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Fiscal responsibility bill proposed by government Vol. 1. No. 6 • Nov. 7 - 13, 2011

~ headline from Oct. 30 news story on a government-sponsored bill requiring proposed expenditure legislation to contain revenue provisions

WORLD 02 Asia’s emerging middle class(es)

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The world economy looks to Asia to pick up where the West left off

• The Next 11 • Impact of China- and India-led commodity booms on different Asian economies • Stuck in the middle

09 Bullying in Cyberspace How digital media can turn a young person’s life into a living hell

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NATION 25 The P72-Billion Question

14 When Kids Get Away With

Murder

How much growth will the ‘stimulus package’ actually stimulate?

31 Going mobile: The end of the PC?

With more people accessing the Internet

through tablets and smartphones, the information age moves beyond the personal computer

• The Patent Wars

Is the Juvenile Justice Law promoting crime?

• Juvenile Justice and Welfare Act of 2006

20 Claiming Benham Rise

The Philippines files an undisputed claim to a 13-million-hectare undersea region that could eventually bring the country energy self-sufficiency

• Methane Hydrate: The Next Energy Source

NEWS ON THE NET BUSINESS

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NTC Approves Pldt-Digitel Deal

Finally, Europe has a dealt

Philippines a ‘safe haven’ for transnational cybercrime: PNP

PHL, Vietnam eye $3-B trade by 2016 Businesses churn out apps blending real, virtual worlds ADB okays new lending program for the Philippines RP software industry back on Chinese investment in Europe to growth track, US main market surge Government subsidies grow to P1.7 billion in September

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Asia’s Emerging Middle Class(es)

The world economy looks to Asia to pick up where the West left off By Bill Huang In the first decade of the new century, economic growth has continued to shift from U.S. and Europe to Asia, as evidenced by gross domestic product growth rates exceeding the American, European, and world averages.

37.6% by 2020. As those figures show, Asia emerged relatively unscathed from the U.S. mortgage-market meltdown in 2008 and the global recession in 2009, and, in possibly from this year’s Eurozone debt crisis as well.

According to figures from The Conference Board’s Global Economic Outlook 2011, developing Asian economies (Asia ex Japan, Hong Kong, Korea, Singapore, and Taiwan) accounted for an estimated 26.6% of world output in 2010, and a projected

Another way to look at the global situation might be the way the Asian Development Bank (ADB) summed it up in its Key Indicators for Asia and the Pacific 2010: the US and Europe now have to increase savings to reduce excessive debt and rebuild

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lost wealth, while consumer spending in developing Asia has shown resilience in the face of the recession. Economic growth, then global wealth. To be sure, there are other signs that global wealth has been finding its way to Asia, in the form of more high-net-worth individuals, higher-paid executives, and upwardly mobile youth. These pointers offer mammoth business and investment opportunities, as tens of millions of upwardly mobile Asians spend on consumer goods and investment vehicles by the billions of dollars. That bonanza comes none too soon as traditional markets in the West dry up amid economic and financial woes. In 2010, according to the latest Capgemini and Merrill Lynch Global Wealth Management World Wealth Report (registration required but free, the link is to a summary), the number of so-called high net worth individuals in Asia (3.3 million) exceeded that of Europe (3.1 million), coming in second only to North America (3.4 million). According to the report itself, the higher numbers for Asia vis a vis Europe came also in that group’s investable assets ($10.8 trillion vs. $10.2 trillion), and in the growth rate for investable assets (12.1% vs. 7.2%). Global human resource consulting firm Mercer’s Global Executive Remuneration Trends 2011 reports that executive salaries in the Asia-Pacific region – primarily China, India, Indonesia, Vietnam, the Philippines, and Malaysia – are increasing at a 7.0% rate, higher than the 2.5% to 3.0% range in Europe and North America. With Asian executive salaries already exceeding their counterparts in Europe, Mercer predicts

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Asian executive salaries will exceed those in the U.S. in two to three years. Citigroup recently announced that it was targeting “emerging affluent” individuals in the Philippines and the rest of emerging Asia for banking and investment services. The global banking giant defines this market as individuals 20-45 years old with net worth between $10,000 and $100,000, and estimates that there are 500 million such people in emerging Asia. Replacing American private consumption with Asian consumption. As Homi Kharas and Geoffrey Gertz of the Brookings Institution put it in their chapter on the new global middle class shifting from the West to the East in a 2010 book on China’s emerging middle class, the global economy has grown to rely heavily on American private consumption – $10 trillion worth, just under 20% of the world economy – which was made possible by the development of a significant middle class. The world economy needs to fill the void resulting from the retrenchment of the U.S. consumer following the 2008 mortgagemarket crash, and is looking to Asia, specifically to an emerging middle class in China and other populous countries. Their assessment: some Asian economies, i.e., China and India, have already reached a tipping point, after which large numbers of people will join the middle class and drive consumption. By 2015, they predict the number of Asian middle-class consumers will equal that of Europe and North America combined. By 2021, there could be 2 billion Asians in middle-class families, 670 million in China alone.

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Table 1: Size of the Middle Class, Regions (millions of people and global share) North America Europe Central and South America Asia Pacific Sub-Saharan Africa Middle East and North Africa World

338 664 181 525 32 105 1,845

2009

18% 36% 10% 28% 2% 6% 100%

2020 333 10% 703 22% 251 8% 1,740 54% 57 2% 165 5% 3,249 100%

2030

322 680 313 3,228 107 234 4,884

Table 2: Total Middle Class Consumption ,Regions (2005 PPP$, billions and global share) North America Europe Central and South America Asia Pacific Sub-Saharan Africa Middle East and North Africa World

5,602 8,138 1,534 4,952 256 796 21,278

2009

26% 38% 7% 23% 1% 4% 100%

5,863 10,301 2,315 14,798 448 1,321 35,045

2020

17% 29% 7% 42% 1% 4% 100%

5,837 11,337 3,117 32,596 827 1,966 55,680

7% 14% 6% 66% 2% 5% 100%

2030

10% 20% 6% 59% 1% 4% 100%

Source: “The New Global Middle Class: A Cross-Over from West to East,” Homi Kharas and Geoffrey Gertz, Wolfensohn Center for Development at Brookings, draft version of Chapter 2 in China’s Emerging Middle Class: Beyond Economic Transformation (2010), Brookings Institution Press, Washington, D.C.

Table 1 depicts the West-to-East shift in the middle class in the projected size of the population, from 28% of the total in 2009 to 66% in 2030, while Table 2 charts the level of projected expenditures, from 23% of the total in 2009 to 59% in 2030.

According to the ADB, in the aforementioned Key Indicators for Asia and the Pacific report, at the rate Asian consumption expenditures have been growing in the last 20 years, they could reach $32 trillion in 2030 and comprise 43% of worldwide consumption by then. Heterogenous aggregate of consumers. Because of the disparity in the sizes and compositions of Asian economies, Asia’s “middle class” will not

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be the same as the U.S. middle class, which is defined not just by one country of origin but also by income level and consumption fueled largely by creative credit expansion. Rather, Asia’s middle classes will consist of a heterogenous aggregate of consumers spending anywhere between $2 and $100 a day (depending on who’s measuring) for everything from cellular phones and sachets of toothpaste and shampoo to installments on cars and condominiums.

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Summary Statistics of Population, Class Size, and Total Expenditures by Region (1990-2008, based on household survey means) Population (%) Total Population (million)

Poor (<$2 per person per day)

Middle ($2-$20 per person per day)

Developing Asia Developing Europe Latin America and Carribean Middle East and North America OECD Sub-Saharan Africa

2,692.2 352.3 352.5 162.3 639.0 274.8

79 12 20 18 0 75

21 84 71 80 24 24

Developing Asia Developing Europe Latin America and Carribean Middle East and North America OECD Sub-Saharan Africa

3,383.7 356.6 454.2 212.8 685.4 393.5

Region

43 2 10 12 0 66

56 87 77 86 16 33

Aggregate annual income/expenditures (2005 PPP $ billion) Poor High (<$20 per (>$20 per person per day) person per day) 1990 0 843 4 23 9 31 2 16 76 0 1 70 2008 1 696 11 4 13 22 3 14 84 0 1 100

Middle ($2-$20 per person per day)

High (>$20 per person per day)

Total

721 638 641 247 735 109

42 141 480 39 9,636 44

1,605 802 1,153 303 10,371 224

3,285 974 1,008 365 542 206

350 425 924 66 12,617 69

4,331 1,403 1,953 445 13,159 376

Note: Developing Asia = Armenia, Azerbaijan, Bangladesh, Cambodia, People’s Republic of China, Georgia, India, Kazakhstan, Kyrgyz Republic, Lao PDR, Malaysia, Mongolia, Nepal, Pakistan, Philippines, Sri Lanka, Tajikistan, Thailand, Turkmenistan, Viet Nam. Developing Europe: Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Latvia, Lithuana, Macedonia, Moldova, Poland, Romania, Russian Federation, Turkey, Ukraine. Latin America and Carribean = Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic,Ecuadfor, Slavador, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Peru, Uruguay, Venezuela Middle East and North Africa = Algeria, Djibouti, Eqypt, Iran, Jordan, Morocco, Tunisia, Yemen: OECD = Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Italy, Korea, Luxembourg, Netherlands, Norway, Portugal, Slovak Republic, Spain, Sweden, United Kingdom, United States. Sub-Saharan Africa = Botswana, Burkina Faso, Burundi, Cameroon, Central African Republic, Ethiopia, Gambia, Ghana, Guinea, Kenya, Lesotha, Madagascar, Malawi, Mali, Maritania, Mozambique, Niger, Rwanda, Senegal, South Africa, Swaziland, Tanzania, Uganda. Source: PovcalNet Database

Source: “The Rise of Asia’s Middle Class,” special chapter, Key Indicators for Asia and the Pacific 2010, Asian Development Bank.

The Asian Development Bank’s figures on the world’s emerging middle classes from 1990 and 2008, during which time developing Asia’s poor population shrank from 79% of the population to 43%, while the middleincome group grew from 21% to 56% of the population. John Parker, writing in The Economist in February 2009 as part of a special report on the new middle classes in emerging markets, talks of emerging markets having two middle classes: a global middle class, where the members have as much in common with each other as they do with the poor in their own countries, and a developing middle class, where the members are middle class in their own countries but not necessarily in the developed world. As of the time of his piece, he figured that the developing middle class became a majority of the population of the developing world, having hit the 49% mark in 2005.

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Unprecedented explosion in the world middle class. According to the World Bank’s Global Economic Prospects 2007 report, the world’s middle class will consist of 1.2 billion people in 2030 – 15% of the world’s population – earning from $4,000 to $17,000 in PPP dollars. As Goldman Sachs would have it, the world is seeing an unprecedented explosion in what it calls the “world middle class,” which it defines as people with annual incomes from $6,000 to $30,000 in 2007 PPP (purchasing power parity)-adjusted dollars. It predicts that by 2030, an additional two billion people could join this global middle

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class, and at 30% of the world’s population, it would dwarf the 19th-century’s middleclass explosion. This coming explosion, it says, can be seen in two ways: a shift in purchasing power from the richest countries to middle-income countries – members of the BRIC (Brazil, Russia, India, and China) nations, along with nations from a bloc it calls N11 (the Next 11, see breakout box) – and a shift in purchasing power to middle-income consumers. An Asian middle class mainly from ‘Chindonesia.’ Meanwhile, the CLSA brokerage and investment group, in its

The Next 11

Asia is the hope of the world economy, with China and India (along with Brazil and Russia) leading this current wave of growth, and with South and Southeast Asian countries – South Korea, Indonesia, the Philippines, Vietnam, Bangladesh, and Pakistan – placed by Goldman Sachs in March 2007 in a next wave of 11 countries (Egypt, Iran, Mexico, Nigeria, and Turkey comprise the others) for whom to watch out over the next three to four decades. This N-11 group of potentially large and fast-growing markets might not have the same impact as the BRIC nations, but could still rival the G7 group of industrialized nations in terms of new growth. Four years later, Goldman Sachs is now asking you to put your money where its mouth is, i.e., its N-11 Equity Fund, with a 14-minute sales pitch that’s as honest as it can get, with just about half the presentation dedicated to whatever sizzle could be sparked from this otherwise disparate group of economies, and the other half dedicated to disclaimers and warnings about the risks it hopes you’ll be prepared to undertake. But while we’re on the subject of blocs of countries, given that BRIC was originally coined by Goldman Sachs itself, before the BRIC countries formed a real bloc and invited South Africa to join, here’s another take on how future blocs might be named and even formed, from Humberto Moreira’s numbersrun blog.

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April 2010 publication Mr. and Mrs. Asia 2010, takes a look at consumption trends around South Asia, particularly of an entity it calls “Chindonesia,” for China, India, and Indonesia. By this group’s definition, its middle class is comprised of people with $3,000 annual per capita income, which it considers the point at which discretionary spending takes place. The report looks at various components of the sector, from autos and banks to technology, telecommunications, and transport, and predicts “hypergrowth” in the consumer sector for “Chindonesia” over the next five to 10 years as incomes continue to rise. By its reckoning, as of 2009, 78% of the new Asian middle class of 570 million people outside of Japan comes from China (63%), India (10%), and Indonesia (5%). By 2015, it predicts, the new Asian middle class will swell to 945 million, with “Chindonesia” contributing 90% of the new members. Composition of the middle class in Asia ex-Japan Thailand 3% Singapore 1%

Taiwan 4%

Philippines 1% Malaysia 3% Korea 9% Indonesia 5% India 10% Hong Kong 1% Source: Euromonitor, World Bank, CLSA Asia-Pacific Markets

Source: Mr. and Mrs. Asia, CLSA Asia-Pacific Markets, Spring 2010, page 23.

The new Asian middle class, with China, India, and Indonesia contributing 78% of the estimated total of 570 million.

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Impact of China- and India-led commodity boom on different Asian economies A July 2008 study (Coxhead and Jayasuriya) from the University of Wisconsin-Madison’s Department of Applied and Agricultural Economics examines the commodity boom generated by rapid growth in China and India and some of the possible development implications on different resourcerich Southeast Asian economies (Indonesia, Malaysia, and Thailand). The commodity boom has also engendered crosseffects in the trade and production of final and intermediate/ semi-finished goods, and how individual countries adjust to the rapid growth in China and India (and increased intra-Asian trade) depends on their mix of finite exportable resources, skillintensive manufacturing and their labor-market composition. Thailand, which has much agricultural land but not so much exportable minerals, oil, and gas resources, has adjusted with increased medium-skill-intensive exports and declining laborintensive exports. Malaysia, which has more exportable natural resources (e.g., palm oil and rubber), has seen slight declines in the shares of medium- and high-skill manufacturing in total merchandise exports, but overall export growth rates have remained robust. Indonesia, with a large natural resource sector (it now has more area planted to oil palm than Malaysia) and lower skill endowment relative to China and India, is benefiting from the commodity boom, but at the cost of development of its manufacturing sector. Indonesia has made far less progress toward developing greater sophistication in manufacturing than its Southeast Asian neighbors, the authors say, and that progress has essentially come to a halt since 2000.

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1993

Asian exports to Asia (in percent of Asian exports) Asian exports (in exports of world exports)

Source: United Nations, Comtrade database

Source: Regional Outlook: Asia and Pacific, International Monetary Fund, April 2011, p. 49.

Asia’s exports to the world have continued to grow to over onethird of the total, but Asian countries exporting to other Asian countries now account for over half of their total exports.

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The challenge for Asia. China and India are leading the way now, in both economic growth and the growth of their middle classes, but Kharas, in a June 2011 blog entry on the East Asia Forum site of Australian National University College of Asia and the Pacific’s East Asian Bureau of Economic Research says that Cambodia, Indonesia, Malaysia, Thailand and Vietnam are poised to become predominantly middle-class countries in the next 10 to 15 years. The challenge for Asia, he says, is to find a growth model that will keep them growing fast even with slow growth in consumption in the advanced countries, which used to drive Asian exports. Put another way, the salvation of the world’s economy will be not just in Asian countries producing cheaper goods and outsourced services for the rest of the world, but also in these and other countries producing and consuming more goods and services among themselves. And that’s already been happening.

Asia: Export Trends 60 55 50 45 40 35 30 25 20

Meanwhile, a Financial Times January 2011 report takes a look at consumers in Asia, particularly in China, India, and Indonesia, with a nod to the Philippines and Vietnam thrown in (subscription required).

According to the International Monetary Fund’s April 2011 Regional Outlook: Asia and Pacific report, while Asia continues to be the world’s leading source of exports, the most striking trend to emerge from the period from 2000 to 2009 has been the growth in intraregional trade. While Asian economies accounted for 35% of the world’s exports in 2009, up from 25% in 1998, the share of Asian exports to other Asian countries comprised 55% of Asia’s exports in 2009, up from 45% in 1998 (see graphic).

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Not a given. To the extent that the world economy is looking to Asia’s consumers to pick up the slack from the U.S. and European middle classes, the ADB is also quick to warn that the development of emerging Asia’s middle class is not a given. While 1.9 billion Asians, or 56% of developing Asia’s population, are now considered middle class based on per capita consumption of $2-20 per day in 2008, they aren’t that far removed from nearly 1.5 billion still trying to get by on less than $2 a day, leaving them highly vulnerable to slipping back into poverty. As Deutsche Bank Research put it in its own August 2009 paper on Emerging Asia’s Middle Class: “Middle class is a widely accepted concept but tricky to measure.” And yet, while it recognizes that current projections indicate that it could take a long time for emerging Asia (even with China’s tremendous growth) to match the U.S.’ consumption prowess, it also says

that the development of a dynamic middle class is making Asia an attractive market destination. The development of a middle class promotes growth, it maintains, while reducing inequality and driving domestic demand. The gist of its findings: Asia’s middle class is growing but is still vulnerable to external (global) economic shocks and asset market corrections, and Asian governments should do what they can to prevent the erosion of their middle classes by improving the quality of their human capital, raising disposable income, and reducing the risks of financial insecurity. In a nutshell, for all the promise, there is still much work for both governments and businesses to do to sustain the progress and tap the potential of emerging Asia’s middle classes, but make no mistake about the general direction the world’s capital has been heading. It’s been heading East.

Stuck in the middle

An August 2000 paper by Birdsall, Graham, and Pettinato, on the Brookings Institute website, calls attention to a possible if unintended consequence of the rise in countries’ middle classes due to globalization. According to the study, globalization may be inducing “distributional stress,” as manifested in dissatisfaction of the middle classes, even with improvements in income. The study posits possible causes, which boil down to government emphasis on protecting the poor while promoting globalization, which benefits the wealthy, all of which leave the middle classes extremely insecure. The mobility promised by market reforms has the promise of both an upside reward and a downside risk. If “rags to riches” stories are possible, the authors remind us, so are “middle to rags” stories. As they put it, while the poorest have the greatest need and merit attention, it’s the political support and economic participation of the middle classes that are needed for market-driven economic growth, and by extension, long-term poverty alleviation.

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Bullying in Cyberspace How digital media can turn a young person’s life into a living hell By Marishka Noelle M. Cabrera In a generation where the Internet serves as one’s umbilical cord to the modern world, being cut off from it may seem like a disaster. And yet, while the Internet provides a platform for a variety of tasks that shape modern existence – from e-mail to instant messaging to “friending”/”unfriending” on social networks – its amorphous quality has brought about, to the terror of some young people, a variation on an old archetype: the bully. Whereas in the past, bullies were confined to certain social settings, e.g., school

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grounds, with the advent of social media, they can now transcend the limitations of face-to-face interaction to intimidate their victims online and/or through digital media. According to a CNN report in September, a recent Associated Press/MTV poll indicated that 56% of its respondents, who were between the ages of 14 and 24 years old, reported having “experienced abuse” through digital media, i.e., cell phones and the Internet. The poll was part of MTV’s A Thin Line campaign, which seeks to eliminate bullying in cyberspace by educating young people about inappropriate

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behavior online or via cell phones, and about their digital rights. Extreme cases ending in tragedy. Some cases of cyber-bullying have actually ended in tragedy. In 2010, a college freshman in the United States jumped to his death after an intimate encounter with another man was captured surreptitiously and then broadcast online by two other students. Earlier that year, a 15-year old immigrant hanged herself after being incessantly taunted through text messages and on social networking sites. On its website, U.S. media organization National Public Radio lists other teens who committed suicide after being bullied online.

Currently, the Philippines ranks 8th in the number of Facebook users worldwide, with close to 27 million users, according to the social media statistics website Social Bakers. Recognizing the power of social media and the number of Filipinos linked online, GMA News and Public Affairs launched the Think Before You Click campaign in July. Be mindful of what you upload. The campaign encourages audiences to be mindful of what they upload or post on the Internet. It recently received a Community Civility Star Award from the Association of Image Consultants International, as GMA news reports. One of the campaign’s public service announcements centered on cyberbullying among teens and what to do if you are the one being victimized.

The traditional image of bullying — the strong picking on the weak — has become somewhat passé, if only because face-toface interaction is no longer needed in order to torment someone, not when one can just reach him online. A Manila Bulletin article reports that, ”Facebook, Twitter, and many other blogs and social networking sites have become an extension of low-level, tit-for-tat exchanges.” While extreme bullying is not as rampant in the Philippines, Senator Miriam DefensorSantiago is not taking any chances. Early this year, Santiago filed Senate Bill No. 2677, or the Anti-Bullying School Policy Act, which mandates educational institutions to come up with concrete policies on bullying, including cyber-bullying. In her explanatory note, she warns, “A new form of bullying is fast emerging with the advancements of technology.” Cyber-bullying, she adds, “happens in a realm where state power is weak and where very few laws are passed for regulation.”

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In an interview with The CenSEI Report, computer security company Trend Micro says this generation, known as the millennials, practically live online—they live, breathe, share, consume and interact within various networks on the Internet. “The very channels young people are using,” the company adds, “can be used to harass or harm them through bullying.”On the next page is a table from Trend Micro depicting the different technologies available to teens today and how they can be misused.

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Technology

Great for...

Example of misuse

Mobile phones

Keeping in touch by voice or text, taking and sending pictures and film. Useful in emergency situations and for allowing children a greater sense of independence.

Sending nasty calls or text messages, including threats, intimidation, harrasment. Taking and sharing humiliating images. Filming others being harassed and sending them to other phones or internet sites.

Instant Messenger (IM )

Text or voice chatting live with friends online. A quick and effective way of keeping in touch even while working on other things on the computer.

Sending nasty messages or content. Using someone else’s account to forward rude or mean messages via their contacts list.

Chat rooms and message boards

Groups of people around the world can text or voice chat live about common interest. For young people, this can be an easy way to meet new people and explore issues which they are too shy to talk about in person.

Sending nasty or threatening anonymous messages. Groups of people deciding to pick on or ignore individuals. Making friends under false pretenses - people pretending to be someone they’re not in order to get personal information that they can misuse in a range of ways - e.g. by spreading secrets or blackmailing.

Email

Sending electronic letters, pictures, and other files quickly and cheaply anywhere in the world.

Sending nasty or threatening messages. Forwarding unsuitable content including images and video clips, or sending computer viruses.

Social network sites

Socializing with your friends and making new ones within online communities. Allowing young people to be creative online. Personalizing profiles and homepages, creating and uploading content.

Posting nasty comments, humiliating images or videos. Accessing another person’s account details and sending unpleasant messages, deleting information or making private information public. Groups of people picking on individuals by excluding them. Creating fake profiles to pretend to be someone else and get the person into trouble.

Source: “Internet Safety Guide: Safety Tips on Cyberbullying”

The U.S. National Crime Prevention Council lists some of the things that a cyber-bully does, namely tricking others to reveal personal information, spreading rumors about another person, sending mean text messages, or posting photos without the victim’s consent. Cyber-bullying related to Internet addiction? Perhaps one reason why more bullying is happening online might

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be because the Internet is so inextricably woven into this generation’s life, and a study called “The World Unplugged” led by the International Center for Media and Public Affairs at the University of Maryland shows just how much. The study asked university students from North America, South America, Asia, Africa, and Europe to go media-free for 24 hours and record their experiences. Researchers

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found that results are strikingly similar for students across continents. They used the term addiction to describe their dependence on media, while some felt lonely and bored without it. Is this new generation of teens and young adults really addicted to the Internet and social media? A study from Elon University in North Carolina thinks the answer might be Yes. Teens and young adults “feel constant societal pressure to be connected with their peers through Internet use is maintaining a continuous near-ubiquitous connection with technology … This generation has made among teens and social media their top priority young adults. In and continues to need more the last decade, usage in order to feel satisfied. This group has also concluded the young that there is a need to decrease adult Internet their usage but seem unable to population has make that a reality.”

remained the most likely to go online

Moreover, a study by the Pew Research Center to determine attitudes and behaviors of millennials toward social media and mobile Internet use says, “Internet use is near-ubiquitous among teens and young adults. In the last decade, the young adult Internet population has remained the most likely to go online.” Internet ubiquity + personal anonymity = impunity. It is not surprising, then, that youth behavior coupled with the inescapable nature of the Internet serve as breeding ground for cyber-bullies. Anonymity, for instance, can give individuals the power to say what they want to say or upload damaging material regardless of the repercussions. What’s

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more, the immense popularity of social media makes it easier to not only reach the victim, but also to acquire personal information that can be used against him or her. Lastly, when anything is posted or uploaded on the Internet, people lose control over such material—who sees it, what others do with it, who downloads it, and the like. In a Huffington Post report on a panel discussion on social media hosted by Marie Claire magazine, Randi Zuckerberg, Facebook marketing director, thinks that putting an end to anonymity on the Internet can help curb cyber-bullying. “People behave a lot better when they have their real names down,” said the sister of Facebook co-founder Mark Zuckerberg, adding, “I think people hide behind anonymity and they feel like they can say whatever they want behind closed doors.” Cyber-bullying worse than traditional bullying? The effects of cyber-bullying may actually be worse than that of traditional bullying. A PsychCentral report on presentations on cyber-stalking and cyber-bullying at the American Psychological Association’s annual convention quotes Elizabeth Carll, Ph.D., as saying: “It is my observation that the symptoms related to cyberstalking and e-harassment may be more intense than in-person harassment, as the impact is more devastating due to the 24/7 nature of online communication, inability to escape to a safe place, and global access of the information.” Meanwhile, a Common Sense Media white paper, “Cyberbullying—Damage in a Digital Age,” posits that the public

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humiliation of cyber-bullying may even be more destructive because hurtful content is harder to remove online. The paper also notes the impact of cyber-bullying on kids, such as low self-esteem, fear, depression, anger, failure in school, and even violence or suicide. Clearly, the psychological effects of cyberbullying can be severely damaging especially to individuals in their formative years. In “Stop Cyber Bullying Before It Starts” from the National Crime Prevention Council website, parents are advised to teach bullied teens not to respond to cyber-bullies, to report and keep a record of incidents of bullying, and not to seek revenge. “Bullying at School and Online” from the American Association of School Administrators and Education.com, meanwhile, suggests actions to be taken when the teen is the one bullying. Increasing supervision, which may mean setting limits on Internet usage or discussing online etiquette, and examining

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behavior and interactions in the home that encourage this type of behavior are a start. As parents, keeping teens safe from the dangers of cyber bullying is an ongoing task. This would entail open communication with one’s children and being aware of changes in their behavior. The Cyberbullying Research Center lists the following as possible signs of bullying: being withdrawn from friends and family, appearing jumpy or nervous when an instant message, text message, or email is received, and seeming angry or depressed after using the computer. If you suspect your child is a victim of any form of bullying, the American Academy of Child and Adolescent Psychiatry, in its Facts for Families, recommends asking the child directly if he is being bullied, and responding in a postive and accepting manner. It is also crucial to let the child know that it is not his fault and that telling you was the right thing to do.

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When Kids Get Away With Murder Is the Juvenile Justice Law promoting crime?

By Joanne Angela B. Marzan When GMA News aired this video from Metro Manila Development Authority’s CCTV camera along Guadalupe Bridge in September, the ‘Hamog Boys’ instantly became a household name. Besides the gang’s trademark modus operandi of attacking motorists stuck in traffic, what appalled most viewers was the sight of young boys brazenly committing a crime, even risking life and limb. The news clip revived the ongoing debate

Source: http://www.gmanews.tv/video/90350/sona-mga- about the Juvenile Justice and Welfare Act batang-nagnanakaw-sa-umaandar-na-taxi-huli-sa-cctv

of 2006 (Republic Act 9344) which exempts

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When kids get away with murder

youths aged 15 or less from criminal liability, up from nine years old. Senators weigh-in.“Syndicates use 14and 15-year-olds you cannot arrest,”Senate Committee on Justice and Human Rights Chairman Francis ‘Chiz’ Escudero said in a media statement. Senate Majority Floor Leader Vicente ‘Tito” Sotto III, former Dangerous Drugs chairman, and Sen. Panfilo Lacson, former Philippine National Police chief, sided with Sen. Escudero. “How can justice be served if they are exempt from liability for the crime they are committing?” Lacson asked GMA-7. Sotto added in another interview with the station that drug dealers use couriers below 18, who are whisked away by their lawyers before they can be questioned by police, and turned over to the Department of Social Welfare and Development.

In September alone, two high-profile cases involved a minor exempt from arrest and prosecution. On Sept. 16, an 11-year-old fifth-grader of Baguio Central Elementary School strangled his classmate to death after an argument. Four days later, a 13-year-old boy shot dead his 16-year-old male lover at SM Pampanga mall over an apparent lover’s quarrel then committed suicide. “The PNP is one with the effort to amend the juvenile law. We are actively pursuing this in coordination with Congress,” PNP

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spokesman Chief Superintendent Agrimero Cruz Jr. said in a Philippine Star interview. He cited reports of youth offenders also involved in robbery. Department of Interior and Local Government Secretary Jesse M. Robredo said he would also propose amendments to the Juvenile Justice Law. He said police intelligence reports revealed that some juveniles are getting bolder in their criminal acts knowing they would be freed or turned over to DSWD. Protect the welfare of the child. But in a press release, both Social Welfare and Justice Secretaries expressed opposition to amendments. “We should protect the welfare of the child in conflict with the law by understanding the circumstances in which a child commits such offenses,” argued DSWD Sec. Corazon ‘Dinky’ Soliman.“If we address that and provide appropriate assistance and services to the child, then they have a better chance at becoming productive members of society.” Justice Sec. Leila de Lima added: “The Juvenile Justice and Welfare Act was enacted in compliance with our obligations under the U.N. Convention on the Rights of the Child [UNCRC] and pursuant to the provisions of the Philippine Constitution. A child-sensitive justice system promotes and protects the physical and psychological well-being of children, while holding them accountable for their actions.” The law’s principal author, Sen. Francis “Kiko” Pangilinan, echoes Sec. de Lima’s view in a press release: “We oppose the proposal to amend the law. With all due

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When kids get away with murder

Juvenile Justice and Welfare Act of 2006 In 2006, President Gloria Macapagal Arroyo enacted into law Republic Act 9344 otherwise known as the Juvenile Justice and Welfare Act of 2006. The different stages of children at risk and in conflict with the law from prevention, rehabilitation to reintegration are covered in RA 9344. The Juvenile Law is pursuant to Article 40 of the United Nations Convention on the Rights of a Child (UNCRC), which states: “States Parties recognize the right of every child alleged as, accused of, or recognized as having infringed the penal law to be treated in a manner consistent with the promotion of the child’s sense of dignity and worth, which reinforces the child’s respect for the human rights and fundamental freedoms of others and which takes into account the child’s age and the desirability of promoting the child’s reintegration and the child’s assuming a constructive role in society.” The UNCRC is a human rights treaty for children. Under this convention, a child is defined as anyone under the age of 18 unless otherwise specified in a country’s law. 194 countries, including the Philippines, have ratified the treaty. The United Nations Committee on the Rights of a Child monitors compliance. Some of the salient points of the Juvenile Justice and Welfare Act are:

1. The minimum age exempt from criminal liability is 15 years old.

“A child fifteen years of age (15) and under at the time of the commission of the offense shall be exempt from criminal liability.” Prior to RA 9344, the minimum age exempt from criminal liability was 9 years old, as prescribed in Article 189 of Presi- dential Decree No. 604 or the Child and Youth Welfare Act signed by President Ferdinand E. Marcos. 2. The Juvenile Justice and Welfare Committee (JWCC) was created to ensure the proper implementation of the law. The JWCC is attached to the DOJ but a DSWD Undersecre tary acts as its Chair.

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respect to its proponent, reverting to the age of nine is a huge leap backwards in the campaign to uphold and defend the rights of children. In addition, the proposal ignores our country’s commitment to the UN Convention on the Rights of the Child.” Instead, the lawmaker wants more funds to implement RA 9344. Speaking to ABS-CBN News Channel, Commission on Human Rights[CHR] Chairperson Loretta Ann “Etta” Rosales also maintained that lowering the age of criminal liability would not solve crime. She blamed the social environment and “our flawed criminal justice system.” “Do not blame the child and do not blame the law,” argued Rosales.“It is the state’s responsibility to create an environment, in order to make sure that the laws that are passed or enforced fully to the hilt.” She also mentioned the lack of funding to build youth homes for young offenders. Under the Juvenile Justice Law, children in conflict with the law must be detained in youth homes. The United Nations Children’s Fund (UNICEF) also expressed opposition. “Reducing the minimum age of criminal responsibility is not the solution to the use of children 15 years or below in the commission of crimes,”argued Atty. Alberto Muyot, UNICEF Child Protection Specialist. “It will violate the very essence of justice if children exploited by criminal syndicates are penalized instead of the adults who had exploited them.”

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When kids get away with murder

3. A child 15 years old and below taken into custody must be immediately released to his parents, guardian or near- est relative. If the child’s next of kin cannot be located or refuse custody, the child may be released to any of the following:

3.1 a duly registered non government or religious organization; 3.2 a Barangay Official of a member of the Barangay Council for the Protection of Children (BCPC); 3.3 a local social welfare and development officer;and 3.4 DSWD.

4. Children in conflict with the law will have to participate in diversion programs. A diversion program is defined by the law as “the program that the child in conflict with the law is required to undergo after he/she is found responsible for an offense without resorting to formal court proceedings.” An example of a diversion program is community service. 5. A child in conflict with the law will always be detained in youth detention homes where the child resides. If a youth detention home is not available, the child may be taken by DSWD or stay in a local rehabilitation center.

Children behind bars. In 2005, a year before RA 9344, CNN aired a documentary on the appalling state of children behind bars in the Philippines. Chris Rogers, an ITV Correspondent went undercover to penetrate the Philippine jails. He told the story of Edwin, then 13 years old. “Edwin is just one of 20,000 children behind bars. Some guilty of petty crimes, others guilty of nothing, homeless and unwanted, denied their human rights. Locked up in adult, overcrowded jails, open to abuse. Sharing bed with pedophiles,” Rogers stated in his report. Edwin was accused of stealing a necklace. The report also showed that most children locked up with adults are victims of sexual abuse.”We were beaten when we refused [sexual favors],” 12-year old Jamie said.

6. The DSWD to establish youth rehabilitation centers in each region of the country that provide 24-hour group care, treatment and rehabilitation services with the purpose or reintegrating the child to his family and community.

Source: http://www.youtube.com/ watch?v=wR5PFs3v-XQ

One of the staunchest defenders of child rights in the country is Fr. Shay Cullen. The Catholic missionary co-founded PREDA, a human rights and social development organization aiming to “win freedom and a new life for children in jails, in brothels, in hunger, on the street, abandoned youth, and those mired in poverty.” The priest’s 2011 article,“Save the Children, Reform the Prison System”,

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When kids get away with murder

listed the most congested jails in Metro Manila: Quezon City jail, with a congestion rate of 295 percent; Las Piñas City jail, 259 percent; and Manila City jail, 195 percent. Huge step forward. In December 2008, PREDA did a report on the implementation of the Juvenile Justice and Welfare Act based on testimonies from lawyers, social workers, paralegal officers, parents and chaplains. According to the Report on the detention of children and lapses in the implementation of the Comprehensive Juvenile Justice System and Welfare Act of 2006 (RA 9344), the enactment of the Juvenile Justice Act is a “huge step forward for children’s rights in the Philippines. For the first time, there is a comprehensive legislative regime governing the area. It is a far sighted and progressive law, and it is to be commended.” Sabha Macmanus and Sophie C. Millner, in the paper Reflections on Restorative Justice in the Philippines, commended the passing of the Juvenile Law. “The law raises the age of criminal responsibility, prevents the detention of minors and introduces programs such as mediation, conflict resolution, reparation, anger management and counseling for offenders under 15 years. Underlying these changes is a theory of Restorative Justice. It presents a vision for a future where the emphasis is on therehabilitation of offenders rather than on their imprisonment.” However, the PREDA report also mentioned that several violations continue even after the enactment of the Juvenile Law. “Every day, more minors are arrested and

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detained in inhumane conditions,” the report said. To prevent further violations of the law, PREDA listed recommendations to make sure that the law is strictly implemented. These are: 1. Proper education of the law to the service providers like the police and social workers; 2. Build more jails and detention centers exclusively for minors; 3. Implement restorative justice to the minors by providing rehabilitation programs that provide incentives for them not to commit an offense again; and 4. Develop an after-detention program so that children who have been released will not go back to the streets and their wayward ways. Amend to protect the child. In 2009, CHR, then chaired by present DOJ Secretary de Lima, submitted a Position Paper on its supported amendments to the Juvenile Justice and Welfare Act. “The call to clarify the implementation of Republic Act 9344 or the Juvenile Justice and Welfare Act, through the introduction of specific child-oriented amendments in the said law, is earnestly supported by the Commission on Human Rights [CHR]”, the position paper stated. Among the amendments supported by CHR are:

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1. For repeat offenders to be removed from their community and be placed in youth homes. This will allow DSWD to closely monitor the child’s progress, spare the child from retaliation from his community and make sure that he does not re-offend again. 2. Maximum penalty will be meted out to those who exploit children. Akap-Bata Partylist also expressed its support to amend the Juvenile Law if it will “lead to further developing the law to become more comprehensive and effective tool to protect the rights of every Filipino child in conflict with the law.” ‘The deepening poverty in the country remains to be the vital issue that the government needs to address in order to resolve the growing number of children who are in conflict with the law,” said Lean Peace Flores, Akap Bata Party-List spokesman. Before amendment, full funding and implementation. While the Juvenile Justice and Welfare Act is not a perfect law, it may be premature to amend it after just five years and with inadequate funding and implementation, especially the lack of proper detention facilities and services for youth offenders. Lowering the minimum age of criminal liability to 9 might just lead criminals to use children 9 years old and under to steal, transport drugs and commitother crimes for them? It will just result in the further abuse of the Filipino child. Beyond proper care of youth offenders, what needs to be done is to educate and care for poor children so they will be in school

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and not on the street. Then they won’t be prey to criminals. By implementing the law in full, society can rehabilitate child offenders to avoid crime in the future. They must also be given safe havens where they are cared for. And instead of news video of children attacking motorists in traffic, it should be their exploiters on TV being tried, convicted, and put away for life. Remembering Rosie. When Fr. Cullen visited an Olongapo City jail in 2005, he met 5-year old Rosie, locked up in jail, holding a can of soda. This image of Rosie so haunted Fr. Cullen that from that moment on, he devoted his life to freeing children behind bars.

May you remember Rosie the same way Fr. Cullen did and champion the rights of a child. “If we were treated well and cared for by our parents,” said one male prisoner, “we would not become like this. Just like you were cared for well by your parents, that explains what you are now. If we had been treated like you, we would not become thieves.”

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Claiming Benham Rise: What It Means for the Philippines The Philippines files an undisputed claim to a 13-million-hectare undersea region that could eventually bring the country energy self-sufficiency. By Marishka Noelle M. Cabrera By the middle of next year, the Philippines may finally own a vast, potentially oil- and gas-rich undersea resource when the United Nations (UN) decides on the country’s undisputed claim over the 13-million hectare Benham Rise region off the eastern coast of Luzon, Environment Secretary Ramon Paje says. In April 2009, the Philippine government gave its partial submission of data and information on the outer limits of its continental shelf to the UN Commission

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on the Limits of the Continental Shelf (UNCLCS) to stake its claim on the Benham Rise. The basis of the claim lies in the “natural prolongation” and “geomorphological continuity” between Philippine territory and Benham Rise, the structure of which extends beyond the prescribed 200 nautical mile limit of the continental shelf yet still within the 350 nautical mile constraint line, in accordance to the UN Convention of the Law of the Sea (UNCLOS).

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Claiming Benham Rise: What it means for the Philippines

The UN Convention on the Law of the Sea (UNCLOS) was created in 1982 to define the rights and responsibilities of states in the use of the world’s oceans through provisions regarding the limits of their territorial sea, contiguous zone, continental shelf, and exclusive economic zone, among others. In Article 76 of the UNCLOS, the continental shelf is defined as “the seabed and subsoil of the submarine areas” up to 200 nautical miles from the baselines, beyond which is already considered the extended continental shelf. The extended continental shelf, however, cannot go beyond 350 nautical miles from the baselines.

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The partial submission came just in time as the May 13 deadline drew near for states party to the UNCLOS to delineate their maritime and jurisdictional zones. Nevertheless, the Philippine government made it clear that with the partial submission, “The Philippines expressly reserves its right to make other submissions for such other areas of the continental shelf beyond 200 M at a future time...” This amid overlapping claims to the Spratly Islands located in the South China Sea (west of the Philippines) where the six claimants, namely: the Philippines, China, Vietnam, Brunei, Taiwan, and Malaysia, have yet to settle their disputes regarding ownership of the area in part or as a whole.

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Claiming Benham Rise: What it means for the Philippines

Addition by accretion. As far as chances of getting approval from the UN go, there is more than enough reason to hope. Professor Mario Aurelio of the University of the Philippines-National Institute of Geological Sciences (UP-NIGS) tells GMA News that Benham Rise is actually being added into the eastern margin of Luzon by means of accretion, or the process by which material is added to a tectonic plate or landmass. “The strongest pieces of evidence the Philippines can present for its claim over these areas are geological, geophysical and tectonic data,” he adds. The submission notes that a series of multi-beam bathymetric surveys were done by the National Mapping and Resource Information Authority (NAMRIA), the country’s central land, water, and coastal surveying and mapping agency, in order to determine the structure of the seabed in the Benham Rise region. It adds that the hydrographic data collected from 2004 to 2008 were supplemented by data from international bathymetric surveys.

The Country Report on Surveying and Mapping in the Philippines submitted to the UN Economic and Social Council shows that NAMRIA’s acquisition of new vessels improved the conduct of bathymetric and geophysical surveys to determine the country’s extended continental shelf. Greater energy self-sufficiency predicted. Should the UN establish that Benham Rise is part of Philippine territory, the country could be looking at greater energy self-sufficiency, since the region is believed to have considerable amounts of oil and natural gas deposits. In 2009, the country’s self-sufficiency in terms of power stood at more than 60 percent, with natural gas owning 33 percent of the energy mix, according to a presentation entitled, “Philippines: National Priorities for Energy Efficiency and Conservation”, by the Department of Energy. In line with the policy thrust of the Philippine Energy Plan 2009-2030, accelerating the exploration and development of gas, geothermal, oil, and coal resources can move the country toward a more secure energy supply.

THE CURRENT ENERGY SITUATION Increased Self-sufficiency and Fuel Diversification in Power 2009 Wind & Solar 0%

Total = 62,000 GWh

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Upon approval by the UN, the Philippine government would have control over economic activities and be legally allowed to enter into exploration projects with private companies to determine the potential of the area in terms of resources, as explained by Senator Franklin Drilon. Studies conducted by the Department of Environment and Natural Resources (DENR) suggest the presence of solidified methane, which, as Paje indicated in the Senate budget hearing, could turn the Philippines into a natural gas exporter. However, Efren Carandang, Deputy Administrator of NAMRIA, tells CenSEI that findings are not yet conclusive since more research has yet to be done as to the kinds of hydrates available in the undersea region, and whether the amount is indeed substantive. He adds continental shelves generally have methane deposits. “We have not explored [Benham Rise] but we have found nodules of methane in the surface and this is very important to us,” Paje also said in a Philippine Daily Inquirer report.

Methane is a colorless, odorless gas and is the main component of natural gas, a valuable fuel for power generation. Volumes of methane deposits can be found deep under the ocean in the form of methane hydrate. Methane hydrate is essentially methane locked in ice and occurs in abundance in permafrost regions like the Gulf of Mexico and Alaska’s North Slope, as well as in continental margins. In Science Clarified, continental margins are defined as “the submerged outer edge of a continent”. However, the article “Methane Hydrate: a future clean energy source?” in eco-blog Greening of Oil posits that for methane hydrate to become a viable energy source, technically and economically feasible ways must first be developed in order to extract methane from the hydrate in commercial quantities. The Philippines is mighty blessed with natural resources, and in the race to find alternative sources of energy, Benham Rise may just give the Philippines an edge. Reaping its benefits, however, will take some time and patience.

Basic composition of continental margins, which include the continetal shelf, continental slope, and continetal rise

Source: http://www.scienceclarified.com/landforms/Basins-to-Dunes/Continental-Margin.html

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Methane Hydrate: The Next Energy Source

In the article “Methane Hydrate: a future clean energy source?” from Greening of Oil, a website tracking the environmental impact of energy sources, scientists estimate that there may be more than 1,000 billion tons of methane hydrate found worldwide. This figure is “comparable to the total remaining amount of fossil fuels such as coal, oil and more conventional forms of natural gas.” The main problem is “the material is only stable within a certain range of pressures and temperatures”, hence a shift in the temperature or pressure will cause the methane hydrate to break down. In terms of its energy potential, the U.S. Department of Energy estimates that when gas hydrate is brought to the earth’s surface, just one cubic meter releases 164 cubic meters of natural gas. This means “the energy content of methane occurring in hydrate form is immense, possibly exceeding the combined energy content of all other known fossil fuels”. According to “Gas Hydrates: Resource and Hazard” from the U.S. Congressional Research Service, gas hydrates are a potentially huge global energy source, with other countries like Japan, China, India, Korea, and India currently pursuing their own research and development strategies. Nonetheless, the U.S. Methane Hydrate Advisory Council in its report admits that developing a “safe and cost effective method” to extract methane remains a “significant technical and economic challenge”. China, for instance, has reserves of methane hydrate in China’s Qinghai province equal to 35 billion tons of oil, which is enough to supply China for 90 years, as reported in the article “As China and U.S. Plan to Exploit “Burning Ice” for Fuel, the Ice Race is On” from Popular Science. Unfortunately, the article says, “China lacks the capability to excavate the mineral. Even at an expedited pace, China’s Ministry of Land and Resources estimates it could be 10 to 15 years before any hydrate-derived gas finds its way into Chinese homes.” In another Popular Science article, China is reported to be building a coastal energy lab to explore undersea energy sources. Japanese researchers, on the other hand, recognize the difficulty of handling and transporting natural gas. Instead of extracting methane from hydrates, the Technology Review article “Gas Goes Solid” says, researchers want to turn methane into hydrates in the form of pellets “that can be easily stored, transported, and eventually turned back into natural gas”. Nevertheless, the exploration of methane found underwater must be approached with caution. An article from Popular Mechanics, “Methane Hydrates—Energy Source of the Future?”, warns that while methane hydrate can be a significant new energy source, methane can still pose harm to the environment if not handled properly. “If methane gas escapes directly to the atmosphere—as a byproduct of extraction, an earthquake or warming ocean waters—the consequences could be dire,” the article says. Methane is a greenhouse gas that is 21 times more effective at trapping heat than carbon dioxide, thereby contributing to global warming.

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The P72-Billion Question

How much growth will the ‘stimulus package’ actually stimulate? By Verbo Bonilla The Aquino administration has much to make up for, and it knows it. Upon the release of disappointing 2nd quarter GDP figures, Budget Secretary Florencio Abad promised increased government spending in the second half of the year, “not only by accelerating existing projects but also by spending on additional projects allowed by the fiscal space.” A month later, President Benigno Aquino III announced this spending to take the form of a P72-billion “stimulus package.” Economists and former Cabinet members Professors Benjamin Diokno and Solita Monsod have taken exception to the term “stimulus package.” In a BusinessWorld column, Monsod rightly noted that the P72 billion cannot be considered an additional

boost to the economy since it is part of the original 2011 government budget. In effect, the government will be working doubly hard to spend in the second semester what it could and should have spent earlier in the year. Former budget secretary Diokno agreed, saying in his own commentary: “The term ‘fiscal stimulus’ was a misnomer, because the new spending program is not one. It’s more like a ‘disbursement acceleration plan,’ as Department of Budget and Management [DBM] authorities called it.” He also cautioned against “lowering the quality of government spending” and changing “budget priorities … without congressional approval.”

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Stimulus or not, the plan aims to address the underspending that is regarded as the primary cause of the decline in GDP growth down to 3.4% in the second quarter, after a previous drop to 4.9% in the first, also due largely to a sharp decline in public expenditures.

have it thoroughly checked to ensure it benefits the country,” he said in Dumaguete, soon after disappointing economic data came out. “Fiscal prudence is not underspending. It’s the sensible thing to do,” he told the Philippine Business Conference last month.

Even the pro-Aquino Makati Business Club has added its voice to the call for more vigorous government outlays. “Government spending must now be pursued aggressively for sustainable growth and job generation,” said MBC board director Ramon del Rosario. “The private sector is doing its part. The government should do no less.”

Looking at NSCB’s GDP tables, the effect of government scrimping can be seen this time in the -0.6% drop in growth over last year of the entire industry sector. A more in-depth inspection reveals public works to have declined by a staggering 51.2% from a year ago, contributing to a 16.1% decline in the entire construction industry. Other major sectors less dependent on government spending—agriculture and services—did better in the second quarter.

But President Aquino was quick to defend the pace of implementing government projects. “It’s better to delay a project and At Constant 2000 Prices INDUSTRY / INDUSTRY GROUP

Growth Rate (%)

Q2 2010

Q2 2011

Agriculture, Hunting, Forestry and Fishery

148,896

159,517

7.1

Industry Sector

489,793

487,030

-0.6

814,702

855,822

5.0

1,453,390

1,502,368

3.4

474,051

460,909

1,927,441

1,963,278

Service Sector GROSS DOMESTIC PRODUCT Net Primary Income GROSS NATIONAL INCOME

1.9

At Constant 2000 Prices INDUSTRY / INDUSTRY GROUP

INDUSTRY SECTOR a. Mining & Quarrying b. Manufacturing c. Construction d. Electricity, Gas and Water Supply

Q2 2010

Q2 2011

Growth Rate (%)

489,793

487,030

-0.6

306,874

321,593

4.8

53,043

51,957

23,580

106,296

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24,285

89,195

BUSINESS

3.0

-16.1 -2.0

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GROSS VALUE ADDED in CONSTRUCTION 2ND QUARTER 2010 AND 2ND QUARTER 2011 AT CONSTAN T 2000 PRICES, IN MILLION PESOS Q2 2010

Q2 2011

Growth Rate (%)

1. PUBLIC

70,232

34,272

-51.2

2. PRIVATE

81,569

97,105

19.0

GROSS VALUE IN CONSTRUCTION

151,801

131,377

-13.5

GROSS VALUE ADDED IN CONSTRUCTION

106,296

89,195

-16.1

INDUSTRY / INDUSTRY GROUP

The DBM Assessment of Disbursements as of June further bore out the slowdown in government spending in the first half. The data indicates a shortfall of P140 billion from the programmed spending of P838.5 billion for the first six months of the year. The assessment cited the slowdown in the “pace of project implementation and payment schedules,” as well as in obligations entered into by departments and agencies, such as the Public Works and Education departments. Public works had now fallen compared with 2010 levels in every quarter since President Aquino took over. The dismal second quarter GDP figures has prompted Senator Edgardo Angara to call the Aquino government “spending-shy” and to ask for the devolution of government spending to LGUs. After this first half economic performance, is there still a chance to achieve government’s target of 7-8% annual GDP growth in 2011? To reach this goal, Director General Cayetano Paderanga of the National Economic Development Authority said, “the economy needs to grow by at least 10.0 percent in the second semester.” Well, miracles can happen.

More realistically, in its Philippines Quarterly Update in September, the World Bank revised downward its earlier 5% forecast to 4.5% for the country in 2011. In his recent visit to the Philippines, World Bank President Robert Zoellick reiterated the need to accelerate public spending, while saying he is “impressed” with the country’s resilience. ADB, meanwhile, trimmed its GDP forecast for the year to 4.7% from 5.0%. What may hamper the Philippine economy’s growth the rest of the year, both institutions agree, are global economic woes, among others, particularly in terms of reduced investments and export activity. Paderanga, even while saying that “prospects for the second half of 2011 are better than the first half’s performance,” himself admits the risks posed by external shocks. Internally, however, aside from delays in public spending, the key immediate concerns, according to the NEDA head, are “weak industry output, and timely recovery from natural calamities.” He expects agriculture, manufacturing, services and trade, among others, to have a strong showing in the last semester of the year. Of course, Paderanga says, “public construction and government services are

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The P71-billin question

likely to pick-up due to the accelerated spending plan of government implementing agencies.” Recent developments may douse this optimism. A string of typhoons has wrought havoc on agricultural production, with estimated agricultural damage due to typhoons Pedring and Quiel at P12 billion, including P11 billion in rice. According to Agriculture Secretary Proceso Alcala, the series of typhoons disrupted what “could have been the year that the country posted its highest-ever palay yield on record.”

Philippine manufacturing growth, on the other hand, has steadily been declining in recent months, with the latest Monthly Integrated Survey of Selected Industries showing just 2.6% growth in August, compared to 4.6% in July. In a comment e-mailed to media, Prof. Diokno opined: “The deterioration in recent months suggests a poor third-quarter performance for manufacturing… consistent with the depressing electronics exports performance and serious government underspending.”

FIGURE 1 Value of Production Index and Volume of Production Index for Total Manufacturing: July 2019 - August 2011 (2000 = 100)

I N D E X

180 160 140 120 100 80 60 40 20 0

July ‘10 Aug

Sep

Oct

Nov

Dec Jan ’11

Feb

VapI

Mar

Apr

May

June

July

Aug

June

July

Aug

VopI

FIGURE 2 Year-on-Year Charges in Production July 2010 - August 2011 G R O W T H R A T E S

30 25 20 15 10 5 0

July ‘10 Aug

Sep

Oct

Nov

Dec Jan ’11 VapI

Feb

Mar

Apr

May

VopI

Source: National Statistics Office (NSO), http://www.census.gov.ph/data/pressrelease/2011/sk1108tx.html

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As for trade, preliminary datacoming in are also hardly encouraging. External trade performance for August, as reported by the National Statistics Office, shows value of exports decreasing slightly from $4.77 billion in August last year to $4.12 billion in the same month this year, with imports managing to increase also slightly. All told, the balance of trade in goods for the Philippines posted a higher deficit (negative) of $7.118 billion for the first Table 1

More alarmingly, the latest figures only validate the continuing decline in Philippine exports â&#x20AC;&#x201D; see table 3 on Philippine exports growth rates -- accompanying the global economic slowdown. There has been no sign of the downward trend reversing any time soon.

Table 2

FIGURE 2A Philippine Trade Performance in January - August: 2011 and 2010 FOB Value in Million US dollars

2011

2010

80,000

FOB Value in Million US dollars

Aug-11

Aug-10

8,000

60,000 50,000

6,000

40,000 30,000

4,000

20,000 10,000 (10,000)

FIGURE 2B Philippine Trade Performance in August: 2011 and 2010

10,000

70,000

Table 3

eight-month period of 2011, a value higher than the $2.505 billion deficit recorded during the same period in 2010. (see table 1 & 2)

2,000 TOTAL

EXPORT

IMPORT

BDT-G

(2,000)

TOTAL

EXPORT

IMPORT

BDT-G

Source: NSO, External Trade Performance (August 2011)

Philippine Exports Annual Growth Rates: Jan 2010 - Aug 2011 50 40 30 20 10 0

Jul-11 May-11 Mar-11 Mar-10 Jan-10 May-10 Sep-10 Nov-10 Jul-10 Jan-11 Feb-10 Apr-10 Jun-10 Oct-10 Aug-10 Jun-11 Aug-11 Dec-10 Apr-11 Feb-11 -10

-20

Annual Growth Rate Source: NSO, External Trade Performance (August 2011)

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The P71-billin question

As for services, this sector is the only really bright spot for the Philippine economy coming into the second half of the year. Updated data on the sector is as yet unavailable, but services’ output historically perks up in the latter months of the year. We can only hope that the increase will be abnormally higher than the figure for the same period a year ago. What about public construction and government services? With earlier pronouncements about accelerated spending, state disbursements should have been ramped up in the third quarter, but the latest government report says otherwise. DBM’s National Government Disbursement Performance in September shows a mere P5.5 billion, or a 1.5% increase in thirdquarter disbursement over the same period a year ago, despite the double-digit percentage growth in this year’s budget. Discounted for inflation of about 4,5%, real expenditure actually declined by 3%, pulling down overall economic growth. Indeed, the government has again fallen short of its disbursement program in the July-September quarter by P65.4 billion below the programmed P436.6 billion. Prof. Diokno, pointed out that this represents underspending by as much as P195 billion — P847 billion versus P1.04 trillion, net of debt payments — from January to September 2011.

Of course, hiking government spending is not as simple as just issuing checks. It involves the implementation of programs and projects meant to enhance public welfare. These shouldn’t be just about any program or project, as well, but those that lay the foundation for lasting development. If anything, the continuous underspending of government, in the face of avowal to spend more, indicates an inability to execute and carry out those activities government has set itself to accomplish. In times of global recession, the government is expected to take up the slack in economic activity. Now, the Aquino administration has announced a so-called stimulus package, after three straight quarters of underspending. Coming at this time of the year, it appears all but too late to make an impact on our 2011 GDP figures. The Aquino government is still unable to disclose the list of projects under its stimulus package. In response to a proposal to add another P20 billion to the package, Prof. Monsod asked, “If the government cannot even come up with a detailed list of “stimulus” projects that add up to P72 billion (or share it with the public), how can it possibly even think of adding P20 billion more to this ‘stimulus’”? The way things are going, it should not be too surprising if the next set of GDP figures will continue to disappoint.

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31

Going mobile: The end of the PC?

With more people accessing the Internet through tablets and smartphones, the information age moves beyond the personal computer

By Tanya L. Mariano The consumer electronics industry is changing, and fast In August, two tech giants dropped industry-shaking news: on Aug. 15, Google revealed plans to buy Motorola Mobility, and three days later, Hewlett-Packard (HP), the biggest personal-computer manufacturer in the world, announced that it may shed its PC business and discontinue its mobile products, just a year after it acquired mobile device manufacturer Palm. With the market for personal informationretrieval and -processing devices going mobile, Google, the search-engine

developer, sees a future in mobile phones, while HP looks like it’s ready to give up on consumer electronics. On Google’s official blog, CEO Larry Page writes that the acquisition will supercharge Android, its mobile operating system, which market research firm Canalys says currently has nearly 50% of the global smartphone market, and will protect it from “anti-competitive threats from Microsoft, Apple and other companies” who have been causing Google’s patent woes. The deal is currently under review by the Department of Justice’s antitrust division.

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Going mobile : The end of the PC?

The Patent Wars

MOBILE PATENT SUITS

There’s an ongoing “patent war” between various mobile companies, some of the more publicized cases being that of Apple suing Samsung for allegedly copying the iPhone and the iPad, Microsoft suing Foxconn, Barnes & Noble, and Inventec because their Android-based e-reader and tablets have certain functionalities that Microsoft claims they own, and Oracle suing Google for infringing on Java-related patents and copyrights with the Android. Many are acquiring patent portfolios not so much for the sake of future innovation as simply to defend themselves against patentinfringement lawsuits and costly royalty demands. This graphic from Thomson Reuters shows who’s suing whom in the mobile industry over patent-related claims.

Patent-related suits between mobile device / component manufacturers

Amazon

Barnes & Noble

Apple

suing

suing eachother

Ericsson

Foxcomm

licensed technology company

Qualcomm

Google

RIM

HTC

Samsung

Huawei

Sony

Inventec

ZTE

Kodak

Microsoft

Utilises Google’s Android OS

Oracle

Nokia

Motorola

Qualcom/Nokia (2005-08) Apple/Nokia (2009-11)

Kodak/Samsung (2008-09) Kodak/LG (2008-09)

LG

Apple/Kodak (2008-09)

Kodak’s separate suit against Apple will be desided on Aug 30.

Cases resolved

Source: Reuters, news report

For more information on the patent wars, this podcast from the public radio show This American Life gives an inside look at how the patenting system, originally meant to promote innovation, is now being used by “patent trolls,” the biggest of which is a company called Intellectual Ventures, to curtail it.

Google goes for vertical integration, HP getting out of it. Aside from gaining an arsenal of 17,000 approved and another 7,500 pending patents from the company that developed the first commercial cellphone, Google will now also be able to marry software and hardware development, possibly resulting in a more unified Android experience. This shift towards vertical integration, in which a single entity owns the supply chain, could give it the same

amount of control Apple has over the production of its mobile devices. So far, the decision has been welcomed by Android partners such as Samsung, HTC, and Sony Ericsson. But while Google is taking its competitors head-on, HP, on the other hand, seems to be bowing out of the consumer electronics business to focus on software and enterprise services, as IBM did in 2004.

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Going mobile : The end of the PC?

Based on their 2011 3rd-quarter earnings report, HP’s hardware manufacturing arm, which produces the company’s failed foray into tablet computers, the TouchPad, is both its biggest revenue-generating and least profitable division. There are rumors, however, that it may be rethinking its strategies, reports online magazine CMSWire. A month after the big announcement, CEO Leo Apotheker was replaced by former eBay CEO Meg Whitman, reportedly due to the board of directors’ dissatisfaction over Apotheker’s performance during his stint as CEO for barely a year. Whether HP’s problems are caused by stiff competition or corporate indecision, which is what an International Business Times article blames for every problem the company has faced, that the biggest PC manufacturer in the world is willing to let go of PC manufacturing certainly does not bode well for the PC. Consumer electronics going mobile. The mobile electronics market is seeing unprecedented growth, and more and more companies are recognizing that the future of consumer technology lies in mobility, which makes sense because portable devices are much more affordable and accessible than their non-portable counterparts. In the 2nd quarter of 2011, market research firm Gartner says, in a press release for its Market Share: Mobile Communication Devices by Region and Country, 2Q11 report, that worldwide sales of mobile devices grew 16.5% year-on-year, with smartphone sales growing by a whopping 74%. At the GigaOM Mobilize conference in September this year, Facebook’s Head of Mobile Products, Erick Tseng, said that

they soon expect to be more of a mobile company than one that develops for the Web. Currently, 350 million out of its 800 million users access the service via a mobile device, and Tseng predicts that soon, “more than half of all our users will be mobile users.” For its part, Microsoft recently revealed that it will be launching Windows 8 soon, an operating system that can run on both PCs and mobile devices such as tablets and smartphones. Beginning of the end for the PC in 2015? If there’s truth in the International Data Corporation’s (IDC) forecasts, then doomsday for the personal computer as we know it will come sometime in 2015. In a press release reporting the results of their latest Worldwide New Media Market Model report, IDC predicts that the number of people in the U.S. that will access the Internet through smartphones and media tablets will post a compound annual growth rate of 16.6% between 2010 and 2015, and that the impact will be “so great that the number of users accessing the Internet through PCs will first stagnate and then slowly decline.” The same trend will also likely be observed in Western Europe and Japan. The Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2010-2015 released by Cisco earlier this year seems to support these findings, and says that mobile data traffic is currently outpacing fixed broadband traffic and by 2015 will have increased 26-fold from 2010 levels, with most of the growth to be driven by laptops and smartphones as illustrated in the graphic below (more powerful devices are capable of generating more traffic, so this doesn’t

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Going mobile : The end of the PC?

mean that there will be more laptops than the other gadgets listed).

Figure 3. Laptops and Smartphones Lead Traffic Growth 92% CAGR 2010-2015

Petabytes per Month

0.7% 2.9% 3.5% 4.7% 5.8%

7,000

26.6%

3,500 55.8%

0

2010

2011

2012

2013

2014

2015

Other Portable Devices

M2M

Smartphones

Nonsmartphones

Home Gateways

Laptops and Notebooks

Tablets

Source: Cisco VNI Mobile, 2011

The report, which uses real-world mobile data usage studies and third-party analyst forecasts, adds that mobile data have become so ubiquitous as to reach the corners of the earth that do not even have power yet, already breaking the “electricity barrier” in 32 countries. The increasing popularity of smartphones and tablets. Polls show that smartphones have become increasingly popular among consumers. In a survey of 2,277 adults age 18 and above, the Pew Research Center found that 25% of smartphone owners in the U.S. access the Internet through their phones instead of a computer, while an opinion survey conducted by the U.K. Office for National Statistics reports that 45% of Internet users in the U.K. go online using their mobile phones.

A “mobile-only Internet generation” is also on the rise, according to a survey of 15,204 respondents in 12 countries conducted by On Device Research, saying that more than 50% of African and Asian mobile internet users and over 20% of users in developed countries such as the U.S. and the U.K. do not even use a PC to go online. Canalys also reports that the rising popularity of the tablet is eating up the PC’s market share, forecasting that, “for every 10 pads sold in 2011, five netbook or notebook PCs will not ship,” across both enterprise and consumer markets. Death of the PC? It’s unlikely that the PC will disappear completely, as it is still needed for certain tasks that require higher computing power, such as software development, multimedia editing, and database processing in enterprises, but it looks like “its era of dominance is over,” says Joe Wilcox, managing editor of online technology news and analysis magazine Betanews. Wilcox, who has been predicting the end of the PC era for years, says that technological displacement is a “fairly consistent phenomenon,” and that smartphones and tablets will be more popular than the PC, but that the PC will still be around, much like some older technologies that we still see today, such as the train, mainframe computers, landlines, and newspapers. In the enterprise sector, Canalys principal analyst Chris Jones says in a July 2011 press release that, ‘High-performance PCs are still clearly seen as a major driver of business productivity around the world,” despite the market share of Windowsbased personal computers falling to its

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Going mobile : The end of the PC?

lowest point in over 20 years. Canalys expects the business sector’s transition to tablets and smartphones to be a long one, mainly because of security and application compatibility issues. The PC industry may not be the exciting and extremely profitable industry that it once was, and traditional personal computers may no longer be consumers’ machine of choice, but they will still be around in the future, just not in the forefront. What’s next for Google and HP? Google’s acquisition of Motorola Mobility will likely result in tougher competition in the mobile electronics industry, which could lead to more innovation, if the patent wars do not dampen it, and if the deal does not alienate its allies, as some fear, by competing with the very manufacturers to whom they supply Android. If things go well, consumers can expect more choices and better products not just from Google but also from its competitors. All in all, the deal will boost Google’s already respectable competitive edge. As for HP, it will miss out on the tremendous growth happening in the mobile industry, but even if it tried, it will have a hard time competing with Apple, Google, and Microsoft. If plans push through, HP’s exit from the consumer PC market will allow other players like Dell,

Lenovo, and Acer to fill the resultant void, for as long as there’s a demand void to fill. For HP to remain competitive in its chosen battlefield of enterprise services, Peter Yared, VP/GM of Social at Web analytics company Webtrends, suggests in the online magazine VentureBeat that HP needs to merge with German enterprise software developer SAP. Yared argues that HP should follow the vertical integration trend in order to compete in the enterprise services arena against IBM, Oracle, and Microsoft – all of which more or less have verticalized enterprise stacks – and merging with SAP would fill HP’s gaps in the areas of collaboration, applications, business analytics, middleware, and database. While the suggestion might seem logical to some, it should also be noted that Yared’s suggestion came on the heels of HP’s August announcement, while Leo Apotheker, a former CEO of SAP, was still CEO of HP. Reactions to the idea of an HP-SAP merger – before and after HP’s announcement– have been neither unanimous nor enthusiastic. In any case, vertical integration only works if executed properly. HP might still need to overcome a penchant for indecision in order to save itself from irrelevance.

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TCR Volume 1 Issue No 6