BusinessMirror January 5, 2016

Now in the Philippines

Out in January | Free to BusinessMirror subscribers

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

n

Tuesday, January 5, 2016 Vol. 11 No. 89

90% of ₧3-T budget effectively released in first week of 2016

B

INSIDE

‘Victorious youth’ detour

Art

d4

udget officials boasted on Monday of having effectively released the bulk, or 90 percent, of this year’s P3.003-trillion budget in only the first working week of 2016, saying this should have far-reaching impact on the country’s much-delayed infrastructure buildup program.

This development contrasted sharply against last year’s disbursement program, in which the release of the equivalent amount of the nation’s monies happened well into the budget year last September.

Budget Secretary Florencio B. Abad said front-loading the release of government funds was the result of a new policy at the Department of Budget and Management (DBM) recognizing the General Appropriations Act (GAA) as already the release document, vice the old practice of requiring a special allotment release order (Saro) before actual cash may be released to a government agency.

ready. set. roll

See “P3-T budget,” A4

sports

c4

supreme court

2nd front page

PSEi falls on first-day jitters S

A12

Philippine Stock Exchange (PSE) President Hans B. Sicat, PSE Director Alejandro T. Yu, PSE Chairman Jose T. Pardo, PSE COO Roel A. Refran and Capital Markets Integrity Corp.

President Cornelio S. Gison lead the bell-ringing ceremony in celebration of the first day of trading at the PSE Plaza in Makati City. ALYSA SALEN

HARE prices ended lower during the first trading day of 2016, fanned by weak Chinese markets and New Year jitters that spread to other markets in the region.

The benchmark Philippine Stock Exchange index (PSEi) tumbled 118.66 points, or 1.71 percent, to close at 6,833.42 points.

“Along with achieving business targets, I hope that this year, we will be able to help more and more Filipinos become financially educated. I hope that the initiatives of the Exchange will encourage our

PARDO: “I hope that the initiatives of the Exchange will encourage our countrymen to take advantage of investing in the stock market.”

countrymen to take advantage of investing in the stock market,” PSE Chairman Jose T. Pardo said in his wel-come remarks during the open-

ing cere-monies at the trading floor.

The market opened strong at 6,954.27, but deteriorated all day. as news on China’s stock market tumbled at its opening on weak factory activity and the possible fall of the yuan. The Chinese market was suspended for the first time, after it fell by 5 percent, which activated the so-called circuit breakers.

Latest manufacturing data from China suggest the sector may be stabilizing, but still not growing. The December Purchasing Managers’ Index reading improved marginally to 49.7, from 49.6 the previous month. Figures See “PSEi,” A2

Cristobal to prioritize MSMEs, consumer protection

By Catherine N. Pillas

T

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

he new chief of the Department of Trade and Industry (DTI) on Monday vowed to focus on consumer protection and help micro, small and medium enterprises (MSMEs) in the remaining months of the Aquino administration.

Newly appointed ad interim Trade Secretary Adrian S. Cristobal Jr. made

the pronouncement in a turnover ceremony held in Makati City on Monday morning.

“We’ll go full speed ahead [at the DTI]. The programs we now have, such as the Shared Services Facility, programs for MSMEs, trade promotions and negotiations, will continue at a faster pace now,” Cristobal told reporters in an interview.

In his speech, Cristobal said the

PESO exchange rates n US 47.1180

DTI will ensure that MSMEs will be at the core of all its policies, programs and activities.

“Unless we do this, the majority of our people will not fully benefit in the growth,” Cristobal said.

Former Trade Secretary Gregory L. Domingo tendered his resignation to President Aquino’s Cabinet last September, citing “fatigue”. Domingo, however, heeded the President’s

request to stay in the Cabinet until December 31.

Domingo earlier said he will return to the private sector after the mandated one-year prohibition for former government officials.

Another DTI official—Trade Undersecretary for Trade Promotions Ponciano C. Manalo Jr.—has also resigned from his post, effective

BMReports

Optimism abounds as expansion drivers seen more than headwinds

By Mia Rosienna Mallari & Rea Cu

B

Second of three parts

ased on the poll conducted by the BusinessMirror, economists and businessmen are banking on at least eight factors that will fuel economic growth this year—the May elections, infrastructure spending, tourism, remittances, consumer spending, foreign direct investments (FDI), exports and manufacturing.

Dr. Bernardo M. Villegas, a member of the University of Asia and the Pacific (UA&P) Board of Trustees, said these drivers will be enough to push 2016 GDP growth to 7 percent.

The drivers, he said, “will outweigh the challenges, because the main drivers are already on automatic pilot.”

Villegas’s forecast is way above t he 6. 35 - percent

average growth forecast that came out in the BusinessMirror poll among heads of business chambers, economists and businessmen for 2016.

Election spending

Election spending is the w idely accepted g row t h driver this year, although the conduct of the polls in May was also mentioned as a challenge, because of the uncertainties that a change in administration creates.

“You have a period during the elections when a lot of money is passed in the economy at the local level. And if you’re s pending it on television ads, it’s going to go to the owners and shareholders of the media companies who are so rich already,” American Chamber of Commerce of the Philippines Legislative Committee Chairman John D. Forbes pointed out.

Continued on A2

See “Cristobal,” A2

n japan 0.3917 n UK 69.5132 n HK 6.0797 n CHINA 7.2561 n singapore 33.2355 n australia 34.4002 n EU 51.1796 n SAUDI arabia 12.5581

Source: BSP (4 January 2016 )

BMReports BusinessMirror

A2 Tuesday, January 5, 2016

Optimism abounds as expansion drivers seen more than headwinds Continued from A1

“The big owners are already quite wealthy.

But at the local level with a hundred thousand people running, you have money being spent for various things; so that helps the economy slightly,” he said.

A study done by Richard Emerson Ballester, Michael Bartolazo, Melanie Calumpang, Bien Ganapin and Sheryll Namingit from the National Economic and Development Authority in 2010 confirmed that election spending has a “positive effect” on the economy. This is based on the data gathered from the 2004 national elections.

Each candidate spends about 27.4 percent on government services, followed closely by manufacturing of election materials with a share of 26.6 percent. Advertisements in radio and television, as well as what was considered as recreational and cultural activities, eat up about 22.3 percent of the campaign budget altogether.

On the manufacturing side, only its subsectors on Printing and Publishing of Books and Pamphlets and Commercial, and JobPrinting and other Allied Industries were included in the expenditure.

Under private services, Recruitment of Labor and Provision of Personnel has the highest share, with Advertising Activity following suit.

Elections could generate certain levels of employment, though this may need more looking into, particularly the nature and sustainability of these jobs.

Though the study of the group was only limited to the impact of national and local election spending quantified through the GDP, it also revealed an upward trend in the number of candidates hiring well-known personalities for their advertisements, thus, contributing more to the services sector.

In 2004 the ban on political television ads was lifted, providing candidates with a wider radius for their campaign. It also provided them an advantageous exposure, much so with catchy jingles and creative tag lines crafted by top advertising agencies in the country.

Another factor that drives up electoral spending is the archipelagic nature of the country, forcing candidates to travel mostly by air with their entourage.

“Election spending is different from government spending…. Mangagaling ito from the campaign contributions ng mga kandidato,” Senen Perlada, director of the Export

Growth drivers

May polls, infra spending, tourism, remittances, consumer spending, foreign direct investments, exports and manufacturing.

Marketing Bureau of the Department of Trade and Industry, said. “Of course there are limits, with the ads, ilan papakainin mo sa rally, ilang t-shirt ’yan [how many t-shirts will be allotted], ilang tarpaulin ’yan, ilang ballers,” he said.

Infra spending

Victor A. Abola, associate professor at the UA&P, said, “Infrastructure spending should continue to expand at a fast clip, even though the DPWH [Department of Public Works and Highways] may be starting to feel the limits in its absorptive capacity.”

Francisco del Rosario Jr. of the Management Association of the Philippines also noted that infrastructure investments will play a major role in boosting GDP growth this year.

Since the 1997 crisis, spending on infrastructure has been low. Prior to that, developing Asian economies logged 6 percent to 8 percent of their annual economic output for public-works expenditures.

The World Economic Forum survey on infrastructure quality ranked the Philippines 95th of 144 countries. One obvious reason is the low budget for infrastructure projects in the previous years. According to the Asian Development Bank (ADB), infrastructure spending plunged to below 1 percent of GDP in 2010.

But the present administration made a serious attempt to ramp this up, allocating about $31.8 billion for infrastructure since President Aquino took office in 2010.

Tourism

Though an excellent tourism haven, the country has been lagging behind its Asean neighbors when it comes to visitor arrivals and tourism receipts.

Over 101.4 million tourists traveled to Asean countries, generating about $100 billion in revenue. The Philippines, however, is only the

sixth most visited country in the region, way behind Malaysia, Thailand and Singapore.

In 2014 the country welcomed over 4.83 million tourists, almost half of these flying in from East Asia. Data from the Department of Tourism (DOT) show that from January to October 2015, tourism activities grew by 8.24 percent. The Philippines received 4.39 million visitors in the first 10 months of 2015, an 11.13-percent growth from 3.95 million in 2014. This year the DOT is targeting to attract 6 million tourists and generate $6 billion to $8 billion in revenues.

OFW remittances and consumer spending

Remittances from overseas Filipino workers (OFWs) have contributed significantly to the growth of the Philippine economy for the first three quarters of 2015.

“I think most people expect the GDP growth will be close to 6 percent through the year, but the government’s target was 7 percent to 8 percent, and the potential for the economy to grow is also 7 percent to 8 percent or even higher, especially because 3 percent to 4 percent of GDP growth is guaranteed by the 10 million Filipinos that have left the country in order to feed their families to have a better life than staying here,” Forbes said.

OFW remittances will always have a role when it comes to boosting consumer spending. “Besides, the peso depreciation, which is likely to continue, albeit at a slower pace, will offset possible weakness in OFW remittances. So consumer spending will be very strong,” Abola said.

“Domestic consumption will increase naturally because of the population and the OFW remittances. It’s still growing although not as fast, but the absolute amounts are still there. What will drive that further, obviously, is the lower commodity prices, which

will increase profitability,” Perlada said.

FDI, exports, manufacturing

Also identified as a major growth engine for the year is the expected higher foreign direct investment (FDI) inflows, especially in the manufacturing sector.

According to the Bangko Sentral ng Pilipinas, FDI are projected to hit $6.3 billion by 2016, a few notches higher than the expected $6 billion last year. The FDI are expected to focus on electronics, manufacturing, real estate and utilities, like renewable energy and waterworks.

The export sector is also believed to make a strong rebound this year and buttress the resurgence of the manufacturing industry.

“At least for my sector, I think I can expect exports, particularly merchandise exports, to snap back. We are still maintaining the growth rate of about 10 percent, although in 2015 we are already conceding that we will have an export decline in merchandise. But we will probably have a flat to about minus 2 [percent] at most for total exports, because services is still strong,” Perlada said.

“I think a lot of a number of investments that have been placed in the prior years will come on stream by next year. So we can expect a robust manufacturing sector performance for next year and beyond. That’s another factor,” Perlada added.

“Exports will be a factor, I expect that exports will recover, especially manufacturing.

Export now is declining. Share of total exports to GDP for 2014 is 47 percent; 2013 was about 44.8 percent; 2012 was 48.4 percent; 2011 was at 47.6 percent, so there is a declining trend in terms of the rate, but obviously the absolute figures are getting higher. So exports make a big difference; any increase in export will impact to that extent in GDP,” he said.

Abola also believes exports will grow stronger in 2016. “Exports should also recover, as the US growth has gained traction.”

Perlada said one cannot be sustainable if the country does not bother to look into foreign markets. Once the tariffs go down, it will be a signal for foreign competition to enter the local market. The Philippines, in his opinion, should have put up a stronger stance.

“You cannot prevent those imported goods from coming in because of globalization, etc.

We should also be defensive. We should think about how to penetrate their market to reach a global playing field,” he said. To be concluded

www.businessmirror.com.ph

Cristobal. . .

Continued from A1

December 31 but no official reason has yet been given. Foreign Trade Service Corps Assistant Secretary Maria Roseni Alvero will serve as officer in charge for the Industry Promotions Group, which Manalo previously headed.

Recommendations

Business groups on Monday welcomed Cristobal’s appointment and his focus on MSMEs and consumer protection.

“We welcome the appointment of Cristobal, with whom the private sector has been working closely since he joined the DTI. There is a continuing partnership with the DTI in connection with free-trade agreements [FTAs] and we are confident that joint efforts will continue under his watch,” said Peter V. Perfecto, Makati Business Club Executive Director.

Perfecto asked the DTI to follow through on the government’s commitment to help MSMEs and achieve inclusive growth.

“It will be excellent if the DTI and the private sector could pursue concrete action that will bear concre results. As there is just six months left, it will be wise to continue ongoing efforts, some of which can still be concluded successfully,” he said.

Philippine Exporters Confederation Inc. (Philexport) President Sergio R. Ortiz-Luis Jr. also supported the MSME thrust of Cristobal.

“Philexport is definitely an advocate of that agenda, and we are happy that [Secretary Cristobal] is putting more focus on this, especially on the area of financing,” Ortiz-Luis said.

The Philippine Chamber of Commerce and Industry (PCCI), for its part, said the country’s foreigntrade policy should be strengthened.

“As there are only five months left in the current administration, there is limited time to make a meaningful contribution, even in the areas of consumer protection and MSMEs,” said Benedicto Yujuico, the newly installed chairman of PCCI. “I think having a clear foreign-trade agenda would be helpful and as a starting point, I would ask that the DTI look into forging basic agreements with many countries that will focus on mutual protection of investment and a treaty on avoidance of double taxation,” Yujuico added.

Perry Lim Pe, president of the Management Association of the Philippines, said more attention should be given to easing business regulations. “[Cristobal] should continue on working on easing doing business, and cut red tape. Consumer protection is okay, but ease of doing business should further be worked on since it is a priority of President Aquino and was mentioned in his last State of the Nation Address,” Pe said.

PSEi. . .

Continued from A1

below 50 indicate contraction. This is the fifthstraight month of contraction with pressures coming from excess capacity, such as those seen in steel and shipbuilding. Meanwhile, nonmanufacturing PMI went up to 54.4, the highest since August 2014.

Other major indices in the region were mostly down. The Shanghai index was down almost 7 percent, Nikkei 225 lost 3 percent and Hang Seng index declined 2.7 percent. Back at the PSE, trading volume was weak at just P2.98 billion. Decliners led gainers 120 to 42, and 36 were unchanged.

Razon-led Bloomberry Resorts Corp. was one of the actively traded stock after investors started selling its shares on rumors that its top officials are resigning from the company.

In its disclosure, the company said Lorraine Koo Mann Loo, senior vice president for VIP services, and Heather Alice Scheibenstock, SVP for table games, left the company effective December 31. It added that the two will “pursue other endeavors.”

Bloomberry ended the day at P4.30, down by 5.3 percent. Most actively traded stock was Universal Robina Corp., up P1 to P187.

SM Prime Holdings Inc. was down P0.35 to P21.35; Philippine Long Distance Telephone Co. shed P60 to P2,000; Ayala Land Inc. declined P0.35 to P34.10; Globe Telecom Inc. slumped P40 to P1,812; Alliance Global Group Inc. fell P0.12 to P15.98; Metropolitan Bank and Trust Co. dropped P1 to P79.50; and Ayala Corp. was steady at P756.

Other subindices were also down. The All Shares index fell 59.68 to 3,930.79; the Financials index dropped 19.55 to 1,531.13; the Industrial index lost 94.60; and the Holding Firms shed 113.61 to 6,487.65.

“The PSEi can be expected to trade sideways as world markets ended the year mixed on the back of oil-price volatility and in anticipation and eventual raising of interest by the US Federal Reserve,” SB Capital said. Justino Calaycay Jr., trader at Philstocks Financials Inc., said that since PSEi dropped for the third straight day since last week, the main index is already ripe for a rebound.

“The problem, however, is that there is little— maybe none at the moment—to hinge such action on. Futures for overseas markets set to open their year aren’t showing encouraging signs either. A continuation of the year-ending rout in both European and US equities will continue to keep investors at the sidelines,” he said. VG Cabuag

BMReports BusinessMirror

www.businessmirror.com.ph

Tuesday, January 5, 2016 A3

RSBS: Ill-fated from the start T B R P. A

HIS year the final verdict on the Armed Forces of the PhilippinesRetirement and Separation Benefits System’s (RSBS) decision to cease operations and gradually return the contribution of its members within a three-year period will be known.

TWO newly acquired FA-50 fighter jets from South Korea make a highspeed pass over Philippine troops and tracked armor vehicles during the 80th celebration of the founding of the Armed Forces of the Philippines at Clark Air Base in Pampanga on December 21, 2015. Various military vehicles and hardware were paraded to showcase the country’s military-modernization program. AP/BULLIT MARQUEZ

The RSBS has more than enough money and assets to cover all of the refund or return of the contributions of our members and pensioners.”—Detoyato The decision, which is subject to the approval of the Governance Commission for Government-Owned and -Controlled Corporations (GCGOCC), will make the RSBS return to the soldiers beginning this month the sum of P12 billion, which they have contributed to the pension fund out of their monthly salaries.

“I am still waiting for their [GCGOCC] decision…we have already submitted everything,” RSBS President and CEO Norman Legaspi said on Sunday, adding, “yes, we will shut down…going to deactivate.”

The move by the RSBS, as announced by Legaspi last month, has sent quivers down the spines of military personnel, fearing they could no longer recover their hard-earned money, which was collected at the fl at rate of 5 percent out of their monthly pay since joining the service.

Fearing it could stoke a rebellion in the ranks, the military leadership, through the Public Affairs Office chief, Col. Noel Detoyato, quickly moves to assuage the soldiers by saying that even if it were shut down, the RSBS has more than enough money and assets to cover the return of the contributions.

“The RSBS has more than enough money and assets to cover all of the refund or return of the contributions of our members and pensioners,” Detoyato said.

However, Legaspi said the fear of soldiers was borne out of a misconception, as the pension fund would not totally ceases its opera-

tions. In fact, for him “deactivation” was not even the correct word.

Legaspi personally wanted that the RSBS would be put under receivership, so that it could still operate to return the money of its members and make investments with financial returns, other than in the areas of real estate and joint investments.

It would be put under receivership, so that it could dispose of its assets while paying the soldiers.

Shutting down the operations of the pension fund for the nth time was the best option for the management of the RSBS, which was left between the “devil and the deep blue sea.”

But beyond the issue of money, legal question also lingers whether the RSBS, which was supposed to have been inoperational many years ago, can be shut down without an act by Congress.

In 2006 then-Army chief Maj. Gen. Romeo Tolentino and a member of the board of trustees of the pension fund, along with the military’s top brass, said the RSBS has incurred huge losses during past years that it could no longer meet the fund requirement of soldiers.

Tolentino and the other officials said the pension system has to be shut down in order to stop its continued bleeding and gasp for life, and be replaced by a new pension fund that would be administered and managed by highly qualified private managers.

Then-Defense Secretary Avelino Cruz also said the fund was “structurally flawed.”

₧15B

Assets accumulated by RSBS under President and CEO Norman Legaspi’s stewardship The soldiers’ fund was set up as a “funding mechanism” to guarantee continuous financial support to the military retirement system.

It was conceived to take over from the government the payment of retirement and separation benefits, “at a time when it is self-sufficient.”

Self-sufficient, its charter says, is when 10 percent of its total cash could already attend to the pension requirement of military personnel.

By law, the RSBS came into being on December 30, 1973, through Presidential Decree 361, which was issued by former President Ferdinand Marcos, but went into actual operations in 1976, when a seed fund of P200 million was given by the government in four tranches.

At that time, the RSBS needed P2 billion to fulfill its mission of

taking over the retirement benefits of soldiers.

With the small fund, it has to increase its money from other sources, which include the contributions of its members (5 percent of the monthly salaries of soldiers), donations, grants and the fund earnings, which are tax-free.

With its funding sources, it is clear from the very start that it is already underfunded.

For, among others, unlike the regular pension funds—the Government Service Insurance System and the Social Security System— which have total employer and employee contributions rate of 21 percent and 9.4 percent, respectively, the RSBS only collects 5 percent, and solely from its members.

It did not take into consideration the increase of pension costs, which is brought about by the continuous increase in the salaries of military personnel, increase in the number of pensioners and their life span.

In December 2006 then-President Arroyo followed the recommendation of the military by issuing Executive Order 590, deactivating the RSBS, but still it continued operating.

In 2009 then-Defense Secretary Gilbert Teodoro also moved

for the dissolution of the RSBS by submitting a proposed bill with the House of Representatives that seeks to dissolve it, as it failed in its mandate as a pension system for retired military personnel.

He said the current position and financial standing of the retirement system for retired soldiers only calls for its dissolution as the best possible option.

At that time, Teodoro said the RSBS has not been operating for years because of the same budgetary constraint, which was partially brought about by losses.

Teodoro, a lawyer and a bar topnotcher, said the RSBS was a creation of law, and only Congress can kill it. He also did not recommend a substitute pension system.

“Establishing a new pension plan for the Armed Forces is more difficult to conceive and to envision. There are several issues involved. For example, will the current members of the Armed Forces be paying in the future [pension fund]? Because you cannot have retirement benefits until you load up the retirement fund for how many years and make it grow,” Teodoro said at that time.

Another problem is funding or the

seed money for its initial operations.

“Is the government willing to put in capital contributions again for that pension plan? On the other hand, is the Government Service Insurance System capable also of accepting members of the Armed Forces, given the different risk profile of the soldier and given the capital adequacy of the system?” he asked.

In September 2010 Defense Secretary Voltaire Gazmin also ordered the military to conduct a study about a new pension system that would replace the RSBS; but like the proposal in Congress, nothing came out of it.

Legaspi said previous officials already knew the problem and yet, they did not move to fi x it. “What did they do?” he asked.

He said that aside from the issue of mismanagement, previous officials erred over the move to give 6 percent in refund to the members, aside from the pension.

The RSBS president, however, clarified the fund is not yet giving out pensions.

Under Legaspi, the RSBS was able to accumulate some P15 billion in assets, while it only needs P12 billion to return the contribution of its members.

Local carriers to gain up to 15% growth this year–airline exec B R M

A

LOCAL aviation expert sees a favorable outlook for commercial aviation worldwide in view of the continuing decline in oil prices, and domestic air carriers could be headed to a 10-percent to 15-percent growth for 2016.

“The favorable outlook will prevail in 2016 and beyond, considering the conflicting production policies of the US and the Middle East oil-producing countries. This has resulted in increasing production of the latter, thus, driving down the prices due to huge supply,” said Avelino Zapanta, president of Seair International.

He added that expectations of more new aircraft deliveries to Philippine Airlines (PAL) and Cebu Pacific (CEB) in 2016 and beyond “presages the increase in the industry-capacity offering, which would drive competition and the resultant reduction in fares, thus, greater growth of passenger traffic.”

CEB has receently reported that it will operate four flights weekly between Manila and Guam, starting March 15, marking CEB’s first US destination.

CEB is the only low-cost carrier to fly directly between the Philippines and Guam, allowing it to offer low fares to a sizable Filipino community in Guam.

The country’s largest budget airline also plans to continue expanding its US and Australia network in 2016, despite a slow growth rate, according to the Cener for Asia-Pacific Aviation (Capa) think tank.

Capa said in its December report that CEB is aiming to launch flights to Guam, Honolulu and Melbourne this year, despite an expected modest seat growth of 2 percent to 4 percent, its lowest rate of expansion for several years, as CEB is not planning of adding more jets.

CEB last month added its fourth destination in Japan. It has also launched four long-haul destinations since September 2014, driving a 27-percent increase in revenue passenger kilometers (RPKs) through the first nine months of 2015.

RPK is a measure of volume of passengers carried by an airline.

“Cebu Pacific has traditionally been the most conservative and rational of Southeast Asia’s main LCCs [low-cost carriers]. The

Cutthroat pricing

Travelers should expect promotional fares to prevail for most of the year as competition among airlines intensifies. group’s flexible fleet plan and disciplined approach to seat-capacity growth is a major strength,” Capa said in its report.

CEB operates a fleet of 55 aircraft to 29 international and 34 domestic destinations. This makes the carrier Southeast Asia’s third-largest LCC group behind AirAsia and Lion Air, Capa said.

PAL, on the other hand, said its goals for 2016 would be “to continue its fleet-modernization program, such as the acquisition of long-range planes for transpacific/ international routes; to launch new

destinations as part of route-network expansion; to continue with its mission to provide quality in terms of the on-ground and inflight experience through service innovations and service competence.”

Asked about the volatility factors that could affect the local carriers, PAL Spokesman Cielo Villaluna said: “Competition—the menu of choices has widened. As such, the key is to leverage on the strengths of the Philippine Airlines brand: the competence of our pilots; our adherence to internationally recognized safety standards; and the fact that we are a full-service carrier.”

“All these collectively enable us to carve a market niche, and instill in our passengers the mindset that they are getting value for money,” she added.

Air Asia Philippines, which has absorbed Air Asia Zest, is also planning to embark on a refleeting program this year.

“Ten-percent growth in 2016 over 2015 would be conservative. I think it could go up to as much as 15 percent,” Zapanta said in an interview.

Asked when will the public see a lowering of airfares since oil pric-

es are on record low since 11 years ago, Zapanta said: “Cutthroat pricing would ensue in most of 2016 and 2017. Only the Christmas and summer peaks might show upward price adjustments. Otherwise, promotional fares would prevail for most of the year.”

“The local airlines have been in the process of consolidation in 2014 and 2015, resulting in less adventurous pricing. From six scheduled airlines, we are now seeing only three. PAL and PAL Express have always been virtually one airline.”

On the other hand, CEB has done away with Tiger Air Philippines and rebranded it CebGo, which it designates as its domestic carrier using mostly turboprops, i.e., including the high-density model, 18 of which have been ordered,” Zapanta said.

He added that the Air Asia Group has addressed its financial crisis by, among others, merging Air Asia Philippines and Air Asia Zest into one, with the former as the surviving entity.

“Major plans of the merged airline is recapitalization [going IPO] sometime in the future and

refleeting, starting 2016.”

“What are the volatility factors that you can see affecting local and international air carriers?” the BusinessMirror asked.

Zapanta, who teaches at the Philippine State College of Aeronautics, said the major factors that would influence the local and regional commercial airline industry in 2016 and beyond are: the drive of both PAL and CEB for long-haul operations using higher-density aircraft; the Asean single-aviation market, which could see airlines of the 10 member-countries freely crossing borders liberally to tap the growing Asean air industry market; and the Philippine pocket open sky, which both local and foreign airlines would be taking advantage of as a result of improving Philippine and Asean economy.

“More of them would access Philippine regional airports with direct links with other countries beyond Asean. These airports would include Laoag, Clark, Bacolod, Iloilo, Caticlan, Kalibo, Puerto Princesa, Cebu, Tacloban, Panglao, Laguindingan, Davao, Zamboanga, General Santos and Tawi-Tawi,” Zapanta predicted.

BMReports BusinessMirror

A4 Tuesday, January 5, 2016

www.businessmirror.com.ph

Drilon still expects CMTA, BBL, PPP Act to hurdle 16th Congress S

By Butch Fernandez & Catherine N. Pillas

aying the campaign for the 2016 elections should not stop incumbent senators and congressmen from going to work, Senate President Franklin M. Drilon said he expects the two chambers of Congress to pass 35 pending bills as soon as lawmakers reconvene on January 19.

Drilon said the proposed Customs Modernization and Tariff Act (CMTA) is on top of that list.

He said the Bangsamoro basic law, which seeks to abolish the Autonomous Region in Muslim Mindanao to make way for a new entity, and the Public-Private Partnership (PPP) Act are in a separate list due for second reading.

He said, however, that a separate list­—containing 32 enrolled bills already approved on final reading by both chambers—is still awaiting the President’s action, having been submitted earlier for signing into law by Mr. Aquino.

According to Senate records, the list of approved bills pending in the President’s table includes the proposed acquisition of road right of way for government infrastructure projects; the SK Reform Act; the Credit Surety Cooperative Fund Act of 2015; a bill expanding benefits and privileges of persons with disability; and a bill creating the Department of Information and Communications Technology.

As a consolation, Drilon said, at least 44 bills were already approved on third reading by the Senate, including the amendments to the Armed Forces Modernization Law providing for education assistance and benefits to dependents of all military and uniformed personnel.

He also cited a separate bill crafted to extend retirement benefits to barangay officials, tanod, barangay health workers and other employees of barangay units.

Asserting the urgency of mustering a quorum in order to attend to unfinished business, Drilon said the 16th Congress is scheduled to finally adjourn in July. On the part of the senators, Drilon assured that “the Senate will maximize their remaining months in session to focus on important legislation remaining

35

Number of pending bills that Senate President Franklin M. Drilon vows to pass during last session days on the priority agenda list.”

He added that the 2016 elections should not distract lawmakers from doing their sworn duty to pass urgently needed laws.

The Philippine Exporters Confederation Inc., headed by Sergio R. Ortiz-Luis Jr., said Congress should focus on passing the proposed CMTA, given its significance to efforts of the government to boost trade.

“The CMTA is one of those bills that are very much delayed, and which we need very badly. If we’re serious about wanting to join the Trans-Pacific Partnership Agreement [TPP], we should focus on that,” Ortiz-Luis said in a phone interview.

The TPP is a United States-led international trade pact, representing 40 percent of the global economy, now undergoing legal scrubbing by member-countries party to it.

The Department of Trade and Industry (DTI) said the Philippines remains keen on joining the TPP, once a protocol of accession has been drafted by members and after it has undergone scrutiny.

Despite the DTI’s pronouncement, the delay in implementing domestic reforms—such as the overhaul of the Bureau of Customs (BOC)—is hampering the country’s bid to become part of the TPP.

Under the TPP, member-coun-

Nonie reyes

tries must ensure greater transparency of customs rules and regulations through online publication and setting of reasonable de minimis thresholds for low-value goods.

The CMTA proposes full automation of procedures at the BOC and to increase the de minimis value, or the ceiling for an imported good to be exempted from duty, from the present P10 to P5,000.

The House of Representatives has already passed the measure on third reading last October, but it has yet to be approved by the Senate.

The Management Association of the Philippines (MAP), however, believes that there may not be enough

time to pass a “meaningful version” of any economic legislation.

“I hope they can pass the economic bills that [Congress] said they would take action on, but I doubt it if they can pass any because of the time,” MAP President Perry Lim Pe said.

The 16th Congress went on a Christmas break last December 19, and is expected to reconvene on January 19.

The third and last regular session of the 16th Congress is expected to be cut short, as the two chambers will take a break again from February 6 to May 22 for the 2016 national and local elections.

SC to tackle head on controversial cases, institute reforms this year continued from A12

It is envisioned to promote the Court’s call for transparency.

Beginning this year, the Court will hire 635 “court-decongestion officers” as part of the “Hustisyeah” project of the Judiciary, which is a onetime case-decongestion project that targets overburdened courts.

Under the program, an inventory of cases in that Court will be connected by a team from the Office of the Court Administrator (OCA). It will be assisted by a team from The Asia Foundation (TAF). Later, a case-decongestion plan will be formulated with the judge.

The plan will be implemented through the assistance of CDOs hired by TAF.

Retirement

BUT as the High Tribunal gets ready to tackle these issues and cases head-on, one of its magistrates prepares for his early retirement due to deteriorating health condition.

Having more hands could help. But with one

of the magistrates retiring this year, an octopus remains envious.

Associate Justice Martin Villarama Jr. has requested for an early retirement on January 16, but the SC has yet to officially announce it has accepted such request. Villarama was supposed to retire on April 14, when he reaches the mandatory retirement age of 70.

But in his letter to Sereno, the magistrate requested to avail himself of optional retirement due to “deteriorating health condition.” Villarama had a double-knee metal implantation in 2013 and a cataract operation in 2014.

Nonetheless, the Judicial and Bar Council (JBC) has already scheduled on January 7 and 8 public interviews of the 16 aspirants for his post. The JBC accepts, screens and comes up with a short list of nominees for vacancies in the judiciary and Office of the Ombudsman.

Among those to be grilled by the seven-man JBC on the first day are Court of Appeals (CA) Associate Justices Apolinario Bruselas Jr., Rosmari Carandang and Mariflor Punzalan-Castillo. Also

scheduled for interview are Sandiganbayan Associate Justice Maria Cristina Cornejo, Justice Secretary Alfredo Benjamin Caguioa, Deputy Ombudsman for Luzon Gerard Mosquera, Quezon Citizens’ Battle Against Corruption Party-List Rep. Cinchona Cruz-Gonzales and lawyer JoeSantos Bisquera.

On the second day, the other eight bets will take their turn: CA Presiding Justice Andres Reyes Jr., Associate Justice Stephen Cruz, Sandiganbayan Presiding Justice Amparo Cabotaje-Tang, Associate Justice Alex Quiroz, Solicitor General Florin Hilbay, former Commission on Audit Chairman Maria Gracia Pulido-Tan, DOJ Chief State Counsel Ricardo Paras III and Quezon City Regional Trial Court Branch 90 Presiding Judge Reynaldo Daway.

After the interviews, the JBC is expected to come up with a short list by February. This means President Aquino may be able to name his sixth appointee in the High Tribunal before the period covered by the election ban on midnight appointments.

₧3-T budget...

Abad explained that with the GAA as release document, all appropriations that have specific purposes in the GAA is deemed released as of the beginning of the year.

“This huge improvement in the release of allotments is made possible with the new policy of treating the General Appropriations Act as the release document.

Once approved and in effect, all disaggregated items in the budget of all agencies are deemed effectively released,” Abad said in a statement.

He said the automatic release of disaggregated items in the GAA will help in making the government more efficient in spending. He acknowledged government underspending were to blame for the underwhelming 6.1-percent expansion in local output, measured as the gross domestic product (GDP), in 2014, or way below the scaled-back target of 6.5 percent to 7.5 percent that year.

Abad also said the release of 90 percent of the budget for 2016 should also allow most projects to be started before the election spending ban on March 25, which is 45 days preceding the regular election on May 9, 2016.

According to Section 261 of the Omnibus Election Code, among the prohibited acts during the 45 days preceding a regular election are the construction of public works, delivery of materials for public works and issuance of Treasury warrant or similar devises for a future undertaking chargeable against public funds; and release, disbursement or expenditures of public funds, among others.

But with the 90 percent of the total national budget for 2016 already “deemed released,” Abad said infrastructure projects could be fast-tracked in the first quarter this year and the disbursement of public funds could be accelerated in the first quarter to beat the election ban on spending and hiring of personnel, which will start on March 25.

Abad noted that the Department of Public Works and Highways (DPWH) targets to complete the awarding of at least 50 percent of the infrastructure projects for 2016 within the first three months.

continued from A1

“We can expect 50 percent of infrastructure projects under the DPWH to be issued notices of award by the first quarter of 2016. This amounts to almost P187.86 billion, and is higher than their actual obligation rate of 39 percent, or P111.14 billion, within the same period last year,” Abad said.

The government is poised to complete key infrastructure projects this year, including 98 percent of 364,693 lineal meters of bridges and 85 percent of 32,526.50 kilometers of roads.

The government has significantly increased funds for infrastructure buildup the past five years, from P175.4 billion in 2011, equal to 1.8 percent of the GDP to P766.5 billion this year and achieve the international benchmark of 5 percent of the GDP.

Abad also expressed optimism the growth momentum in the fourth quarter of 2015 will persist and predicted the actual number for the period will be better than the three previous quarters.

“December 2015 spending will continue the momentum that the previous five months demonstrated. In addition, the spending boost for last-minute Christmas sales will further ramp up growth in the last month of the year,” he said.

Abad noted the drivers in the first semester of 2016 will be the following: issuances of notices of award and notices to proceed for projects that benefited from pre-procurement activities in the second semester of 2015; the great sense of urgency to implement projects before the March 25 election ban; additional consumption push due to the January 1 effectivity of the Salary Standardization Law of 2015; spending in the run up to, during and after the May local and national elections; and further spending boost from the preparation for the opening of classes in June.

The latter will be highlighted by the first-year implementation of the K to 12 Program (with thousands more teachers and nonteaching personnel being hired), and the educational contracting program Government Assistance to Students and Teachers in Private Education being expanded to more than a million students.

AseanTuesday A5 Tuesday, January 5, 2016

BusinessMirror

Singapore’s economy expands more than estimated on services

S

cegoh/pixabay.com

ingapore’s economy expanded more than economists estimated, as services and construction provided support to counter faltering exports amid China’s economic slowdown and an uneven global recovery.

Its GDP rose an annualized 5.7 percent in the three months to December 31, from the previous quarter, when it expanded a revised 1.7 percent, the trade ministry said in a statement on Monday. The median of nine estimates in a Bloomberg News survey was for a 1-percent expansion.

The economy grew 2.1 percent last year.

“What the number continues to suggest is that services are becoming more important for growth, and will likely be so over the course of 2016,” said Michael Wan, a Singapore-based economist at Credit Suisse Group AG. It also “perhaps reflects some stabilization in Asean growth,” he

5.7%

Singapore’s annualized GDP growth in the three months to December 31 from the previous quarter

said, referring to the Association of Southeast Asian Nations. Headwinds persist for the region, including a slowing credit cycle and weaker China, he said.

The city-state has relied on its position as an Asian financial hub to bolster services, as overseas demand for its goods faltered.

While industrial production fell for a 10th straight month in November, retail sales rose for a ninth month in October.

GDP grew 2 percent in the fourth quarter from a year earlier, compared with a median survey estimate for 1.2 percent.

The Singapore dollar traded at 1.4181 against the US currency as of 8:14 a.m. after the GDP report, compared with 1.4185 on December 31. Singapore markets were closed for New Year’s Day on January 1.

Singapore’s manufacturing fell 3.1 percent last quarter, from the previous three months, the trade ministry said. The services industry grew 6.5 percent in the same period, while construction expanded 7 percent.

Monday’s data are advance estimates computed largely from figures in the first two months of the quarter and may be revised later, the ministry said. Bloomberg News

Vietnam weakens dong fixing PHL also opposes as it adopts market-based rate China’s runway test

T

he State Bank of Vietnam reduced the dong’s reference rate for the first time since August, after saying over the weekend that it is moving to a more market-based methodology in setting a daily reference rate versus the dollar.

It lowered the fixing by 0.03 percent to 21,896 against the greenback on Monday, after the currency sank to the limit of its permitted trading range in late December.

The monetary authority had kept the rate unchanged since August 19, when it cut the fixing by 1 percent and increased the currency’s trading range to 3 percent on either side.

That followed another band widening on August 12. The central bank also cut the reference rate by 1 percent in both January and May of 2015. The currency ended 2015 at 22,495 per dollar, 2.7 percent weaker than the central bank’s December 31 reference rate of 21,890. It was trading little changed on Monday at 22,498.

“The dong’s daily reference rate will make it easier for market stakeholders,” Do Ngoc Quynh, Hanoi-based head of treasury at Bank for Investment and Development of Vietnam, said by phone. “It also helps policymakers avoid accumulated pressure on the

dong and allows them to be more proactive in coping with changes in global markets.”

The state bank said over the weekend that the new mechanism will take into account movements in major foreign currencies that are relevant to Vietnam’s trade and investment activities. The rate will also reflect domestic and international money- market developments, the central bank said, adding that it is willing to sell dollars to stabilize the money market and ensure the dong can fluctuate within its trading band. It didn’t release a statement on Monday.

The move comes as tightening monetary policy in the US boosts demand for the greenback and a depreciating yuan drags currencies lower across Asia. The dong’s 4.8-percent loss last year compares with slides of 19 percent for Malaysia’s ringgit and 10 percent for Indonesia’s rupiah—the region’s two worst-performing currencies.

Supporting the exchange rate has come at a cost to the Vietnam’s foreign-currency reserves, which tumbled by $6.7 billion to $31 billion in the third quarter, according to Trinh Nguyen, a Hong-Kong based senior economist for emerging Asia at Natixis SA. Bloomberg News

T

he Philippine government said on Monday that, like Vietnam, it opposes China’s recent test of a newly completed runway on one of seven islands Beijing has constructed in the disputed South China Sea. Department of Foreign Affairs Spokesman Charles C. Jose said the government was considering protesting China’s action, as Vietnam did, adding that the test at Fiery Cross Reef “adds to tension and uncertainties in the region.”

Vietnam last week protested the test, saying it violated Hanoi’s sovereignty, and demanded that China stop such actions. China rejected Hanoi’s protest and will likely dismiss Manila’s concerns, as well.

Chinese Foreign Ministry Spokesman Hua Chunying said on Saturday that China deployed a “civil aircraft” on the island, which it calls Yongshu Jiao, to determine whether the new airfield in what she said was Chinese territory conformed to civil-aviation standards.

The early diplomatic tussle presages a continuation this year of tense exchanges, mainly among China, Vietnam and the Philippines, over long-disputed and potentially oil- or gasrich offshore territories also claimed by Taiwan, Malaysia and Brunei. Bloomberg News

The W

Business

A6 Tuesday, January 5, 2016

Venezuela opposition leader will head Congress National Assembly

GENERAL Secretary of Opposition coalition Jesus Torrealba (left) congratulates Cong. Henry Ramos Allup, after he was elected as the Venezuela National Assembly’s president in Caracas, Venezuela, on January 3. Newly elected opposition lawmakers voted in Ramos as National Assembly president on Sunday. The legislative session that starts on Tuesday will represent the first time opponents of the socialist administration have had control of any government institution here in more than a decade. AP

C

ARACAS, Venezuela—An outspoken opposition leader known for embracing confrontation was chosen on Sunday to head Venezuela’s new Congress, when it opens in two days, as a counterweight to the socialist administration.

The newly elected opposition majority voted to make Henry Ramos Allup the president of the National Assembly when it is seated on Tuesday. The new session will be the first time foes of the administration have had control of any government institution in more than a decade.

Ramos, 72, is a divisive figure that government supporters love to hate as much for his acerbic tongue as for his leadership in the oncehegemonic Democratic Action party that cogoverned Venezuela for decades before the late President Hugo Chavez won power in 1998 and began his leftist program.

Ramos’s rival for the legislative presidency was Julio Borges, 46, a member of the Justice First party, a newer, moderate movement that won the biggest bloc of opposition seats.

Although Ramos hasn’t joined in street protests against the government, he won with the help of opposition hard-liners who favor such demonstrations and other confrontation w ith President Nicolas Maduro’s administration.

Borges’s party advocates a focus on negotiation and elections. Ramos said the new National Assembly will show Venezuelans a more democratic way forward.

“We ask the people to watch us, to demand more of us, and keep an eye on what we do to make sure that we honor our commitment,” he said.

Ramos’s supporters praise him as an experienced operative wellpositioned to wrangle the dozens of parties that make up Venezuela’s opposition coalition and stand up to what is sure to be an offensive by the administration.

Skeptics say Ramos is too prone to spouting off and plays into the government’s attempts to paint the opposition as entitled snobs nostalgic for the days when elites ran Venezuela. The opposition won a crucial two-thirds legislative “supermajority” by a single seat in the December 6 elections and it will need to corral every lawmaker to get through the most dramatic policies.

But policy and strategy disagreements within the opposition will make it hard to get the most high-stakes votes through, said R. Evan Ellis, a professor of Latin-American studies at the United States Army War College Strategic Studies Institute.

“I suspect that the government will also use a combination of personal inducements and legal intimidation to try to co-opt some of the members of the new Congress,” he said. The opposition has long been split between moderates and hard-liners, and the two sides have exchanged barbs since their coalition’s landslide victory over the socialists.

Even as the scale of the victory was still settling after polls closed, some opposition members began talking jubilantly about taking steps to remove Maduro and rewrite the constitution, while others cautioned that the voters wanted economic reforms rather than a political fight.

Justice First leader Henrique Capriles, a governor who narrowly

lost to Maduro in the last presidential election in 2013, called the opposition’s legislative victory a vindication of his party’s focus on building electoral support district by district. His party won 33 of the opposition’s 112 seats in the new congress.

In recent weeks, Capriles has lambasted opposition leaders who have advocated street activism, particularly a wave of protests that shut down parts of Venezuela in 2014 and resulted in dozens of deaths. Carpriles said that if the opposition had continued to pursue open confrontation in the streets, the coalition would never have won Congress. The street protest movement “must be named among our g reatest nationa l failures,” he told the Venezuelan weekly Tal Cual.

Supporters of Capriles’s chief rival, the imprisoned hardline opposition politician Leopoldo Lopez, angrily rejected that criticism. Lopez’s father, Leopoldo Lopez Gil, tweeted that he was glad Capriles is a governor and doesn’t have a seat in the “new, brave Congress.” He also backed Ramos’s leadership bid.

Lopez has been sentenced to more t ha n a decade in pr ison in connect ion w it h h is leadersh ip of t he 2014 protests, a nd he consistent ly pol ls as one of the nation’s most popular leaders a long w it h C apr i les. The government has so far showed few signs of willingness to negotiate. The outgoing Congress filled the Supreme Court with newly appointed judges, and the court last week barred three opposition lawmakers from being sworn in. AP

Illinois, Missouri assess damage, cleanup after deadly flooding

K

INCAID, Illinois—The Mississippi River and many of its tributaries continued their retreat on Sunday from historic and deadly winter flooding, leaving amid the silt a massive cleanup and recovery effort likely to take weeks, if not months.

T he f lood, fueled by more than 10 inches (25 centimeters) of rain over a three-day period that began on Christmas Day, is blamed for 25 deaths in Illinois and Missouri, reflecting Sunday’s discovery of the body of a second teenager who drowned in central Illinois’s Christian County.

The Mississippi River was receding except in the far southern tip of both states. The Meramec

River, the Saint Louis-area tributary of the Mississippi that caused so much damage last week, already was below flood stage in the hardhit Missouri towns of Pacific and Eureka and dropping elsewhere.

But worries surfaced anew on Sunday along the still-rising Illinois River north of Saint Louis, where crests near the west-central towns of Valley City, Meredosia, Beardstown and Havana were to approach records before receding in coming days. In Kincaid, a 1,400-resident central Illinois town near the South Fork Sangamon River’s south fork, Illinois Gov. Bruce Rauner toured flooddamaged homes on Sunday as residents piled ruined furniture,

appliances and clothes along the street for disposal crews to pick up. Mike Crews, Christian County’s emergency manager, said the worst of the inundation appeared to be past, “until the new weather comes,” citing the prospect of potentially heavy rain later in the week.

In Illinois’s Morgan County, home to the 1,000-resident village of Meredosia, locals were keeping wary eyes on levies fortified with 50,000 sandbags. As of midday Sunday at Meredosia, Illinois was more than 10 feet (3 meters) above flood stage and pressing toward an expected crest on Tuesday roughly a half foot (15 centimeters) short of the record set in July. AP

POLICE officers try to disperse protesters during a protest denouncing the execution of Sheikh Nimr al-Nimr, a prominent opposition Saudi Shiite cleric, in front of the Saudi Embassy in Tehran, Iran, on January 3. Saudi Arabia announced the execution of al-Nimr on Saturday along with 46 others. His execution drew condemnation from Shiites across the region. AP/VAHID SALEMI

Saudis sever ties with Ira

T

EHRAN, Iran—Saudi Arabia has severed diplomatic ties with regional rival Iran following attacks on the kingdom’s embassy and consulate in the Islamic Republic over the execution of a prominent Shiite cleric.

Saudi Foreign Minister Adel al-Jubeir announced the cut in relations late on Sunday and gave Iranian diplomatic personnel 48 hours to leave his country.

All Saudi diplomatic personnel in Iran have been called home after an attack on the kingdom’s embassy in Tehran and a consulate.

The decision came after the mass execution of Sheikh Nimr al-Nimr and 46 others—the largest carried out by Saudi Arabia in three-and-a-half decades—laid bare the sectarian divisions gripping the region. Shiite protesters took to the streets from Bahrain to Pakistan while Arab allies of Sunni-ruled Saudi Arabia quickly lined up behind the kingdom.

The standoff illustrates the kingdom’s new aggressiveness under King Salman.

During his reign, Saudi Arabia has led a coalition fighting Shiite rebels in Yemen and staunchly opposed regional Shiite power Iran,

even as Tehran struck a nuclear deal with world powers.

It also represents just the latest turmoil in the two countries’ long-rocky relationship, which saw diplomatic ties between them severed from 1988 to 1991.

Iran’s supreme leader, Ayatollah Ali Khamenei, warned Saudi Arabia on Sunday of “divine revenge” over al-Nimr’s death, while Riyadh accused Tehran of supporting “terrorism” in a war of words that threatened to escalate even as the US and the European Union sought to calm the region.

Al-Jubeir told a news conference in Riyadh that the Iranian regime has “a long record of violations of foreign diplomatic missions,” dating back to the occupation of the US Embassy in 1979, and such incidents constitute “a flagrant violation of all international agreements,” according to the official Saudi Press Agency.

He said Iran’s “hostile policy”

40

People arrested outside the Saudi Embassy in Tehran on Sunday, as protesters threw stones and gasoline bomb at the embassy. was aimed “at destabilizing the region’s security,” accusing Tehran of smuggling weapons and explosives and planting terrorist cells in the kingdom and other countries in the region. He vowed that Saudi Arabia will not allow Iran “to undermine our security.”

Al-Nimr was a central figure in Arab Spring-inspired protests

by Saudi Arabia’s Shiite minority until his arrest in 2012. He was convicted of terrorism charges but denied advocating violence.

While the split between Sunnis and Shiites dates back to the early days of Islam and disagreements over the successor to the Prophet Muhammad, those divisions have only grown as they intertwine with regional politics, with both Iran and Saudi Arabia vying

Abe: Summit with Putin needed to resolve

T

OK YO—Japanese Prime Minister Shinzo Abe said on Monday that summit talks with Russian President Vladimir Putin must take place in order for the countries to forge a peace treaty.

Japan and Russia never signed a peace treaty after World War II because of conflicting claims over islands north of the Japanese island of Hokkaido, which Japan calls its “Northern Territories.”

When asked about Putin in a news conference, Abe said, “We both recognize that 70 years after

the war’s end, to not have concluded a peace treaty is abnormal.”

“But without a summit meeting, this Northern Territories problem cannot be resolved,” Abe said.

He also said it was crucial that Russia play a constructive role in fighting terrorism and in the crises in Iran and Syria.

Since taking office in late 2012, Abe has sought to make progress on improved relations with Russia, but the conflict in Ukraine and other issues have complicated that effort.

Several tentative plans for a visit by Putin to Japan have been put off due to western concerns over Russia’s involvement in such crises. Tokyo views this as a good time to seek negotiations with Moscow over the territorial dispute, given Russia’s desire to boost foreign investment in its Far East region and its currency economic straits, local media have reported recently. The four disputed islands were seized by the Soviet Union in 1945.

Earlier speculation suggested

World

sMirror

news@businessmirror.com.ph | Tuesday, January 5, 2016

A7

Bill Clinton to stump for his wife, bringing old controversy

IN this November 15, 2015, file photo, former President Bill Clinton listens to his wife, Democratic presidential candidate Hillary Clinton, speak in Ames, Iowa.

The White House hopefuls have been slogging through Iowa, New Hampshire and airports in between for months. Beginning in February, voters will finally get the chance to pare down an unwieldy field of Republicans and a smaller group of Democrats dominated by Hillary Clinton. AP

K

an over embassy attack

48

Number of hours Saudi Foreign Minister Adel al-Jubeir gave Iranian diplomatic personnel to leave his country to be the Mideast’s top power.

Iran accuses Saudi Arabia of supporting terrorism in part because it backs Syrian rebel groups fighting to oust its embattled ally, President Bashar al-Assad.

Riyadh points to Iran’s backing of the Lebanese Hezbollah and other Shiite militant groups in the region as a sign of its support for terrorism. Iran also has backed Shiite rebels in Yemen known as Houthis.

In Tehran, a protest outside the Saudi Embassy early Sunday quickly grew violent as protesters threw stones and gasoline bombs at the embassy, setting part of the building ablaze, according to Gen. Hossein Sajedinia, the country’s top police official, the semi-official Tasnim news agency reported.

Forty people were arrested and

investigators were pursuing other suspects, Tehran prosecutor Abbas Jafari Dowlatabadi said, according to the semi-official ISNA news agency. Iranian President Hassan Rouhani condemned Saudi Arabia’s execution of al-Nimr, but also branded those who attacked the Saudi Embassy as “extremists.”

“It is unjustifiable,” he said in a statement. Another Saudi diplomatic mission also was attacked in Mashhad. Western powers sought to calm the tensions.

In Washington, State Department Spokesman John K irby said the Obama administration was aware of the Saudis’ severing of ties with Tehran. “We believe that diplomatic engagement and direct conversations remain essential in working through differences and we will continue to urge leaders across the region to take affirmative steps to calm tensions,” Kirby said.

Earlier, EU Foreign Policy Chief Federica Mogherini spoke to Iranian Foreign Minister Mohammad Javad Zarif by phone and urged Tehran to “defuse the tensions and protect the Saudi diplomats,” according to a statement.

The disruption in relations between Saudi Arabia and Iran may have implications for peace efforts in Syria. US Secretary of State John F. Kerry and others spent significant time trying to bring the countries to the nego-

tiating table and they both sat together at talks aimed at finding a diplomatic solution to the civil war. Last month Saudi Arabia convened a meeting of Syrian opposition figures that was designed to create a delegation to attend peace talks with the Syrian government that are supposed to begin in mid-January. Across the region, demonstrators took to the streets on Sunday in protest over the execution of al-Nimr.

In Bahrain, police fired tear gas and birdshot at demonstrators on Sitra Island, south of the capital, Manama, wounding some. In alDaih, west of the capital, Shiite protesters chanted against Saudi Arabia’s ruling Al Saud family, as well as against Bahrain’s ruling Al Khalifa family.

In Beirut, Hezbollah leader Hassan Nasrallah called al-Nimr “the martyr, the holy warrior,” while protests erupted from Turkey to India to Pakistan.

Meanwhile, al-Nimr’s family prepared for three days of mourning at a mosque in al-Awamiya in the kingdom’s al-Qatif region in predominantly Shiite eastern Saudi Arabia. The sheikh’s brother, Mohammed al-Nimr, told the Associated Press that Saudi officials informed his family that the cleric had been buried in an undisclosed cemetery, a development that could lead to further protests. AP

territorial row

a compromise might allow the countries to split control of the islands: Etorofu, Kunashiri, Shikotan and the Habomai islet group.

Over the past few years, both countries have sought to encourage more development of the resource rich area, with limited success. Outlining his achievements over the past few years, Abe also said Japan’s often tense relations with China and South Korea are “normalizing” following a summit in Seoul and he hopes for further progress. AP

JAPANESE Prime Minister Shinzo Abe pauses during a New Year’s media conference at his official residence in Tokyo on January 4. Abe said summit talks with Russian President Vladimir Putin must take place in order for the countries to forge a peace treaty. AP/SHIZUO KAMBAYASHI

EENE, New Hampshire— For months, former president Bi l l C l i nton h a s largely stayed out of the 2016 race, mentioned mostly in passing by Democratic front-runner Hillary Clinton.

Now, following days of attacks over his sexual history from Republican front-runner Donald Trump, Clinton is escalating his public involvement in his wife’s campaign. On Monday he heads out for his first solo campaign events with stops planned in New Hampshire, a key primary state that gave much-needed momentum to his struggling 1992 presidential bid.

But some of the less desirable moments of his past—his impeachment and decades-old sex scandals—are also reemerging as he prepares to campaign in the Granite State.

So far, Bill Clinton has remained mum about the accusations— following the lead of his wife’s campaign, which believes their candidate comes across as more presidential by rising above what they see as Trump’s crass political tactics. But the attacks seem to have struck a nerve.

At a campaign event in New Hampshire on Sunday, Katherine Prudhomme O’Brien heckled Clinton about her husband ’s sexual history, accusing her of

enabling him to mistreat women.

“You are very rude and I’m not going to ever call on you,” Clinton snapped at O’Brien, after repeated shouted interruptions by the New Hampshire state senator.

T he for mer president, too, h a s b e e n k no w n to b e come heated when he feels h is w ife is u nder at t ac k , a s he d id du r ing t he 20 08 pr ima r y w it h re marks about then-Il linois Sen. B a rac k Oba m a t h at a ngered black voters in South Carolina.

“I love my husband and, you know, he does get upset when I am attacked,” said Clinton, in an interview with NBC’s Meet The Press last year. “I totally get that.”

Just days after Clinton called her husband her “secret weapon” at a campaign event last month, Trump began aiming his fire at Bill Clinton, accusing the former president of mistreating women and his wife of enabling the abuse.

“If Hillary thinks she can unleash her husband, with his terrible record of women abuse, while playing the women’s card on me, she is wrong,” Trump tweeted last week.

His accusations reverberated across the campaign trail, giving fodder to conservatives who want to use the issue in the 2016 campaign. “You see what’s happened recently and it hasn’t been a very

pretty picture for her or for Bill,” Trump said in an interview on CBS’s Face the Nation. “Because I’m the only one who’s willing to talk about his problems.”

Clinton supporters believe the attacks will backfire, particularly in the general election. Hillary Clinton had some of her highest approval ratings in the wake of disclosures about her husband’s affair with White House intern Monica Lewinsky.

The former president’s public events in New Hampshire come as he moves into a more public role in his wife’s effort. After months of keeping the former president to private fund-raisers, Clinton said in a December debate that she would turn to her husband for advice should she win the W hite House, particularly on economic issues.

Their schedules on Monday showed t he deg ree to whic h the ubiquitous political couple will be able to blanket the early primary states in the next two months as Democrats also hold contests in Iowa, Nevada and South Carolina.

While the former president was drumming up support for his wife in New Hampshire, Hillary Clinton was starting a two-day “river-toriver” tour of Iowa, holding town hall meetings and organizing events across the state. AP

Trump brushes off militant recruiting video citing his words

W

A SHINGTON—Donald Trump won’t be dissuaded from saying what he thinks, simply because Islamic extremists use his words to recruit Muslims to their cause.

The Republican presidential contender brushed off the appearance of an African Islamic militant group’s video to recruit Americans that shows him calling for Muslims to be banned from coming to the US. On Sunday TV news shows Trump said it’s no surprise America’s enemies would exploit comments of a presidential frontrunner like himself. “The world is talking about what I’ve said,” the billionaire real-estate mogul told CBS’s Face the Nation in an interview taped on Friday. “And now, big parts of the world are saying, Trump is really right, at least identifying what’s going on. And we have to solve it. But you’re not going to solve the problem unless you identify it.” The 51-minute video is by al-Shabab, al-Qaeda’s

East Africa affiliate, and showed up on Friday on Twitter. Hillary Clinton claimed in the last Democratic presidential debate that another extremist group, the Islamic State (IS), has been using video of Trump in its propaganda. But she had no evidence that that group, also known as ISIS (Islamic State of Iraq and the Levant), had done so. Trump told Fox & Friends the emergence since then of the alShabab video doesn’t change the fact that she was wrong: “It wasn’t ISIS and it wasn’t made at the time, and she lied.”

Trump told CBS that Democrats don’t want to talk about Islamic radicalism, but he won’t shy away from it for the sake of depriving extremists of fodder for their recruitment. “What am I going to do?” he asked. “I have to say what I have to say. And you know what I have to say? There’s a problem. We have to find out what is the problem. And we have to solve that problem.”

The video, broadly seeking the

support of blacks and Muslims in the US, contains a clip of Trump proposing the “total and complete shutdown of Muslims entering the United States,” an idea rebuffed by his rivals in both parties. Al-Shabab is fighting the internationally backed Somali government and has carried out many guerrilla attacks there and in neighboring African countries contributing troops to the effort to stabilize security.

Ben Rhodes, a deputy national security adviser in the Obama administration, said the US is at war with terrorists, not Islam. “The terrorists want us to act like we’re at war with Islam,” he said. “That’s how they recruit people. That’s how they stir up grievances.”

Asked about the video on CNN’s State of the Union, Republican presidential contender Carly Fiorina criticized its content and misidentified the source of the propaganda as the IS group. “I find it pretty rich that this ISIS propaganda tape talks about the cruelty of the West,” she said, given that group’s brutality. AP

The World BusinessMirror

news@businessmirror.com.ph

Tuesday, January 5, 2016

A8

Vacation over, Obama looking at ways to reduce gun violence

IN this November 12, 2015, file photo, Swedish police officers perform identity control among the passengers aboard the train from Copenhagen at the Swedish end of the bridge between Sweden and Denmark in Malmo, Sweden. On January 4 new travel restrictions are set to be imposed by Sweden to stem a record flow of migrants, transforming the Oresund bridge between Sweden and Denmark into a striking example of how national boundaries are reemerging. STIG AKE JONSSON/TT VIA AP

After 1 million migrants, Europe’s borders are back

S

PRESIDENT Barack Obama, First Lady Michelle Obama and their daughters Sasha and Malia arrive at Andrews Air Force Base in Maryland on January 3, as they return from vacation in Hawaii. AP

W

ASHINGTON—Back at the White House after a two-week Hawaiian vacation, President Barack Obama says he is energized for his final year in office and ready to tackle unfinished business, turning immediate attention to the issue of gun violence.

Obama scheduled a meeting on Monday with Attorney General Loretta Lynch to discuss a three-month review of what steps he could take to help reduce gun violence. The president is expected to use executive action to strengthen background checks required for gun purchases.

Republicans strongly oppose any moves Obama may make, and legal fights seem likely over what critics would view as infringing on their constitutional rights to bear arms. But Obama is committed to an aggressive agenda in 2016, even as public attention shifts to the presidential election.

Obama spent much of his winter vacation out of the public eye, playing golf with friends and dining out on the Hawaiian island of Oahu with his family. He returned to the White House about noon on Sunday.

“I am fired up for the year that stretches out before us. That’s because of what we’ve accomplished together

over the past seven,” Obama said in his weekly radio and Internet address.

While in Hawaii, he also worked on his fi nal State of the Union address, scheduled for January 12.

The prime-time speech to Congress will give the president another chance to try to reassure the public about his national security stewardship after the attacks in Paris and San Bernardino, California.

Congressional Republicans have outlined a competing agenda for January, saying they will spend the first days of 2016 taking another crack at eliminating keys parts of the president’s health-insurance law and ending federal funding for women’s health-care provider Planned Parenthood. The legislation is unlikely to become law, but it is popular with the Republican base in an election year.

The debate about what Obama may do on gun violence already has spilled

11 Nations that joined the US in a free-trade agreement called the Trans-Pacific Partnership over into the presidential campaign.

Democratic front-runner Hillary Clinton has called for more aggressive executive actions on guns, and rival Bernie Sanders said he would support Obama’s expected move.

The Vermont senator told ABC’s This Week that he believes “there is a wide consensus” that “we should expand and strengthen the instant background check.” He added: “I think that’s what the president is trying to do and I think that will be the right thing to do.”

Republican candidates largely oppose efforts to expand background checks or take other steps that curb access to guns.

“This president wants to act as if he is a king, as if he is a dictator,” unable to persuade Congress and forcing an “illegal executive action” on the country, New Jersey Gov. Chris Christie told Fox News Sunday.

Former Florida Gov. Jeb Bush, also

on Fox, said Obama’s “first impulse is always to take rights away from lawabiding citizens, and it’s wrong.”

In the radio address, Obama said tens of thousands of people have died from gun violence since background check legislation stalled three years ago.

“Each time, we’re told that commonsense reforms like background checks might not have stopped the last massacre, or the one before that, so we shouldn’t do anything,” Obama said. “We know that we can’t stop every act of violence. But what if we tried to stop even one?”

Federally licensed gun sellers are required by law to seek criminal background checks before completing a sale. But gun-control advocacy groups say some of the people who sell firearms at gun shows are not federally licensed, increasing the chance of sales to customers prohibited by law from purchasing guns.

Obama plans to participate in a town hall on Thursday night at George Mason University in Virginia on reducing gun violence. The president will take questions from the audience at the event moderated by CNN’s Anderson Cooper.

Despite his deep differences with Republicans, Obama has cited two agenda items for 2016 that have bipartisan support: a free-trade agreement with 11 other nations, called the Trans-Pacific Partnership, and changes in the criminal justice system that would reduce incarceration rates for nonviolent offenders. He often points out that the US accounts for 5 percent of the world’s population and 25 percent of its inmates. AP

New York governor: Take homeless inside as temperature falls

N

EW YORK—New York Gov. Andrew Cuomo on Sunday signed an order requiring communities statewide to take homeless people from the streets to shelters when temperatures reach freezing, saying he was ready for a legal challenge from anyone who believes “people have a civil right to sleep on the street and freeze to death.”

Cuomo said the executive order, which takes effect on Tuesday, will protect the state’s growing homeless population.

The order came as temperatures in

parts of New York state were dipping below 32 degrees Fahrenheit (0 degrees Celsius). It calls for police departments and social-service agencies to move people into shelters, including those reluctant to go.

The legality of the order was questioned by Karen Hinton, a spokesman for New York City Mayor Bill de Blasio.

“We support the intent of the executive order, but to forcibly remove all homeless individuals in freezing weather, as the governor has ordered, will require him to pass state law,” she said in

a statement. “This executive order adds no legal or financial resources to New York City’s programs to assist the homeless and merely requires all New York state localities follow many of the same requirements as New York City to shelter families and individuals in need in freezing temperatures.”

In an interview with WCBS-AM, Cuomo said he was ready to go to court, if necessary, to defend his order against any constitutional challenges.

“I want this done statewide,” Cuomo said. “By the way, there is a philosophy

out there that says people have a civil right to sleep on the street and freeze to death if they want to.”

He said he believed the law was on his side.

“I’m not going to argue an individual’s right to freeze to death,” Cuomo told WCBS. “I want to argue an individual’s human right to housing and services and shelter.”

The governor said the order, requiring homeless shelters to extend hours if necessary, was to protect people from hypothermia and potential death. AP

TOCKHOLM—Since it opened in 2000, the Oresund bridge between Sweden and Denmark has been a towering symbol of European integration and hassle-free travel across borders that people didn’t even notice were there.

On Monday new travel restrictions imposed by Sweden to stem a record flow of migrants are transforming the bridge into a striking example of how national boundaries are reemerging. A year of clampdowns on migration and terrorism has all but killed the idea of a borderless Europe where you could drive or train-hop from Spain in the south to Norway in the north without ever having to show your passport.

“We’re turning back the clock,” said Andreas Onnerfors, who lives in Lund, on the Swedish side of the bridge. An associate professor in intellectual history, he said he’s benefited from the free flow of people and ideas across the bridge—he’s studied on both sides and taught students from both Sweden and Denmark.

“We’re going back to a time when the bridge didn’t exist,” he said, referring to the ID checkpoints being set up on Monday on the Danish side for train passengers wishing to cross over to Sweden.

The move is meant to stop undocumented migrants from reaching Sweden, which abruptly reversed its open-door policy after receiving more than 160,000 asylum-seekers last year, mainly from Syria, Iraq and Afghanistan.

It follows the reintroduction of border checks in Germany, Austria, France, Belgium and other countries in what’s supposed to be a passportfree travel zone spanning 26 nations.

The moves are supposedly temporary, but are likely to be extended if Europe’s migrant crisis continues in 2016.

“It’s basically every country for itself now,” said Mark Rhinard, an expert on the European Union (EU) at the Swedish Institute of International Affairs.

Citing exceptional national circumstances related to security, terrorism and public order, several European countries have suspended EU rules that required them to keep their borders open to each other.

It’s a significant development that strikes at the very heart of the EU project—the free movement of goods and people across borders.

The Bruegel think tank in Brussels says that in 2014 there were almost 1.7 million cross-border commuters in the passport-free zone, known as the Schengen Area, after the Luxembourg town where it was created in 1985.

Abolishing it would affect their daily lives, but the consequences for Europe would go deeper, given the “visible and powerful symbol of European integration that Schengen represents,” Bruegel researchers Nuria Boot and Guntram Wolff wrote last December.

Whether the temporary reintroduction of borders also means rebuilding mental boundaries between EU citizens remains to be seen. But the migrant crisis is becoming an even bigger challenge to European unity than the cracks emerging in recent years over the bloc’s common currency, the euro.

EU nations demonstrated starkly different views on how to deal with the 1 million migrants that crossed the Mediterranean in 2015. Germany

and Sweden, until recently, said refugees were welcome, while Hungary built a fence to keep them out. The Danish government took a series of measures to discourage migrants from going there, including a proposal to seize their jewelry to cover their expenses in Denmark.

Common rules requiring refugees to seek shelter in the first EU country they enter collapsed, as Greece and Italy were overwhelmed by sea arrivals and countries further north just waved the migrants through to their intended destination, often Germany or the Scandinavian countries.

Meanwhile, the EU’s efforts to spread refugees more evenly across the bloc met stiff resistance from member states. By November only about 150 of 160,000 refugees had been relocated from Greece and Italy under an EU plan.

The crisis underlines structural flaws in the EU, showing how it has implemented common rules that it just can’t enforce once the external pressures become too great, said Karl Lallerstedt, cofounder of Black Market Watch, a Switzerland-based nonprofit group focusing on cross-border smuggling.

“It’s not a strong federal state that can overrule its members,” he said.

“At the same time, individual states have obligations to the EU. So you’re in this sort of half-way house.”

Any hope of a quick return to a borderless Europe was crushed by the deadly Paris attacks last November, after which France declared a state of emergency and beefed up border controls with neighboring countries.

However, if bottlenecks build up at the borders, EU citizens and companies moving goods in trucks will eventually get fed up, said Rhinard, of the Swedish Institute of International Affairs.

“As soon as it starts to bite economically, people are going to start to ask: ‘Is this the right solution to the problem?’” Rhinard said.

That question is already being asked by companies and commuters opposed to new ID checks at the 8-kilometer (5-mile) Oresund bridge and tunnel, known to European TV viewers as the focal point of the SwedishDanish crime series The Bridge.

Train networks on either side have been integrated to allow thousands of commuters to cross the bridge daily, essentially incorporating the southern Swedish cities of Malmo and Lund into suburban Copenhagen.

But the new ID checks mean there will be no more direct railway service from Copenhagen’s main station to Sweden. Travelers heading to Malmo will have to switch trains at Copenhagen Airport after going through the checkpoints there, adding an estimated half an hour to the 40-minute commute.

To avoid the hassle, Sweden’s national railway company SJ canceled service to Denmark altogether, leaving only Danish and regional Swedish operators with service across the bridge.

“This is what happens when national states put their foot down and say security is most important,” Onnerfors said. “It collides with the freedom [of movement] they’ve been talking about for 20 years, which was the reason we joined the EU to begin with.” AP

A9

The World BusinessMirror

Tuesday, January 5, 2016

news@businessmirror.com.ph

3 arrested in killing of Mexico mayor day after taking oath

M

EXICO CITY—Three people, including a minor, were being held on Sunday in the slaying of a newly inaugurated mayor just hours into her term in a gang-troubled central Mexican city.

Morelos Gov. Graco Ramirez ordered flags on state buildings flown at half-staff and called for three days of mourning following the killing of Temixco Mayor Gisela Mota.

He blamed organized crime for killing the 33-year-old Mota, a former federal congresswoman who had been sworn in as mayor the day before she was gunned down in her home Saturday morning.

Ramirez ordered security measures for all of the state’s mayors, though he gave no details on what that involved.

Ramón Castro Castro, Roman Catholic bishop of Cuernavaca, celebrated Mass at Mota’s home on Sunday and later spoke critically of a state where some areas are in control of organized crime.

“One theory could be that it was a warning to the other mayors,” Castro said to reporters. “If you don’t cooperate with organized crime, look

NTSB considers next steps in probe of cargo ship’s sinking

at what will happen to you. It’s to scare them.”

Following Mota’s killing, two suspects were killed in a clash with the police and three others arrested.

Officials said those taken into custody were a 32-year-old woman, an 18-year-old man and a minor. They gave few other details, though state Attorney General Javier Perez Duron said the suspects had been tied to other crimes.

Temixco, with about 100,000 people, is a suburb of Cuernavaca, a city famed among tourists for its colonial center, gardens and jacarandadecked streets. “The city of eternal spring” was long a favorite weekend getaway for people from nearby Mexico City.

But drug and extortion gangs have plagued the area in recent years, driving away some tourists and residents. The expressway—and drug routes—between Mexico City

100

Number of mayors killed by organized crime and the country’s murder capital of Acapulco, cuts through Cuernavaca and Temixco.

Neither the governor nor prosecutors indicated which criminal organization might be involved in the mayor’s slaying.

Drugs, kidnappings and extortion in the area were once under the control of the Beltran Leyva cartel, but that group’s collapse a few years ago, unleashed fierce competition among its progeny and rivals in Morelos and neighboring Guerrero and Mexico states.

In December 2014 a state lawmaker who was a candidate for mayor of Temixco from the same party as Mota, was kidnapped there. Authorities rescued him the following day and blamed the Guerreros Unidos cartel, which has been clashing with a group, known as Los Rojos, in

IN this January 1 photo, Gisela Mota waves during her swearing in ceremony as mayor of Temixco, Morelos state, Mexico. The Morelos state Public Security Commission said attackers invaded Mota’s house on Saturday morning and killed her. AP/TONY RIVERA

Guerrero and Morelos.

Temixco also saw one of Mexico’s emblematic killings of the past decade: The 24-year-old son of poet Javier Sicilia and six other people were found slain in March 2011, prompting the writer to start a nationwide movement against violence. Prosecutors said the seven apparently had gotten into an argument with men who turned out to be local members

of the Pacifico Sur drug cartel.

Efforts to clean out corrupt, local police who have protected gangs led Morelos to put officers under a unified state command in 2014. Temixco joined that system, though the state’s main city, Cuernavaca, has resisted.

One organization representing mayors in the country, the Association of Local Authorities of Mexico, issued a

statement saying nearly 100 mayors have been killed across Mexico over the past decade, “principally at the hands of organized crime.”

Mota’s center-left Democratic Revolution Party released a statement describing her as “a strong and brave woman who, on taking office as mayor, declared that her fight against crime would be frontal and direct.” AP

India search for attackers at air base not over

J

ACKSONVILLE, Florida—Federal accident investigators are considering launching another search of the wreckage of a freighter that sank last October in an attempt to locate the ship’s “black box.”

Tom Roth-Roffy, the lead investigator for National Transportation Safety Board (NTSB), told The Associated Press that a weeks-long search found one of the El Faro’s missing decks, but not the mast where the ship’s voyage data recorder was attached. The agency on Sunday released the first images of the ship in its final resting place.

“There were no human remains found whatsoever, and no personal effects whatsoever,” Roth-Roffy said.

“I think we found one boot.”

The El Faro sank last October 1 after losing engine power and getting caught in a Category 4 hurricane while sailing from Jacksonville to San Juan, Puerto Rico. There were 33 mariners aboard and no survivors.

Roth-Roffy said the NTSB would need to launch a second search of the wreckage 15,000 feet (4,572 meters) below the sea if it wants to find the data recorder, which would have recorded the captain’s final transmissions. They are still determining if and when such a search would occur.

The images of the sunken ship show a breach in the Faro’s hull and its main navigation tower missing.

Roth-Roff y said crews did locate one of the missing decks about a half-mile away from the main ship.

Images show it resting on the seafloor, its windows broken out.

The ship’s stern, or rear end, was buried more deeply, but at this point, they’ve ruled out a major structure failure as a cause of the El Faro’s sinking, Roth-Roffy said.

“The issue with the detachment of the upper two decks, we’re looking at that carefully,” he said.

Even without the data recorder, the images taken by remote-controlled underwater vehicles are helping to shed some light on the case. AP

INDIAN army soldiers take position outside the Pathankot air force base in Pathankot, India, on January 3. Combing operations to secure the Indian air force base, where a group of militants started an attack before dawn on Saturday, were continuing late Sunday morning. APCHANNI ANAND

P

ATHANKOT, India—Two gunmen were believed to be still on the run on Monday, more than 48 hours after they and several others attacked an Indian air base near the Pakistan border. At least seven troops and four gunmen have been killed in the fighting so far.

On Sunday Home Secretary Rajiv Mehrishi told reporters the last two gunmen had been cornered on the large base and would be “neutralized” soon.

The attack on the Pathankot air force base started before dawn on Saturday, and is seen as an attempt to undo recent improvements in the relationship between archrivals India and Pakistan. It comes a week after Narendra Modi became the first Indian prime minister in 12 years to visit Pakistan.

Mehrishi said Indian authorities were alerted about a potential attack in Pathankot, and that aerial surveillance at the base spotted the suspected militants as they entered the compound. He said they were engaged by Indian troops and were kept away from the base’s aircraft and military equipment.

A senior air force officer, Air Marshal Anil Khosla, told reporters in New Delhi that the base will not be declared fully secured until the entire area is checked by troops.

Since Saturday morning the base has been swarming with air force commandos, troops from India’s elite National Security Guard and local police, but officials refused to say how many troops were involved in the fighting and combing operations.

The sprawling Pathankot air force

base is spread over 25 kilometers (15 miles), including some forested sections. Defense officials would not say where on the base the fighting took place or where the suspected militants had taken cover, except to say that no aircraft or military equipment has been damaged.

The base houses a fleet of India’s Russian-origin MiG-21 fighter jets and Mi-25 and Mi-35 attack helicopters, along with other military hardware.

The air force station is on the highway that connects India’s insurgency-plagued Jammu and Kashmir state with the rest of the country. It is also very close to India’s border with Pakistan.

The Himalayan region of Kashmir is divided between India and Pakistan, but is claimed in its entirety by both. Rebels in India’s portion

of Kashmir have been fighting since 1989 for independence or merger with Pakistan.

India accuses Pakistan of arming and training the insurgents, a charge Islamabad denies, and the attack is being viewed as a possible attempt to unravel recent progress in the relationship between the two nations.

The police said they do not know if the gunmen came from the Indian portion of Kashmir, where rebels routinely stage attacks, or from Pakistan.

The violence follows Indian Prime Minister Modi’s surprise December 25 visit to Pakistan, where he met his Pakistani counterpart, Nawaz Sharif—a trip that marked a significant thaw in the mostly tense relations between the nucleararmed neighbors.

The two also held an unscheduled meeting at the Paris climate change talks last month.

Ahead of Modi’s visit to Pakistan, the national security advisers of both countries met in Thailand. The foreign secretaries of both nations are to meet in Islamabad later this month.

The responses to the weekend attack from both countries have been muted so far, with neither New Delhi nor Islamabad giving any indication that the planned talks are under any threat.

All political parties in India condemned the attack, but there were no demands that the government call off the talks with Pakistan. In the past, when it was in opposition, Modi’s right-wing Bharatiya Janata Party was a vocal critic of engagement with Pakistan. AP

A10 Tuesday, January 5, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Predictions for 2016

A

S the year begins, it seems like everybody is making predictions about every possible subject. Who will be the new showbiz stars of 2016? What will be the latest advancement in technology? What will happen in the world of politics and business?

However, it might be more interesting to look back at predictions for 2016 from the past.

In 2006 at a showing for his film An Inconvenient Truth, Al Gore forecasted that the world only had 10 years—until January 25, 2016—“That, unless drastic measures to reduce greenhouse gases are taken within the next 10 years, the world will reach a point of no return of a true planetary emergency.”

For some reason, 2016 has been foretold to be a year of great consequence by many of the world soothsayers. The blind prophetess Baba Vanga foretold before she died in 1996 that 2016 would be the year that Europe will cease to exist. She said the continent will lose almost all of its population, and the developing countries will transform to exploiters. That may be truer than it seems with the flood of migration into Europe from the Middle East during 2015 and strong moves from several countries to at least leave the European Union.

The art of prophecy, though, is not limited to fortune-tellers. In 2012, on the floor of the US Senate, Mike Lee predicted that, if Obama was reelected, gas would cost $6.60 by 2016. The current gasoline price in the US is now below $2 per gallon. Lee sits on the Committee on Energy, responsible for shaping US energy policy.

Every year there are always the natural-disaster predictions about earthquakes, bad-weather events and near-misses by asteroids. These are kind of boring, since all of those things are constantly happening. However, one psychic is saying that in 2016 a “Japanese island sinks beneath the sea.” We wonder if it will be one of the islands that is disputed territory between Japan and China.

Knowing China’s poor record for construction mishaps as with the latest landslide in Shenzhen last week, maybe one of China’s artificial islands in the West Philippine Sea will also sink into the ocean depths.

Maybe the boldest natural-disaster prediction for 2016 comes from a “psychic to the stars.” She says that India will be split in half by an earthquake in 2016. But then again for 2015, she also said Tokyo would be destroyed by an earthquake.

Finally, one Internet psychic, who will remain nameless, is convinced that “an alleged naked picture of Kim Jong-un causes a political row.” Now, that is something to look forward, too.

Perhaps, if there were “inappropriate selfies” of world leaders circulating on the Internet, many of the world’s problems could be more easily solved.

Income-tax cut: The unending debate Manny B. Villar

THE Entrepreneur

O

ne of the contentious issues that may persist up to the last days of the present administration or even spill over to the next administration is the proposal to reduce income-tax rates for individuals and corporations.

The bill pending in the House of Representatives provides the following tax rates for individual taxpayers: Employees earning less than P180,000 a year will be exempted from paying income taxes; employees earning P180,000 to P500,000 will pay an income tax equivalent to 9 percent of income; those earning between P500,001 to P10 million ($213,901.29) a year will have a tax rate of 17 percent; and those earning more than P10 million will have a tax rate of 30 percent. Under the same proposal, corporate taxes will be reduced to 25 percent.

It’s a radical measure, but both proponents and opponents have valid points. Proponents from both houses of Congress say lowering income taxes will increase the number of taxpayers and boost consumer spending, resulting in faster economic growth.

Other supporters of similar legislative proposals pending in the House of Representatives and the Senate say lowering corporate income-tax rates will attract more foreign investments.

The government, however, has

opposed the proposal from day one, citing the need to sustain fiscal stability. Finance Secretary Cesar V. Purisima says the revenue-reducing proposal will put at risk the country’s fiscal sustainability and credit rating. Finance officials have estimated that the income tax-rate reduction would result in a P29-billion revenue loss for the government.

Echoing Purisima’s position, President Aquino says his administration was able to reduce the fiscal deficit through prudent measures, which earned upgrades from various international credit-rating agencies. He says reducing revenues as a result of lower income-tax rates would increase the deficit and could be a negative factor on the country’s credit rating. The proposed incometax reduction has received wide support from different sectors, but let me cite the position of foreign investors considering the proponents’ position that the measure will make the Philippines more attractive to foreign investments.

A joint position paper has been issued by the Joint Foreign Chambers (JFC), a coalition of business groups

from the United States, Australia, New Zealand, Canada, Europe, Japan and Korea representing more than 3,000 companies with $30 billion worth of investments in the Philippines. In its statement, the JFC said it has been proposing the reduction of personal- and corporate-income taxes since 2010, coupled with higher consumption taxes. Contrary to the government’s view that reducing corporate- and personal-tax rates would decrease total revenues and lead to a deficit, the JFC said reducing these rates would increase investment and trade with higher total revenues for the government.

The Philippines, according to the JFC, should follow the trend among other members of the Association of Southeast Asian Nations (Asean) to reduce income taxes to make their economies competitive. According to the foreign business coalition, the Philippines has the second-highest personal-income tax and the highest corporate-income tax among the Asean-6 countries.

The maximum personal incometax rate in the Philippines is 32 percent, while Thailand is 35 percent (reduced from 37 percent in 2010).

Vietnam is 35 percent; Indonesia, 30 percent; Malaysia, 26 percent (to be reduced to 25 percent in 2016); and Singapore, the most affluent Asean member, is 20 percent.

The Philippine corporate-income tax is 30 percent, compared with 25 percent in Indonesia and Malaysia; 22 percent in Vietnam (reduced from 35 percent in 2010); 20 percent in Thailand (reduced from 35 percent in 2010); and 17 percent in Singapore.

The high corporate income-tax rate may be one of the reasons the

China should fix its drug problem

By Adam Minter | Bloomberg View

J

ust before Christmas, the US Food and Drug Administration (FDA) alerted US pharmaceutical manufacturers to keep a sharp eye on ingredients imported from Tianjin, China. The problem, it seemed, is that these could be contaminated with cyanide that escaped after an explosion in August of a hazardous material warehouse. Already, the FDA reported, it had detected the deadly chemical in two shipments from the city.

The FDA deserves credit for shutting down a poison pipeline aimed at America’s medicine cabinets. But there are considerable doubts about whether it can consistently repeat that success.

The problem is numbers. China and India manufacture more than 80 percent of the main ingredients of the world’s medicines. But the FDA has only two inspectors in China to scrutinize around 700 factories involved in manufacturing drugs for export to the US, according to Bloomberg News. Concerns are running so high that just days before the FDA’s cyanide letter, two members of Congress requested a Government Accountability Office investigation into

the FDA’s ability to supervise foreign drug manufacturers.

Based on the FDA’s publicly available reports from 2015, there’s reason for concern. Beyond safety violations, there are also cover-ups. During an April inspection of one Chinese-owned manufacturer of pharmaceutical ingredients, inspectors found evidence that staffers deleted unfavorable reports from computers and kept a paper shredder near machines that recorded quality data.

The situation wasn’t much better at a new Pfizer facility where, according to Bloomberg News, “employees hid quality failures; used expired manufacturing materials or ones that hadn’t been

recently checked; and retested failing products until they passed.”

It’s natural to think that additional FDA inspectors could make these problems go away. Certainly, they would increase the odds that a rogue factory could be identified. But even if the FDA were capable of regular inspections of all those 700 manufacturers, neither it nor the Chinese authorities have the resources to make regular inspections of the additional suppliers who deliver ingredients to those 700 export facilities.

Identifying the scofflaws is made more difficult by a lack of clear regulatory authority in China. Within the China FDA, for example, are 10 agencies with responsibility for medical products. Chinese law grants considerable regulatory authority to individual provinces, many of which have their own bureaucracies.

Sculpting national and local institutional rivalries into a competent, national regulatory apparatus might be more difficult than cleaning up China’s drug manufacturers.

Nonetheless, it’s very much in China’s interest to do so. Among Chinese consumers, fake and adulterated drugs are an everyday concern that call into

Philippines has not been attracting as much investments as the five other major economies of the Asean.

According to the United Nations Conference on Trade and Development World Investment Report 2015, foreign direct inflows to the Philippines totaled $6.2 billion in 2014, the lowest among the Asean-6.

Singapore topped the foreign direct investments list with total inflows of $67.52 billion, followed by Indonesia with $22.58 billion, Thailand (despite its political crisis), $12.57 billion; Malaysia, $10.8 billion; and Vietnam, $9.2 billion.

The government’s concern, with respect to lowering income-tax rates, is understandable: income taxes have been a major and stable source of revenues. It does not want to risk losing or reducing this revenue stream in favor of the potential (rather than actual) higher revenues from increased investments and higher purchasing power for consumers.

In other words, the finance department’s concern is fiscal stability rather than growth, which the proponents and supporters of the income tax-reduction measure want.

We have attained fiscal stability and earned investment grade ratings from Fitch Ratings, Moody’s Investor Service and Standard & Poor’s, yet, we are still trying to catch up with our neighbors in attracting foreign investments, which are what we need to grow our economy and uplift the lives of Filipinos.

If you want to address poverty, you have to focus on growth more than stability.

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

question the ruling regime’s competence and interest in their safety. And if the Chinese government and pharmaceutical industry want to make good on their ambition to become a global leader in pharmaceutical innovation, it’s going to need to clean up an industry that’s second only to India in the number of facilities banned by the FDA, currently 38.

Allowing additional FDA inspectors into China without additional red tape would be an excellent place to start. Longterm, China needs to rethink its product liability laws so that consumers have access to courts and cash settlements that will spur companies to clean up their supply chains voluntarily.

Above all, China needs to demonstrate that it meets international pharmaceutical manufacturing and safety standards, from the factory floor to the top regulatory offices. To do this, it should begin the process of joining the Pharmaceutical Inspection Co-Operation Scheme, a 46-member association of top-level pharmaceutical inspection authorities (like the FDA) that have harmonized their manufacturing standards and recognized each other’s factory inspection reports.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Who will make it to the Palace?

Philanthropy of change Ernesto M. Hilario

ABOUT TOWN

T

his year’s presidential election bears close watch as it will determine where the country will go until 2022. The winner in the forthcoming political exercise will set the nation’s agenda on June 30, when he/she takes the oath of office and lays down the key thrusts, policies and programs of the new administration. Will the next leader inspire new hope for change and reform, or will he/ she eventually fail to meet the high expectations of our people, and prove to be a deep disappointment?

It is important, therefore, to make the right choice in the May 9 election, where we also get the opportunity to choose the next vice president, as well as 12 senators, close to 300 members of Congress and thousands of local officials at the provincial, city and municipal levels.

No wonder, then, that the top political story last year, easily eclipsing the other major political developments, such as the Mamasapano massacre and the territorial dispute with China, among others, was who would slug it out and emerge on top in the presidential contest in May. From Day One as Vice President, Jejomar Binay made no secret of his plan to run for the highest elective post. He was banking on his long tenure as mayor of Makati City to make a determined bid to capture the presidency this year. Which worked for him, as he was the consistent frontrunner in popularity surveys among possible presidential bets until early this year. That is, until his political opponents in the Senate initiated an extended investigation into alleged corruption during his term as mayor that gradually whittled down his ratings to slip to No. 2. As of endDecember, however, he had regained the top position in at least one major survey.

Former Interior Secretary and now Liberal Party standard-bearer Manuel Roxas II had also been widely believed to be interested in pursuing the presidency since the time he gave way to Noynoy Aquino in 2010.

While he is considered a technocrat, his performance at the helm of the Department of Transportation and Communications and later of the Department of the Interior and Local Government is seen as below par.

Besides, he is perceived as trying too hard to identify with the masa, even as he is a scion of one of the richest families in the country. His popularity ratings, consequently, had always been low compared to the frontrunners, despite having gotten the endorsement of President Aquino.

Sen. Grace Poe had been considered a rising political star since she topped the senatorial elections in 2013 with 20 million votes. But since she declared her presidential bid last October, she has been hounded by allegations that she is not a naturalborn citizen and that she lacks the 10-year residency requirement. Last November the Senate Electoral Tribunal (SET) denied the petition for her disqualification as senator. But a month later, she was disqualified by the Commission on Elections (Comelec) 2nd Division from running as president after failing to reach the 10-year residency requirement. Later, her certificate of candidacy (COC) was canceled by the Comelec 1st Division as it ruled that she did not meet the same 10-year residency requirement of the Constitution.The Comelec en banc sustained the ruling of the two divisions, but she has filed an appeal before the Supreme Court that is still pending.

Davao City Mayor Rodrigo Duterte declared his candidacy only last December, as a substitute candidate of the PDP-Laban party. He did so but only after much hemming and hawing. He spoke before various gatherings to speak his mind out about what the country needs to do to see real change. But the deadline for the filing of COC before the Comelec came

Tuesday, January 5, 2016 A11

and went and he was nowhere to be seen. He counts on many followers who say that his successful campaign against criminality in the city is what this country needs at this time. He has been hounded by allegations that he has sanctioned or even taken part in extrajudicial killings of suspected criminals in Davao City. But his tough image could also be his downfall, as human-rights advocates staunchly oppose what they believe to be his involvement in summary executions.

The camp of the fifth presidential candidate, Sen. Miriam DefensorSantiago, claims that she has been topping surveys among netizens.

She took second place in the 1992 presidential elections where, she said, she was cheated of victory by the winner, Fidel V. Ramos. She says she has completely recovered from a prolonged bout with lung cancer, which led to her taking an extended leave from her duties as a senator.

Even as she has officially filed her candidacy, however, she does not appear to be actively building a strong campaign machinery. Thus, she is the cellar dweller among the presidential candidates.

As things now stand, Binay and Poe are tied in the latest poll conducted by the Social Weather Stations from December 12 to 14. Binay and Poe were each chosen by 26 percent of 1,200 respondents. Administration candidate Roxas was chosen by 22 percent and Duterte by 20 percent, with Santiago the cellar dweller with 4 percent.

A Pulse Asia survey conducted a week earlier, from December 4 to 11, showed Binay the runaway winner, with 33 percent of respondents saying they would vote for him; followed by Duterte (23 percent); Poe (21 percent); Roxas (17 percent) and Santiago (4 percent).

It would be wrong to assume that Filipino voters are limiting their choices to the five candidates. At least one small political party that had fielded candidates for president, vice president and senators in two past elections is reported to have adopted a boycott position. Some netizens are also supporting this “Nota,” or “none of the above” stance, believing that no one among the current crop of presidential candidates can be expected to bring about genuine social change or transformation within the next six years, and therefore deserving of the people’s vote.

It’s a protest vote, if we may call it as such, and it’s a valid one, even if it means they forego their right of suffrage under a democratic setup.

Be that as it may, we believe that the electorate should choose the next leader on the basis of the following criteria: (1) character/ personality: Is he/she a strong and decisive leader?; (2) integrity: Has he/she been involved in graft and corruption issues?; (3) education/ academic preparation: Does he/she have the intellectual faculties to handle the rigorous demands of the job?; (4) work experience: Does he/ she have enough experience at either the local or national level, or both, to be familiar with the situation on the ground and the people’s pulse?; and (5) platform: Does he/she have a comprehensive program of governance that addresses the country’s problems and needs?

E-mail: ernhil@yahoo.com.

Sen. Edgardo J. Angara

T

he Financial Times of December 23, 2015, wrote about philanthropy in our time. It describes the evolution of giving, from traditional endowments (charitable foundations) to forprofit networks (limited liability companies without tax privileges).

The best example of the first category is the Rockefeller Foundation, a modern model of philanthropy, the best known being Bill & Melinda Gates Foundation. An example of the second is the Omidyar Network used by eBay Founder Pierre Omidyar and followed by Steve Jobs’s widow and Facebook’s Mark Zuckerberg.

There are at present 1,826 billionaires in the world, controlling a total wealth of $7 trillion. Current charity outlays usually consist of one-off gifts to a cause or multiple causes. Several pioneering young philanthropists pursue a systemwide giving. An example is the case of Bill Gates and company, their

collective giving goes to rescuing the environment.

Our planet Earth is facing serious risks within the lifetime of millions of Filipinos. United Nations scientists calculated that with current proposals, global temperatures would still rise 2.7oC by the end of the century—higher than the 2oC

Philippines 2016 John Mangun

OUTSIDE THE BOX

T

he Philippines is an amazing country.

When a mortal human being decides to run for national office, suddenly he or she develops superpowers, able to create millions of jobs, bring peace and order found only in paradise, and create wealth where the streets are paved with gold. Even just holding an election means that economic growth will boom along with the stock market.

At least that is all that we are told to expect in the next 12 months.

Reality may be a little different.

The Philippines is still connected to planet Earth and the world is not necessarily a place of free-flowing milk and honey.

Steel is like the “Lego blocks” for the world. Our buildings, bridges, factories and the machinery to build almost everything else is made from steel manufactured in one form or another. Like Lego blocks, there is almost an unlimited supply of steel as it is needed. However, as in most markets, the price of steel is determined by demand.

In June 2008 the price of a metric ton of steel was $1,265. One year ago the price had fallen to $485 per ton.

Today, the current price of 1 ton of steel is $170.

A little over 10 years ago, two

decades of large debt creation suddenly hit a wall of people, companies, and countries being unable to pay that debt. Not wanting to admit that maybe government policies that created debt was not such a good idea, governments decided that the only way out of that debt mess was to create more debt, this time backed by the “full faith and credit” of those governments.

That idea was not exactly pouring gasoline on the debt fire—that was destroying economies and personal wealth—to put out the fire but it came close. Besides, there was a big country that had not created debt-based wealth that could provide the economic growth that the world needed. That country was China.

So the debt fiesta continued and with China building big ghost malls

The 20-percent world

By John Micklethwait Bloomberg View

I

f you want to pick a number for 2016, how about 20 percent? Look around the politics of the Western world, and you’ll see that a lot of once-unthinkable ideas and fringe candidates suddenly have a genuine chance of succeeding.

The odds are usually somewhere around one in five—not probable, but possible.

This “20 percent world” is going to set the tone in democracies on both sides of the Atlantic—not least because, as anybody who bets on horse racing will tell you, eventually one of these longshots is going to canter home.

Start with President Donald Trump.

Gamblers, who have been much better at predicting political results than pollsters, currently put the odds of the hardto-pin-down-but-generally-right-wing billionaire reaching the White House at around 6-1, or 17 percent. Interestingly, those are roughly the same odds as the ones offered on Jeremy Corbyn, the most left-wing leader of the Labor Party for a generation, becoming the next British prime minister. In France gamblers put the likelihood of Marine Le Pen winning France’s presidency in 2017 at closer to 25 percent, partly because the right-wing populist stands an extremely good chance of reaching the runoff. Geert

Wilders, another right-wing populist previously described as “fringe,” perhaps stands a similar chance of becoming the next Dutch prime minister.

Other once-unthinkable possibilities could rapidly become realities. America’s version of Corbyn, Bernie Sanders, whom Trump recently described as a “wacko,” is currently trading around 5 percent, no worse than Jeb Bush. Plus, Sanders has assembled the sort of Corbynite coalition of students, pensioners and public-sector workers that tends to outperform in primaries. If Hillary Clinton stumbles into another scandal, the Democrats could yet find themselves with a socialist contending for the national ticket.

And it’s not just “wacko” candidates; some unthinkable events are also distinctly possible. This year, perhaps as early as June, Britain may vote to leave the European Union (EU). Bookmakers still expect the country to go for the status quo, though most pundits are less certain about this than they were about the Scottish referendum in 2014, which turned out to be an uncomfortably close race for the British establishment.

Investors are used to the political world serving up surprises. These surprises, however, have usually involved one mainstream party doing much better or worse than expected—and things continuing as normal. Not this time. With

threshold above which scientists say spells irreversible global catastrophe and much higher still than the ambitious 1.5oC target set in the Paris Agreement. If humanity is to be rescued at all from falling off a “climate-change precipice,” nothing less than an audacious global effort to rapidly “decarbonize” economic development is needed.

That entails an urgent and costly transition to improved and more affordable clean-energy technologies, which, in turn, requires billions of investments in research and development (R&D) and deployment. The International Energy Agency (IEA) calculated that up to $51 billion a year should be invested in relevant R&D so that global warming can be kept below the 2oC threshold.

But as governments tighten belts around the world and are constrained from investing in clean-energy R&D, the private sector have come forward with some novel financing schemes for scientific innovation.

Bill Gates (cofounder of Microsoft), Mark Zuckerberg (cofounder of

Facebook), Richard Branson (chairman of the Virgin Group), Jack Ma (chairman of Alibaba), Jeff Bezos (founder and CEO of Amazon) and up to 23 other billionaires are doing just that. At the sidelines of COP 21, they launched the Breakthrough Energy Coalition, which aims to invest billions of dollars over the next few decades in start-up clean-energy companies. Months before the announcement, Gates already committed $2 billion of his own money to accelerating R&D in zero-carbon energy.

Such initiatives follow a trend which a 2014 New York Times article described as the philanthropy of the new economy, where more of the rich become “patrons of social progress through science research.”

This represents a dramatic expansion from previous notions of philanthropy as simple donations to charities. Extra emphasis is placed on spurring innovation, which the world direly needs right now to face down climate change.

E-mail: angara.ed@gmail.com.

in huge ghost cities, many countries were able to also increase their wealth. Many countries were able to take advantage of this, like Australia, Indonesia and Brazil, which provided the raw materials for China But China unfortunately just could not continue to build these ghost cities, particularly since the US and Europe could not continue to buy Chinese sport shoes and gadgets like they had before. Further, China’s debt-to-gross domestic product has gone up 30 percent since 2008. China now has a bit of a debt problem. So Brazil went from a 10-percent annual economic growth rate in 2010 to negative 3 percent in 2015. Indonesia was doing great with a 7-percent growth in 2011, not so much today with 4.73 percent. Even Australia has seen its economic growth cut in half, from 5 percent to 2.5 percent.

While the Philippines is not dependent on China, economic growth here was 8.9 percent year-on-year in the second quarter of 2010 to the current growth of about 6 percent.

The Philippines is not going to have a “bad” 2016. But there is some reality out there that cannot be ignored. For example, 2015 was the first year since 2009 that the companies on the Standard & Poor’s 500 list saw lower profits than the previous year. Now do you see why the US is so anxious to open Asian consumer markets like the Philippines to US goods and services through the Trans-Pacific Partnership?

Further, Philippine government

spending will slow as the official election season starts, as will corporate expansion. But the headlines are that 90 percent of Filipinos are optimistic for 2016. Filipinos are always optimistic for the coming year. But this is an election year.

Unless the source code for the computers that are counting the votes is fully examined, the Philippines may elect a new president with the same percentage of votes as Filipinos are optimistic. Any election problems might dampen all that enthusiasm.

Filipino businesses are also optimistic. A cheery outlook is part of the national character. For 2016, our optimism ranks No. 3 globally.

In 2015 we also ranked No. 3 and for 2014 the ranking was No. 2.

The National Economic and Development Authority may be holding to its 7-percent growth forecast for 2016, but they get paid big bucks for being cheerful. A growth rate under 6 percent is more realistic.

The Philippine stock market’s Buena mano for 2016 came in, looked around and may have stolen a laptop on the way out the door if most of yesterday’s stock trading is any indication.

Year 2016 in the Philippines means to “expect the best, plan for the worst and prepare to be surprised.”

Trump in charge, America would have a wall along the Rio Grande and could well be stuck in a trade war with China.

Le Pen wants to take France out of the euro and renegotiate France’s membership in the EU. It’s hard to tell what would do more damage to the City of London: a Brexit that could lead to thousands of banking jobs moving to the continent; or a Corbyn premiership, which could include a maximum wage and the renationalization of Britain’s banks, railways and energy companies.

Moreover, in the 20-percent world, some nasty possibilities make others more likely. If Britain leaves the EU, Scotland (which, unlike England, would probably have voted to stay in) might, in turn, try to leave Britain. If Le Pen manages to pull France out of the euro, the union’s chances of dissolution increase.

And you can only guess what a President Trump would do to US relations with Latin America and the Muslim world.

The conventional wisdom from political elites is that voters will consider these possibilities, wise up and pull back from the unthinkable. The mandarins are not wrong: The gambling markets show that Hillary Clinton and Marco Rubio are more likely to become president than Donald Trump, just as they show that Britain is more likely to stay in the EU than not.

But there’s also plenty of evidence that across the Western world, voters are furious with the established parties and choices—and much more willing to consider extreme solutions, especially when put forward by politicians who “tell it like it is” and seem genuine, either because they say the unthinkable (Trump and Wilders) or have stuck to their principles, no matter how outdated they seem (Corbyn and Sanders).

Indeed, fringe candidates have already started to take power in some smaller countries. Five years ago, Alexis Tsipras, a Marxist demagogue, was treated with as much disdain by Greece’s established politicians as Sanders was by the Bush family. But Tsipras’s hardleft Syriza party won Greece’s election in January 2015 and drove it into a collision with Germany that nearly led to Greece leaving the EU. Hungary is now ruled by Viktor Orban, who has promised to build “an illiberal state.”

Nationalist-populists also rule in Poland and have a share of government in Switzerland and Finland.

Put another way, it’s hard to dismiss a “Brexit” or a Trump presidency as a complete surprise. Trump has been atop the Republican polls for several months.

Most big banks are already working on a Plan B in case the City of London finds itself no longer in the EU.

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com.

Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

2nd Front Page BusinessMirror

A12

BusinessMirror

Tuesday, January 5, 2016

www.businessmirror.com.ph

SC to tackle head on controversial cases, institute reforms this year O

By Joel R. San Juan

CTOPUSES, unlike magistrates, would have six other arms free. But with resolving controversial issues on one hand and instituting new reforms on the other, it seems the justices of the Supreme Court (SC) have their hands full this year.

Controversial CHIEF Justice Ma. Lourdes Sereno has acknowledged the need to immediately address the expected deluge of poll cases, as the May 9 national and local elections near.

Sereno told reporters the justices have started preparing for these cases by already “undertaking preliminary research and some preliminary reading” on the reported issues.

“I think that whatever deci-

sion that we may make on the petitions that are filed before us and that will be filed before us, it must be with the utmost wisdom that we should look at these things,” Sereno said.

“But the impact of whatever decision will come out from us, as well as the election itself, will have long-term consequences for our country. It will measure our ability to really be a modern democracy.”

Poe, Edca

ONE of the election cases pending in the SC involves the petitions filed by Sen. Grace Poe, seeking the reversal of the resolutions by the Commission on Elections (Comelec) en banc nullifying her certificate of candidacy for her failure to prove that she is a natural-born Filipino citizen and for lack of the 10-year residency requirement.

The SC has issued a temporary restraining order (TRO), enjoining the Comelec from implementing its resolution on Poe’s disqualification and set her petitions for oral arguments on January 19.

The SC will resume its regular session, after its one-month holiday break, on January 12.

Also on the plate of the magistrates is the issue on the constitutionality of the controversial Enhanced Defense Cooperation Agreement (Edca) signed by the Philippines and the US in April 2014.

The SC was expected to release a decision on this case last month. It is now expected the SC will release its ruling on the matter early this year.

There are two main petitions pending before the SC against the

6

The number of P-Noy’s appointees at SC should he get to choose Associate Justice Martin Villarama Jr.’s replacement Edca. The petitions were filed by a group, led by former Sen. Rene Saguisag and Wigberto Tañada, and militant party-list lawmakers led

by Party-list Reps. Neri Colmenares and Carlos Zarate of Bayan Muna.

The SC held oral arguments on the matter in November last year, and the case has been up for resolution since then.

The petitioners alleged that the government committed a grave abuse of discretion when it entered into the Edca, as it constitutes a derogation of the country’s dignity and an unconscionable sellout of sovereignty and that it contravenes the country’s national interests, as it is “primarily motivated by the US strategic rebalancing toward Asia and is, therefore, in the service of US security and economic interests.”

They added that contrary to the claim of the respondents, the Edca is “not in implementation or furtherance of the 1951 Mutual Defense Treaty between the two countries and the Visiting Forces Agreement, and that the country might once again become a staging ground for the deployment of US ships, aircraft and even missile systems overseas, because of the prepositioning and the deployment of materiel allowed under the Edca.”

The petitioners also said the respondents yielded to the US forces the operational control of agreed location for construction activities, and the operational control and defense of these agreed locations.

The government, on the other hand, insisted that the agreement is a valid executive agreement that could stand even without the concurrence of the Senate.

Under the Edca, the US will be allowed to build structures; store, as well as preposition, weapons, defense supplies and materiel; station troops, civilian personnel and defense contractors; transit and station vehicles, vessels and aircraft for a period of 10 years.

Train, Torre

ANOTHER important case the SC is expected to tackle this year includes the petitions seeking to nullify the P70-billion concession agreement

alysa salen

that the government signed with the Light Rail Manila Corp. for the extension of Light Rail Transit (LRT) Line 1 to Cavite, a.k.a. Cavite Extension Project.

The first petition was filed by the Bagong Alyansang Makabayan and the Confederation for the Unity, Recognition, and Advancement of Government Employees (Courage).

Another petition was filed by lawyer Salvador Belaro Jr.

The Court had earlier directed the government to justify the legality of the agreement.

The petitioners argued that the concession agreement should be declared invalid for its failure to comply with provisions of the Constitution and other existing laws.

They pointed out that the contract “is loaded with sovereign guarantees that are contrary to law and detrimental to the people.”

The concession agreement covers the privatization of the operation and maintenance of the current LRT Line 1. It also covers the construction and extension of the existing LRT Line 1 from 20.7 kilometers to 32.4 km by providing trains originating from the end of Baclaran, traversing the municipalities of Parañaque and Las Piñas, and ending in Bacoor, Cavite.

The SC is also expected to resolve within the year the issue involving the construction of the Torre de Manila building, which is being opposed in a petition filed by the Knights of Rizal.

The Knights of Rizal is seeking the demolition of the property, as it blocks the iconic sight line of the monument of National Hero Jose Rizal in the the Luneta Park.

The DMCI-Project Developers Inc. (DMCI-PDI), which was behind the construction of the building, made its final appeal last October with the Court to lift the TRO it issued on June 16, 2015.

The DMCI insists the construction of the property did not and does not violate any law, rule on easement or requirement of aerial navigation.

The company also said the construction was duly authorized by the concerned national and local government agencies.

All the parties have submitted their respective memoranda on the case, and the SC is expected to rule on the matter soon.

Decongestion

ASIDE from resolving important cases, the SC has unveiled a set of reforms to be implemented this year in a bid to speed up resolution of cases and declog court dockets.

Court Administrator Jose Midas Marquez said the Revised

Rules on Small Claims Cases will take effect in February. The rules mandate, among others, an increase in maximum claims, from P100,000 to P200,000.

The SC magistrates are now also studying the proposal to increase the amount of threshold of small claims involving commercial disputes, from P100,000 to P250,000.

Speaking before a forum, SC Associate Justice Estela Perlas-Bernabe said increasing the threshold would mean more commercial disputes falling within the classification of small-claims court.

Prior to the revision, the smallclaims cases system covers money claims that do not exceed P100,000, exclusive of interests and costs.

Sereno earlier noted that records show a 75-percent “disposal” rate of 74,019 small-claims cases.

Statistics from the Court’s database also show that small-claims cases are disposed of within an average of 75 days.

The SC is, likewise, set to widen the implementation of its so-called assisting courts project, where adjacent courts with manageable caseloads are designated assisting courts to nearby courts within insufficient branches to address caseload.

Thus, Manila, which has 30 branches of the Metropolitan trial courts (MeTCs), has been designated as assisting courts to Makati City, which only had seven MeTCs, and to Quezon City, which only has 13 MeTCs, Perlas-Bernabe explained.

Likewise, Cebu City’s 20 Regional Trial Court have been designated as assisting courts to Mandaue City, which only has three RTCs, and to Lapu-Lapu City, which only has three RTCs.

“This means that some cases filed and raffled in QC and Makati are heard, tried and decided in and by their counterpart courts in Manila,” Perlas-Bernabe said. “[It would be the] same thing for Mandaue and Lapu-Lapu, [they will be] assisted by Cebu City.”

eCourt

THE SC is also expected to expand its eCourt project, which was pilottested in Quezon City and rolled out last year in Angeles City, Lapu-Lapu and Cebu City, and Davao City.

This year the eCourt project will cover Makati, Mandaluyong, Pasig and Manila.

The eCourt is an electronic end-to-end case-management system. It organizes cases digitally, from filing of complaints to resolution and enforcement.

The project aims to modernize and automate the Court processes and render case-management paperless. continued on A4