported. The article also mentioned that infertility is a growing problem in China, with over 40 million people suffering from the condition. Heavy workloads, stress, environmental pollution and unhealthy lifestyles are

Infertility treatments. To fight infertility, couples may opt to use the assisted reproductive technology (ART) or the fertility treatments in which both eggs and sperm are handled outside of the body, such as in vitro The declining global and Asian fertility rates fertilization (IVF). In general, ART procedures involve surgically removing eggs from a woman’s ovaries, combining them with sperm in the laboratory, and returning them to the woman’s

Growing business. A Sept. 2012 podcast of the

BBC news program Business Daily tackles the global infertility business and features experts discussing the increasing demand in sperm and egg donation, as well as surrogacy. Amanda Segal, of the Shady Grove Fertility Reproductive Science Center, the U.S.’ largest fertility center, says egg donation is a growing business, especially given the difficult process of adopting children. For patients, donor egg cycle costs US$25,000, which covers the cost of IVF, as well as payment and medication for the egg donor, among others. Donors are compensated with US$6,500, while women with ethnic background are paid higher because of their scarcity.

Chart from “Starting Families Asia study” by Switzerland-based pharmaceutical company Merck Serono, p. 18

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Every month, Segal says, the clinic receives a thousand of applications from women aged 21 to 31, but only 5% make it to egg donation. Segal sees a rising demand for services in the future and she also sees value in “educating women in their 30s to freeze their own eggs,” which the center has been doing over the past years. Another area of the fertility business is sperm donation. According to Ole Schou, managing director of the world’s leading sperm bank Cryos International in Europe, about 10 to 15% of the demand come from heterosexual couples, while 40% comes from highly educated, career-driven females who start thinking about reproduction during their 30s. The company, which ships donor semen to clinics and private customers in more than 70 countries, claims it has the world’s largest selection of sperm donors that can be checked through their website. Their prices range from 45 euros (US$60) for anonymous donors to 12,000 euros (US$16,000) for exclusive donors.

This 18-minute podcast from BBC discusses issues related to the global infertility business BBC

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One Way or Another: The Growing Business of Making Babies

Womb for rent in India. Surrogacy is big business

in India. A February Time feature discusses how India’s new regulation prohibiting gay couples, single men and women, nonmarried couples and couples from countries where surrogacy is illegal from hiring commercial surrogates in India present a blow to the country’s US$2.5-billion surrogacy industry. About 25,000 foreign couples visit India each year for surrogacy services, resulting in more than 2,000 births. Surrogacy services cost US$18,000 to US$30,000, or only about a third of the U.S. price. Based on the article, the new law threatens the business of about 1,000 registered and unregistered fertility centers in India, including surrogates who get paid about US$5,000 to US$7,000.

In the aforementioned BBC podcast, Dr. Nayna Patel of the Akshanka clinic in India, which houses and provides surrogate mothers, explains that surrogate mothers in India get US$7,500 for carrying a child, and US$9,000 to 10,000 if they were to carry twins. Patel says 35% to 40% of the demand comes from outside of India. According to a 2009 case study, “Commercial Surrogacy and Fertility Tourism in India,” by Kari Points from Duke University’s Kenan Institute for Ethics, India has become the world’s destination for commercial surrogacy for the following reasons: much lower costs, the large number of women willing to engage in surrogacy, top-notch private health care, English-speaking providers, a business climate that encourages the outsourcing of Indian labor, world-famous tourist destinations, and the total absence of government regulation. One estimate places the worth of

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India’s rapidly growing commercial surrogacy industry at US$445 million per year. However, commercial surrogate pregnancy is leading to ethical and legal concerns, Dr. Pikee Saxena et al declare in a 2012 article published in the Indian Journal of Community Medicine. The authors maintain that due to lack of proper legislation, both surrogate mothers and intended parents are exploited, and the profit is earned by middlemen and commercial agencies. Cross-border surrogacy leads to problems in citizenship, nationality, motherhood, parentage, and rights of a child, according to the article, which was posted on the U.S. government’s National Center for Biotechnology Information. The authors report that aside from India, commercial surrogacy is legal in Ukraine and the U.S. state of California, while it is illegal in England, many U.S. states, and in Australia. “If we look upon the problem of surrogate mothers, things are even worse and unethical. The poor, illiterate women of rural background are often persuaded in such deals by their spouse or middlemen for earning easy money,” they maintain. Moreover, they observe that unlike in the U.S., in India, there is no provision of psychological screening or legal counselling for surrogate mothers. During the course of pregnancy, these women stay in hostels to avoid the social stigma of becoming outcasts in their community. In addition, the authors note, “(I)t seems ironical that people are engaging in the practice of surrogacy when nearly 12 million Indian children are orphans,” citing what they call “a complicated and a lengthy procedure” for adopting a child in India. Their suggestion: Modify and simplify the adoption procedure, and promote altruistic, not commercial, surrogacy.

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Apart from the ambitious national and continental initiatives to map and model the human brain that we discussed in our previous edition (“Big Brain Projects Seek to Unravel the Mysteries of the Mind,” The CenSEI Report, Vol. 3, Issue 14), the brain continues to be the subject of considerable scientific inquiry, as we discovered in our own research since then.

Technically, it’s still an afterlife experience. By now, most if not all

of us must have heard one tale or another of near-death experiences, fueling belief in life after death with testimonies of lights and tunnels and levitation from people who were nearly dead or given up for dead. Now, an Aug. 14 National Geographic report by Diane Cole tells of a new study that might provide the basis for a more scientific explanation for those experiences: Even when the heart stops, the brain continues to function. According to the report, which discussed some of the findings with lead study author Jimo Borjigin, associate professor of physiology and neurology at the University of Michigan Medical School, the study of rats’ brains indicated that in the seconds after their hearts stopped beating, there was brain activity characteristic of conscious perception, and that the brain was the source of electrical activity. In

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fact, according to, the brain wasn’t only active, it was hyperactive, and for 30 seconds after the heart stopped. Borjigin goes on to hypothesize – while admitting no factual basis or proof – that this might be a lastditch effort of the brain to recover from what he characterizes as “the severest crisis the brain will ever see.” The study was published in the August online version of the Proceedings of the National Academy of Sciences of the United States of America.

The real secret to losing weight? Fix your brain. An Aug.

21 blog post by Melanie Haiken on Forbes’ site discusses a new theory behind the inability to sustain weight loss, courtesy of Dr. Louis Aronne, Director of the Comprehensive Weight-Control Program at New York-Presbyterian Hospital/Weill Cornell Medical Center. Haiken quotes Aronne as saying that research is establishing that “eating fattening foods causes inflammatory cells to go into the hypothalamus … This overloads the neurons and causes neurological damage.” The hypothalamus is the part of the brain that regulates metabolism.

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Aronne cites a Feb. 2013 study in the British Journal of Nutrition as one study that proves the theory of hypothalamic damage. A team of scientists at the University of Liverpool, in reviewing research that included studies of different weight loss diets, found that a diet high in saturated fat and simple carbohydrates sets in motion a chain reaction of “metabolic dysfunction” involving the appetite- regulating hormones leptin and ghrelin, which suppress and increase appetite, respectively. Aronne goes on to explain that over time, too many calories from fat and simple sugars damages the nerves that conduct signals through the hypothalamus, affecting the function of leptin and ghrelin, and thus the body’s ability to regulate weight and metabolism. ”Because of this damage, the signals don’t get through about how much fat is stored.” In a nutshell, according to Aronne’s theory of hypothalamic damage, cutting fat and simple sugars and eating healthier food aren’t just for reducing calories, they’re also for healing your hypothalamus. Haiken also provides a link to more information on Aronne and his views on brain signaling and weight loss.

• August 26 – September 8, 2013

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filipinos rage over pork barrel

Filipinos Rage Over Pork Barrel To stop sleaze, let beneficiaries monitor project spending By Ricardo Saludo

POINT & CLICK Access online research via your Internet connection by clicking pictures, graphics, and words in blue

O

n the fourth Monday of August marking National Heroes Day in the Philippines, most people take it easy at home or on the last day of a long weekend trip out of town. But this time, for close to 100,000 agitated citizens in Metro Manila and thousands more in cities elsewhere in the archipelago, it was time to rage. “We are all angry at all the stealing of the politicians,” retired professor Teodoro Jurado told the Philippine Daily Inquirer. “We are telling them that time is up.” The public outrage is over multibillion-peso anomalies in the Priority Development Assistance Fund (PDAF) disbursed through senators and representatives, totaling ₱27 billion in the proposed 2014 budget. The nationwide unrest reached such intensity that even Congress and President Benigno Aquino III have grudgingly agreed

Congress corruption sparked the biggest rally under Aquino, via social media

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to radically revamp the system, while maintaining his opposition to total PDAF abolition. The Friday before the Monday rallies, Aquino addressed the nation with his staunch allies, Senate President Franklin Drilon and House of Representatives Speaker Feliciano Belmonte Jr., by his side. Translated by the Palace from his Filipino speech, the President declared: “It is time to abolish PDAF. Now, we will create a new mechanism to address the needs of your constituents and sectors, in a manner that is transparent, methodical and rational, and not susceptible to abuse or corruption.”

₱10-billion pork barrel queen? The

restiveness across the archipelago began last month when the top-circulation Inquirer ran an expose alleging massive kickbacks in ₱10 billion

ABS-CBN

STRATEGY POINTS After three years of anti-corruption efforts, President Aquino grapples with sleaze in Congress, customs and allegedly a close relative The pork barrel scam spurs the biggest rallies in the current administration, despite late moves to reform the hugely corrupt system Expand and enhance citizen monitoring in government bidding and implementation, for project beneficiaries make the best monitors

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Aquino wants PDAF reformed, not scrapped

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Napoles faces Inquirer editors

• August 26 – September 8, 2013

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Two Years After ‘Tuwid na Daan’ worth of projects financed with PDAF, commonly called “pork barrel,” an expression borrowed from the U.S. Congress. The expose centered on businesswoman Janet Lim-Napoles, who, Inquirer sources said, operated a stable of firms and bogus nongovernment organizations under her JLN Corporation. Through an elaborate scheme believed to have been honed over many years, Napoles is accused of “buying” PDAF allocations from legislators, then working out projects and documents to get funds released by the Department of Budget and

Management (DBM) to her NGO partners and eventually channeled to her accounts. Soon after Napoles’s half-hour interview at the Inquirer’s offices, Justice Secretary Leila de Lima ordered her arrest on wrongful detention charges and moved to freeze her hundreds of bank accounts. After about two weeks in hiding, Napoles surrendered to President Aquino on August 28.

$30-million extortion scam? The pork-

barrel expose exploded when Filipinos were already disturbed by allegations in late June of a multimillion-dollar extortion attempt involving a group purportedly including President Benigno Aquino III’s sister Ballsy and her husband Eldon Cruz. The group was claimed to have demanded as much as $30 million from Czech company Inekon, which was bidding for a contract to supply train cars to Metro Rail Transit. Czech Ambassador Josef Rychtar sent a letter to President Aquino, dated June 29 and stating that “the allegations that members of your family were involved with discussions with Inekon on any projects in the Philippines are simply untrue and malicious.” He said he had met the Cruz couple and other Aquino family members, “and I hold all of them in the highest esteem.” Despite this letter, released three weeks after its date, Presidential Spokesperson Edwin Lacierda cast doubt on Rychtar’s assertions. The ambassador had accused three undersecretaries of the Department of Transportation and Communications of demanding $30 million in connection with the MRT project. When Inekon refused, Rychtar recounted, it was blacklisted. The government denied this. Eventually, however, the government had to address the allegations. Both Transportation Secretary

Rychtar’s letter raised Palace doubts

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Graphic by Transparency International

After two years of his high-profile anti-graft measures, including the jailing of his predecessor on corruption charges, has President Benigno Aquino III made a big dent in corruption? Not much, according to the 2013 Global Corruption Barometer ratings compiled by Berlin-headquartered Transparency International. As the TI graphic shows, most respondents surveyed by the body — 62% in all — said corruption in the country in Aquino’s two full years in office increased or stayed the same (31% each). Another 35% saw a little decrease, with a mere 2% reporting a big drop. While that’s better than the 2010/11 results of 69% seeing more corruption and just 6% feeling any improvement, the absolute numbers remain worrisome, especially considering the far more favorable media coverage given to the present government. There’s more to dismay the corruption-weary nation. In response to Question 2, 64% of Filipinos say corruption is a serious problem, with another 31% finding it bothersome. Only 3% think it’s not a problem at all. In the third question about “a few big entities” controlling the government, 62% see total (15%) or large dominance (47%), with just 12% seeing little or no clout wielded by those powerful interests. (These two questions are only for 2013, with no comparable results for the previous survey.)

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On the fourth question on how effective the government is in fighting corruption, 28% think they are ineffective (down from 48% in 2010/11), with another 31% neutral (neither effective nor ineffective, up from 24%). A sizable 40% think anti-graft efforts have been effective, a gain of 12 points from 28% in the previous report. Among key segments of government and society, the Philippine National Police rated worst in corruption perception, with 69% of TI respondents believing PNP law enforcers corrupt or extremely corrupt. Also rated very badly are civil servants (64%), political parties (58%), the judiciary (56%), Congress (52%), and the military (43%). Commenting on the Transparency International report, Presidential Spokesperson Edwin Lacierda noted the survey gains since 2010/11 (starting one minute into his press briefing video). “People have seen there is a consistent fight against corruption under this administration,” he stressed. “It will continue to the very last day of this administration.” So far, however, only one in every 50 Filipinos is impressed, and that ratio may fall further with the recent pork barrel, customs and commuter train scandals.

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filipinos rage over pork barrel

Joseph Abaya and Justice Secretary Leila de Lima launched investigations, and MRT General Manager Al Vitangcol went on leave. In a TV interview, Aquino’s sister Ballsy Cruz denied involvement in the alleged extortion attempt, and expressed willingness to testify in investigations.

The ₱200-billion customs hole. Besides the

pork barrel and MRT scandals, there was also a flood of Bureau of Customs corruption stories, triggered by Aquino’s own charge of massive contraband smuggling, including guns and drugs, and P200 billion in BoC revenue losses a year in his fourth State of the Nation Address (see portion subtitled “Bureau of Customs’ incompetence”). Yet despite a proposed reassignment of district collectors now pending with Finance Secretary Cesar Purisima, BoC Commissioner Rufino Blazon will keep

frontline personnel — the ones dealing more directly with cargo — in place. And while President Aquino mobilized an multi-agency body to investigate the pork-barrel scam, he has yet to order a probe into rampant smuggling, including the 3,000 or so containers lost in transit under his watch — the biggest inflow of contraband in Philippine history. On top of those recent controversies were unimpressive results in the 2013 Global Corruption Barometer for the Philippines, published by the world anti-graft body Transparency International. TI found that 62% of Filipinos believed corruption in the past two years got worse or stayed the same, with another 35% seeing a little improvement. Despite two and a half years of Aquino’s Tuwid na Daan (Straight Path) anti-corruption campaign, a minuscule 2% saw significant decline in corruption (see boxed article on page 30).

Justice Secretary de Lima and Ombudsman Morales at Aug. 27 IAAGCC briefing: Promising fairness

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‘That’s plunder, legalized.’ The

same skepticism is greeting President Aquino’s call for pork-barrel reform. On the State of the Nation public affairs program, columnist and professor Solita Monsod, his mother’s former economic-planning secretary, warned that turning PDAF into budget-line items would just mean that legislators with good connections in the Palace and government agencies would get their projects in. “The Executive and Legislative [branches] are in a giant conspiracy to take advantage of the pork barrel for their own personal gain,” Monsod asserted. “That’s plunder, legalized.” Equally unimpressed by Aquino’s claimed PDAF reforms is U.K.-based finance professor and long-time business columnist and consultant Dean de la Paz. In his article he bristled at the prospect of legislators meddling with pork-barrel funds in reviewing the budget: “Are we now asking the untrustworthy to scrutinize for us the very mechanism that fattens their bellies and fills their pockets as it steals from ours?”

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Graphic from Philippine Daily Inquirer

Expectations may be subdued as well for the President’s activation of the Inter-Agency Anti-Graft Coordinating Council (IAAGCC) to investigate PDAF anomalies, despite vows by two of its eight members, Justice Secretary de Lima and Ombudsman Conchita Carpio Morales, as well as assurances from the Palace, that allies of the President will no be spared. For one thing, the scope of investigation is already circumscribed by the recent Commission on Audit

• August 26 – September 8, 2013

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report, which is limited to 2007-09 and excludes irregularities in the Aquino regime. Moreover, Aquino already cleared Agriculture Secretary Proceso Alcala, while de Lima was criticized for doing the same with three pro-Aquino senators. President Aquino has constantly defended close associates embroiled in controversies, even paying the bail of two stalwarts of his Liberal Party on trial for corruption.

New and improved pork barrel? Still,

with the powers that be set on pork-barrel reform, not abolition, here are the President’s proposed reforms. Most important of these is the requirement of competitive bidding on the DBM-administered Philippine Government Electronic Procurement System (PhilGEPS) website, created under the 2003 Government Procurement Reform Act.

In addition, hard-to-measure and -verify projects are no longer eligible for PDAF funding. They include: “consumable soft projects, such as fertilizers, seeds, medicines, medical kits, dentures, funding for sports fests, training materials ... temporary infrastructure ... dredging, desilting, regravelling, or asphalt overlay.” Also banned from pork-barrel projects: all NGOs and certain state corporations implicated in past anomalies, like National Agri-Business Corp. and ZNAC Rubber Estate Corp. Funding will go only to the district of the legislator sponsoring the project. Lastly, Aquino added, “each item will be disclosed in the DBM and related agency websites and the National Data Portal of the government.”

Can Aquino’s reforms clean up PDAF?

Budget Secretary Florencio Abad will work with Senate President Drilon and House Speaker Belmonte on legislation and regulations to implement President Aquino’s PDAF reforms. That would be the opportunity to further refine the measures so as to more stringently monitor and make more transparent and accountable

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the funding and implementation of congressional development projects. Taking account of the alleged pork-barrel kickback scheme of Napoles and her NGOs, the players seem quite adept in complying with rules and documentation while perpetrating their scams. They get the needed signatures, produce required papers for fund releases, and transfer funds through normal banking channels. So stricter rules and even outright prohibitions against dubious entities may simply be just another challenge to the deviousness of the dishonest. Indeed, even in programs and projects subject to open bidding, countless anomalies occur and escape scrutiny. So it is with public works projects and other non-consumable undertakings. One recent porkbarrel TV report featured a road linking two cities in Southeastern Luzon’s Bicol region, which was reported to be completed, but was in fact missing key segments. So the solution is not limiting the kinds of projects, but beefing up the oversight and accountability. What’s not in President Aquino’s reformed pork barrel, but which would immensely enhance integrity, transparency and accountability, plus people empowerment is direct citizen involvement, especially project beneficiaries, in monitoring spending and implementation of PDAF and, for that matter, all other government initiatives. The good news is, this kind of grassroots and civil society watchdog system for public undertakings is, in fact, already in the 2012 Philippine Government Action Plan submitted to the Open Government Partnership earlier this year.

People power for integrity. Initiative No. 16

A watchdog system utilizing grassroots and civil society organizations is already in the government’s own action plan to institutionalize people power in monitoring projects

in the Action Plan is Participatory Social Audit for Public Infrastructure Projects (update on page 23 of the plan). The Commission on Audit scheme mobilizes community members, including engineers, to inspect road, bridge, school, market and other construction (Continued on page 35)

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you gotta see this

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Christopher Jobson’s Colossal art/visual/design blog provides us with a couple of must-sees, starting off with a report about a video of a underwater “crop circle” and its most unlikely creator: a tiny puffer fish, using one fin. The Colossal blog entry also includes a link to Colossal’s previous report on the phenomenon, which in turn includes a link to its fascinating back story, so to speak, courtesy of the American-Japanese Spoon & Tamago blog.

Manila Girl Scouts checking textbooks: Why not PDAF too?

projects. If that can be done for complex undertakings like infrastructure, why not for far simpler programs like providing books, medicines, fertilizer, and other consumables, where counting and random evaluation of product deliveries are all that’s needed? In fact, as recounted in a Princeton case study, the Arroyo administration’s Textbook Count program in 2002-05 partnered with Ateneo de Manila University’s Government Watch (G-Watch), National Citizens Movement for Free Elections (Namfrel), and Boy and Girl Scouts nationwide to monitor bidding, inspect textbook quality, and check deliveries. Besides the Education Department, G-Watch had similar citizens monitoring tie-ups with Public Works and Highways, Health, and Social Welfare and Development. Also harnessing people power for transparency and accountability is the People’s Participation Partnership Program under the Department of Interior and Local Government (cited on page 28 of the Action Plan). In this program, DILG works with civil society organizations (CSOs) and the private sector to develop and test the Citizens’ Satisfaction Index System for evaluating public services in local government units (LGUs) at the provincial, city and municipal levels. As

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of March, the index has been piloted in seven LGUs, and a government fund is providing small grants to 12 CSOs. Credit: NHK and Colossal

In his pork-barrel speech, President Aquino called on citizens to check PDAF projects online: “The information will be there for you to monitor: let us understand and examine it.” Besides fund upload, the government should expand and enhance citizen monitoring in government bidding and implementation, especially for PDAF. And while Aquino is at it, he should prioritize the passage of the Freedom of Information Bill into law once and for all. “I am calling on each and every Filipino to do his part, even as we do ours,” urged the President. “Together, let us work to strengthen accountability and transparency in government, in order to ensure that public funds are utilized in a just manner — one that truly benefits the Filipino people.” One prerequisite to achieve this is an FOI Law, which would empower people to demand truth and accountability from the government. The best monitors are those whose lives stand to gain from the projects being watched. Most especially porkbarrel projects. Just you watch.

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Credit: Kelli Andersen and Colossal

Another must-see Colossal brings to our attention is a paper stop-motion teaser by illustrator and designer Kelli Andersen for an iPad app, The Human Body, by design studio Tinybop. The 1:20 teaser – hence the term – provides a cut-out of a human body, onto which the body’s various physiological systems are overlaid, but that description, while technically accurate, might be just a tad, how shall we put it, clinical? We’ll stop now and let you watch the teaser for yourself.

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TCR Volume 3 Number 15 issue