BusinessMirror August 3, 2015 by BusinessMirror

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UNDERSPENDING CURSE PLAGUED 23 O.D.A. PROJECTS IN 2014

Govt’s spending woes affect ODAs

INSIDE

SAMSUNG PAY BusinessMirror

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ven official development assistance (ODA) projects are being affected by the problem of the Aquino administration to spend as planned.

Monday, August 3, 2015 E 1

SamSung Pay’S Older TechnOlOgy

cOuld Be an advanTage By Dae Ryun Chang

he stakes are high in the mobile wallet market, projected to top $140 billion by 2019. Recently, Samsung announced that it will roll out a payment system called Samsung Pay later this year. While Google and Apple have already entered the market, Samsung’s new mobile wallet strategy may be a sign that the company is finally becoming a true leader. The irony is that they are embracing an older payment technology to pave the way for new growth.

Apple was the first mover into mobile payment options with its Apple Pay, introduced in late 2014. Google countered with Android Pay. Apple and Google both employ a NFC (Near Field Communication) technology, where offline retailers install terminals that consumers can tap with their smartphones to securely pay with preregistered credit cards. Samsung, by contrast, allows consumers the option to use MST (Magnetic Secure Transmission) in areas where the newer NFC terminals have not been installed, giving it a much broader potential market. In addition, Samsung, like Google, will not charge users for paying with their smartphones. (Apple’s transaction fee of .15 percent of the purchase amount limits retailers’ adoption of Apple Pay.) Of course, risks are looming in the payment market horizon. Retailers,

both online and offline, are gearing up their own payment systems. Even though the payment system CurrentC, developed by a consortium of retailers including Walmart, has not received good reviews, it shows that the major payment players will have to forge alliances with retailers. The “mobile only” evolution is also taking place in consumer purchasing. In India or China, ecommerce via smartphones has become a high-growth retail space. Plus, the e-commerce juggernaut Alibaba has entered the mobile wallet market with Alipay. The mobile wallet market is still in its infancy. Companies coming into it from the device, credit card, retailer or social network base need to be nimbleminded, instead of sticking to their tried-and-true industry practices. Dae Ryun Chang is a business professor at Yonsei School of Business.

CustoMeRs Like seLf-seRviCe,uNLess it uNdeRMiNes CustoMeR suppoRt By Michael Schrage

UE to my inadvertent idiocy, I lobotomized my smartphone by deleting an essential function. After 20-plus minutes of laptop Googling, Binging and YouTubing for a quick fix, I gave up. Two days and mounting frustrations later, I popped into a Sprint store. It took a sales associate four swipes and 15 seconds to make my phone smart again. After thanking her, I asked how she did it. She quickly demonstrated. I told her I couldn’t find that on the Internet. She explained that my search needed to include the words “wallpaper” and “widgets.” She was being serious, of course. This sort of self-help is all too common. Survey after survey suggests that even customers happy with self-service become less than thrilled with their options when—not if— something goes wrong. Mistakes will be made. Accidents will happen. Customer-centricity that conflates self-service (a systems design approach that lets people service themselves effectively and conveniently) with self-support (self-service when things go wrong) is bad design. Self-service optimizes what’s supposed to happen; self-support deals with what’s not supposed to happen. My experience with the sales

associate was great. But finding the 15-second fix online on my own would have been even better. True customercentricity requires that answers can be quickly found and implemented. Respectful user-ex perience design enables customers not only to do what they want but also to fix something that’s gone wrong. That should hold as true for the average user as for the most knowledgeable one. Indeed, average users are the likeliest to need support. “Undo” buttons aren’t enough. At one industrial equipment supplier, for example, a comprehensive review of customer support processes revealed that if just one in 12 customers could better self-diagnose their technical issues, the firm could save roughly $10 million in maintenance costs in less than 18 months. “Ease of use” as a design ethos should never be minimized. But as systems and services become more complex, “ease of fix” deserves greater design attention. An ounce of prevention may, indeed, be worth a pound of cure. But that’s a poor excuse for underinvesting in cures.

People offer better ideas when they can’t see what others suggest By Andrew Stephen, Peter Pal Zubcsek & Jacob Goldenberg

OMPANIES from BMW to Kraft have invested a good deal in soliciting “open innovation” ideas from consumers, but the results have been underwhelming: Of the more than 23,000 ideas gathered by Dell’s Idea Storm site, only 2 percent have been put to use, and Starbucks has implemented an even smaller fraction of the 200,000 suggestions submitted to My Starbucks Idea. We think companies can do better. The key, we’ve discovered, is preventing participants in these forums from seeing the same body of suggestions as their neighbors.

That’s because of the perverse dynamics of brainstorming. If you gather consumers together to generate ideas, you’ll usually get more participation and more creativity than if you asked those same people individually to put ideas in a suggestion box. But social convergence quickly limits this creativity: Participants pick up on each other’s suggestions rather than offer fresh insights. Others keep quiet, either because they worry that their ideas might be ridiculed or because a few talkative people dominate the conversations. Fortunately for open innovation, the online environment makes it easy to overcome this problem. The trick is to avoid clustering.

We want Mike and Beth to discuss each other’s ideas, and Beth to interact the same way with Dan, but we don’t want Dan to loop back into Mike’s ideas. No two people see the same batch of ideas, so each person retains an independence that helps to combat social convergence. These partial connections within the overall group of participants provide some diversity while diminishing the pressure for conformity. To do this, you need anti-clustering software, which is not difficult to create. The software makes sure that no participants share the same body of ideas and the same neighbors as anyone else. There are many reasons to set up open-innovation initiatives with consumers. Both the

INTEGRATION REMAINS AN ELUSIVE DREAM FOR PHL STEEL INDUSTRY

Data obtained by the BusinessMirror from the National Economic and Development Authority (Neda) showed that around 23 ODA projects were plagued by procurement and fund-flow problems in 2014 alone. In its 2014 ODA Portfolio Review, around 13 projects encountered prolonged procurements and 10 projects experienced budget bottlenecks. Continued on A12

suggestions and consumers’ votes on them serve as feedback on existing offerings, and participation can bind people to the brand. Even the act of setting up a forum can boost the brand. If you’re trying to use open innovation to boost research and development, imposing limits can make for better results, not just in product ideas but also in better customer experiences generally.

Andrew Stephen is a professor of marketing at Oxford’s Saïd Business School. Peter Pal Zubcsek is an assistant professor of marketing at the University of Florida. Jacob Goldenberg is a professor of marketing at the Interdisciplinary Center in Herzliya, Israel.

What the auto industry can learn from cloud computing By Maxwell Wessel

RANSPORTATION is one of the world’s largest industries. The five largest automotive companies in the world generate more than €750 billion in annual revenue. It’s also an industry in the midst of transformation. Today, new transportation vendors like Uber, Lyft, Zipcar and GrabTaxi are changing our relationship with cars. Information technology (IT) has undergone a similar upheaval in the past 15 years. Some of the same factors that drove that transformation can point the way toward the future of transportation. “Cloud transportation” is at hand.

against cost per mile driven. Unlike the average consumer, cloud transportation vendors will attempt to ensure they (or their drivers) buy the most efficient cars per mile, service them optimally and retire them on the best schedules. It may be a long time before cloud transportation companies offer anywhere near the same variety that ownership can confer. But for many of us, what they offer will be good enough. And when it is, we should expect renting to become cheaper than owning.

2. Network effects will be

critical to performance. In a world of cloud infrastructure, scale helps companies establish strong network effects. In transportation, networks create value in a couple of ways. The first is convenience. The more Uber drivers there are in a city, the more likely people are to sign up for

Uber, and the more likely drivers are to opt into it. Every mile driven by a ridesharing driver with no customer is a mile of costs that need to be covered. But once a ride-sharing company has built meaningful network density, a driver might leave you on one corner and pick up his next rider only a block down the road.

3. Most of the old guard will

struggle to adapt. The most valuable customers in a supplier’s portfolio today aren’t necessarily the most valuable customers in the new world. Today car companies might treasure the luxury customer willing to pay for a highly customized interior. Tomorrow, business-to-business buyers purchasing at massive scale will be looking for cars that cost little to maintain, get great gas mileage and last forever.

4. Change will be slow, and edge cases will persist for decades. Trans-

portation is still a long way from being able to serve many suburban and rural areas with next-generation infrastructure. And there is nothing in place today to help address the edge needs of those doing things like hauling junk or moving people long distances on a regular basis. Regulatory issues will persist, too. We’re seeing these issues arise with the questions surrounding the employment status of Uber and Lyft’s contract employees. But just like with cloud IT, even if we don’t see everyone move en masse, the change will be noticeable. And soon. Within years, we’ll have trends that point the way toward a very different future.

MONDAY MORNING

Michael Schrage, a research fellow at MIT Sloan School’s Center for Digital Business. His latest book is The Innovator’s Hypothesis.

By Cai U. Ordinario

special report

1. Renting is almost always

cheaper than owning. Like their counterparts in IT, huge vendors of cloud transportation have every incentive to optimize their fleets

Maxwell Wessel is a venture capitalist at Sapphire Ventures, a member of the Forum for Growth and Innovation and an active angel investor with NextGen Angels.

22 YEARS A SLAVE Perspective BusinessMirror

E4 Monday, August 3, 2015

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SEAFOOD FROM SLAVES Myanmar fisherman goes home after 22 years as a slave T

B M M | The Associated Press

UAL, Indonesia—All he did was ask to go home. The last time the Burmese slave made the same request, he was beaten almost to death. But after being gone eight years and forced to work on a boat in faraway Indonesia, Myint Naing was willing to risk everything to see his mother again. His nights were filled with dreams of her, and time was slowly stealing her face from his memory.

IN this April 20, 2015, photo, former fishing slaves who were rescued from Indonesia’s remote island village of Benjina gather at a temporary government-run shelter on the island of Tual, Indonesia. Hundreds of men remain unaccounted for and are believed to be fishing in Papua New Guinea. AP/MARGIE MASON

So he threw himself on the ground and roped his arms around the captain’s legs to beg for freedom. The Thai skipper barked loud enough for all to hear that Myint would be killed for trying to abandon ship. Then he flung the fisherman onto the deck and chained down his arms and legs. Myint was left for three days to burn in the searing sun and shiver in the nighttime rain, without food or water. He wondered how he would be killed. Would they throw his body overboard to wash up on shore, like the other corpses he’d seen? Would they shoot him? Or would they simply bash his head open, as they had done before? He was never going to see his mother again. He would simply disappear, and she wouldn’t even know where to look.

VERY year, thousands of migrant workers like Myint are tricked or sold into the seafood industry’s gritty underworld. It’s a brutal trade that has operated for decades as an open secret in Southeast Asia’s waters, where unscrupulous companies rely on slaves to supply fish to major supermarkets and stores worldwide. As part of a year-long investigation into the multibillion-dollar business, the Associated Press interviewed more than 340 current and former slaves, in person or in writing. The stories told by one after another are strikingly similar. Myint is a thin, soft-spoken man with the wiry strength of someone who has worked hard all his life. Illness has left his right arm partly paralyzed and his mouth clenched into a forced half-smile. But when he breaks into laughter, you see flashes of the boy he once was, despite all that has happened in between—a 22-year odyssey recounted by Myint and his relatives. He comes from a small village off a narrow, dusty road in southern Myanmar’s Mon State, the oldest of four boys and two girls. In 1990 his father drowned while fishing, leaving him as the man in charge at just 15. He helped cook, wash clothes and care for his siblings, but they kept sliding deeper into poverty. So when a fast-talking broker visited the neighborhood three years later with stories of jobs in Thailand, Myint was easily wooed. The agent offered $300 for just a few months of work—enough for some families to survive on for a year. He and several other young men quickly put their hands up to go. His mother, Khin Than, wasn’t so sure. He was only 18 years old, with no education or travel experience. But he kept begging, arguing that he wouldn’t be gone long and

relatives already working there could look after him. Finally, she relented. Neither of them knew it but, at that moment, Myint began a journey that would take him thousands of miles away from his family. He would miss births, deaths, marriages and the unlikely transition of his country from a dictatorship to a bumpy democracy. He would run away twice from the ruthless forced labor on a fishing boat, only to realize that he could never escape from the shadow of fear. Yet on the day he left home in 1993, all Myint saw was promise. The broker hustled his new recruits to grab their bags immediately, and Myint’s 10-year-old sister wiped tears from her cheeks as she watched him walk down the dirt track away from their village. His mother wasn’t home. He never got to say goodbye.

HAILAND earns $7 billion a year from a seafood industry that runs on labor from the poorest parts of the country, along with Cambodia, Lao PDR and especially Myanmar, otherwise known as Burma. Up to 200,000 estimated migrants, most of them illegal, work at sea. Their catch ends up halfway around the globe in the United States, Europe and Japan—on dinner tables and in cat food bowls. As overfishing decimates stocks near Thailand’s shores, trawlers have been forced to venture farther and farther into more plentiful foreign waters. The dangerous work keeps men at sea for months or even years with fake Thai identity documents, trapped aboard floating prisons run by captains with impunity. Though Thai officials deny it, they have long been accused of turning a blind eye to such practices. After easily skirting police at the border with Thailand and being held in a small shed with little food for more than a month, Myint was shoved onto a boat. The men were at sea for 15 days and finally docked in the far eastern corner of Indonesia. The captain shouted that everyone on board now belonged to him, using words Myint would never forget: “You Burmese are never going home. You were sold, and no one is ever coming to rescue you.” He was panicked and confused. He thought he would be fishing in Thai waters for only a few months. Instead the boys were taken to the Indonesian island of Tual in the Arafura Sea, one of the world’s richest fishing grounds, stocked with tuna, mackerel, squid, shrimp and other lucrative species for export. Myint spent weeks at a time on the

open ocean, living only on rice and the parts of the catch no one else would eat. During the busiest times, the men worked up to 24 hours a day, hoisting heavy nets rippling with fish. They were forced to drink foul-tasting boiled sea water. He was paid only $10 a month, and sometimes not at all. There was no medicine. Anyone who took a break or fell ill was beaten by the Thai captain, who once lobbed a piece of wood at Myint for not moving fish fast enough. Nearly half the Burmese men surveyed by the AP said they were beaten, or witnessed others being abused. They were made to work almost nonstop for nearly no pay, with little food and unclean water. They were whipped with toxic stingray tails, shocked with Taser-like devices and locked in a cage for taking breaks or attempting to flee. Sometimes, the men said, the bodies of those who died were stashed in the ship’s freezer alongside the fish. Workers on some boats were killed for slowing down or trying to jump ship. The Burmese fishermen said others flung themselves overboard because they saw no escape. Myint spotted several bloated bodies floating in the water. By 1996, after three years, he had had enough. Penniless and homesick, he waited until his boat returned to Tual. Then he went into the office on the dock and, for the first time, asked to go home. His request was answered by a helmet cracking his skull. As blood oozed out, he used both hands to hold the wound together. The Thai man who hit him repeated the words that already haunted him: “We will never let you Burmese fishermen go. Even when you die.” That was the first time he ran away.

N islands scattered throughout Indonesia’s Maluku chain, also known as the Spice Islands, thousands of migrant fishermen who have escaped or been abandoned by their captains quietly hide out in the jungle. Some start families with local women, partly to protect themselves from slave catchers. It’s risky, but one of the only ways to find a semblance of freedom. An Indonesian family took mercy on Myint until he healed, and then offered him food and shelter in exchange for work on their farm. For five years, he lived this simple life and tried to erase memories of the horrors at sea. He learned to speak the Indonesian language fluently and acquired a taste for the food, even though it was much sweeter than the salty Burmese dishes his mother fi xed. But he couldn’t forget his relatives in Myanmar or the friends he left behind on the boat. What happened to them? Were they still alive? Sometimes Myint quietly visited other runaway Burmese slaves on the island to talk about home, bringing a big bag of vegetables he grew himself. “He was a bit afraid to go around,” remembered Naing Oo, another former Burmese slave in Tual. “It was very brutal on the fishing boats.” In the meantime, the world around him was changing. By 1998, Indonesia’s longtime dictator Suharto had fallen, and the country was moving toward democracy. Myint wondered if maybe things were getting better on the ships, too. In 2001 he heard one captain was offering to take fishermen back to Myanmar if they agreed to work. He was determined to find a way home. So, eight years after he first arrived in Indonesia, he returned to the sea. Right away, he knew he’d fallen into the same trap again. The work and conditions were just as appalling as the first time, and the money still didn’t come. If anything, the slavery was getting worse. Thailand was rapidly becoming one of the world’s biggest seafood exporters, and needed more cheap labor. Brokers deceived, coerced or sometimes even drugged and kidnapped migrant workers, including children, the sick and the disabled. After nine months on the water, Myint’s captain broke his promise and told the crew he was abandoning them to go back to Thailand alone. Furious and desperate, the Burmese slave once again pleaded to go home. That, he said, was when the captain chained him to the boat for three days. Myint searched wildly for something, anything, to open the lock. Working it with his fingers was useless. Then he managed to

fashion a small piece of metal into a makeshift pick and spent hours trying to quickly and quietly unlatch freedom. Finally, there was a click. The shackles slid off. He knew there wasn’t much time, and if he got caught, death would come swiftly. Sometime after midnight, he dove into the black water and swam to shore. Then he ran without looking back, in clothes still weighted by sea water. He knew he had to disappear. This time, for good.

HE slave trade in the Southeast Asian seafood industry is remarkable in its resilience. Over the past decade, outsiders have begun to take notice, and the US government slams Thailand in annual reports year after year for pervasive labor abuses in fishing. Yet it continues, and it seldom lets go of the lives of those it ruins. After he ran the second time, Myint hid alone in a bamboo shack in the jungle. But just three years later, he fell ill with what appeared to be a stroke. His nerves seemed to stop firing properly, leaving him easily chilled despite the oppressive tropical heat. When he became too sick to work, the same Indonesian family cared for him with a kindness that reminded him of relatives back home. He had forgotten what his mother looked like, and knew that by now his favorite little sister would be all grown up. They likely thought he was dead. What he didn’t know was that his mother was like him: She never gave up. She prayed for him every day at the little Buddhist altar in her family’s traditional stilt house, and asked fortune tellers year after year about her son. They assured her he was alive, but in a faraway place difficult to leave. At one point, another Burmese man told the family that Myint was fishing in Indonesia and married. But Myint never wanted to be tethered to the country that had destroyed his life. “I didn’t want an Indonesian wife, I just wanted to go back home to Myanmar,” he said. “I felt like I lost my young man’s life. I just thought that all of this time, I should have been in Burma having a wife and a proper family.” After eight more years in the jungle without a clock or calendar, time began to blur. Now in his 30s, he started to believe the captain had been right: There really was no escape. He couldn’t go to the police or local officials, afraid they might hand him over to the captains for a fee. He had no way to call home. And he was scared to contact the Myanmar embassy because it would expose him as an illegal migrant. In 2011 the solitude had become too much. Myint moved to the island of Dobo, where he had heard there were more Burmese. He and two other runaway slaves farmed chilies, eggplant, peas and beans until the police arrested one in the market and put him back on a boat. The man later fell sick at sea and died. It was yet another reminder to Myint that if he wanted to survive, he needed to do it carefully. One day in April, a friend came to him with news: An AP report linking slavery in the seafood industry to some of the biggest American grocery stores and pet food companies had spurred the Indonesian government to start rescuing current and former slaves on the islands. To date, more than 800 have been found and repatriated. This was his chance. When the officials came to Dobo, he went back with them to Tual, where he was once a slave—this time to join hundreds of other free men. After 22 years in Indonesia, Myint was finally going home. But what, he wondered, would he find?

HE flight from Indonesia to Myanmar’s biggest city, Yangon, was a terrifying first for Myint. He walked out of the airport with a small black suitcase and a donated hat and shirt—all he had to show for his long time abroad. Myint was coming back a stranger to his own country. Myanmar was no longer ruled by a secretive military government, and opposition leader Aung San Suu Kyi was free from years of house arrest and in Parliament. The currency was baffling. He struggled to convert 15,000 Indonesian rupiah into about 1,000 Myanmar kyat, both roughly $1. “I feel like a tourist,” he said, sweat dripping down his face and chest. “I feel Indonesian.” The food was different, and so were the

greetings. Myint kept shaking hands and touching his heart the Indonesian way, instead of bowing with his hands in a prayer position like a Burmese. Even the words seemed odd. While he waited with other former slaves for the bus to Mon State, they chatted not in their native Burmese, but in Bahasa Indonesia. “I don’t want to speak that language anymore because I suffered so much there,” he said. “I hate that language now.” Yet he continued to slip in and out of it. Most of all, just as the country had changed, so had he. He had left as a boy, but was returning a 40-year-old man who had been enslaved or in hiding for more than half his life. And he was the only one from his village to come back at all. When he reached his home state, Myint’s emotions started to fray. He was too nervous to eat. He fidgeted, running his hands through his hair and constantly rubbing the heart-shaped abalone pendant around his neck. Finally, it all became too much, and he started to sob. “My life was just so bad that it hurts me a lot to think about it,” he choked out. “I miss my mom.” He wondered if he would even recognize his mother and sister, or if they would remember him. An hour later, he slapped his head in frustration as he tried to remember which way to go. The roads were now paved and lined with new buildings. He rubbed his palms on his pants and squirmed in excitement when he recognized a police station. He knew he was close. Finally, the car he was riding in turned into a small village. He called a phone number that he had gotten only the day before. Seconds later, when he saw a plump Burmese woman—on the same road that had led him away so many years ago—he knew immediately it was his little sister. They exploded into an embrace, and the tears that spilled were of joy and mourning for all the lost time apart. “Brother, it’s so good that you are back!” she sobbed. “We don’t need money! We just need family! Now you are back, it’s all that we need.” But his mother was missing. Myint anxiously scanned the road as his sister frantically dialed a number. And then a small, frail figure with gray-streaked hair began to run. When he spotted her, he howled and fell to the ground, burying his face in his hands. She swept him up in her arms and softly stroked his head, cradling him as he let everything go. They wailed and wept so loudly, the whole village emerged to see what seemed like a ghost. “That guy’s been gone for 20 years,” one man said. Myint, his mother and his sister walked arm-in-arm to the simple stilt house of his childhood. At the front gate, he crouched on his knees, and they heaved water with a traditional tamarind soap on his head to cleanse away evil spirits. As his sister helped wash his hair, his 60-year-old mother turned pale and collapsed against a bamboo ladder. Then, suddenly, she grabbed her heart and began to gasp for air. Relatives and neighbors fanned her and fetched water and a lime to smell, but her eyes rolled back into her head. Someone yelled that she wasn’t breathing. Myint ran to her, dripping wet, and blew three breaths into her mouth. “Open your eyes! Open your eyes!” he screamed, beating his chest with both hands. “I’ll look after you from now on! I will make you happy! I don’t want to see you sick! I am back home!” She slowly revived, and Myint took a long look into her eyes. He was finally free to see the face from his dreams. He would never forget it again.

By Catherine N. Pillas

taskus expands

WHERE THIS STORY CAME FROM MYINT NAING’S story comes from interviews with him, his family, his friends and other former slaves, and through following his journey from a makeshift camp set up for rescued men at an Indonesian port in Tual, Indonesia, to his home in Myanmar. He’s among hundreds rescued and returned to their families after a year-long AP investigation exposed extreme labor abuses in Southeast Asia’s seafood industry. Reporters documented how slave-caught fish is shipped from Indonesia to Thailand. It can then be exported to the United States and cloud the supply chains of supermarkets and distributors, including Wal-Mart, Sysco and Kroger, and pet food brands, such as Fancy Feast, Meow Mix and Iams. The companies have all said they strongly condemn labor abuse and are taking steps to prevent it.

PERSPECTIVE

Jaspar Weir (left), TaskUs president and cofounder; and Bryce Maddock, TaskUs CEO and cofounder, are shown during the opening of TaskUs’s Philippine office at 24/7 McKinley in Bonifacio Global City, Taguig. TaskUs Philippines, an omnichannel customer-care and back-office support provider, expands its presence and strengthens its operational and employee capabilities in the country. This was revealed as it announced a $15-million investment to support the expansion programs. The investment came in the form of a private-equity funding from Navegar, a locally based fund established by individuals from the call-center industry. NONIE REYES

Timing of LTFRB crackdown vs Uber ‘a surprise’ By Lorenz S. Marasigan

and Transportation Franchising and Regulatory Board (LTFRB) Chairman Winston M. Ginez warned ride-hailing application operator Uber that the government will prosecute its drivers should they continue to operate illegally. Ginez said his men will go after the

transport-network company (TNC) soon. He refused to say exactly when. “It will be a surprise,” he said in a brief interview, refusing to answer further questions. Uber has yet to apply for a license to operate as a TNC. Lawrence Cua, Uber Manila general manager, earlier said his company is still finalizing the paperworks for his firm’s accreditation. The Philippines is the first country to

PESO exchange rates n US 45.6180

legally recognize ride-hailing services. The Department of Transportation and Communications issued a department order in May acknowledging the need for such innovation. A TNC is an organization that provides prearranged transportation services for compensation using an Internet-based technology application, or a digital platform technology, to connect passengers with drivers

using their personal vehicles. They will provide the public with online-enabled transportation services, known as Transportation Network Vehicle Service, which will connect drivers with ride-seekers through an app. In a nutshell, TNCs are companies that partner with private-vehicle owners, or even fleet managers, to provide private taxi services to consumers.

First of three parts

ith higher growth rates and investments shifting to emerging economies like the Philippines, the manufacturing industry is being prepped by the government— specifically the Department of Trade and Industry (DTI)—for a revival, aiming to improve its contribution to work force and national output. This move, initiated through the Industry Roadmap Project of the DTI, is part of the agency’s broader manufacturing-resurgence program. Crafting of the industry road maps is led by the private sector. They are presented to the government to identify gaps and challenges in the growth of a particular manufacturing subindustry. Among these subindustries that have long been burdened with inefficiencies is the iron and steel industry. Based on the industry’s road map, of the Philippines’s estimated domestic demand of 6 million metric tons (MMT) in 2012, 57 percent, or 3.4 MMT, were imported. And with the steady economic growth further driving up steel consumption, the Philippine iron and steel industry needs to gain some measure of self-sufficiency if it hopes to compete in a wider and freer Asean. Continued on A2

n japan 0.3675 n UK 71.1686 n HK 5.8848 n CHINA 7.3464 n singapore 33.1743 n australia 33.2275 n EU 49.8696 n SAUDI arabia 12.1645 Source: BSP (30 July 2015)

A2 Monday, August 3, 2015

BMReports BusinessMirror

news@businessmirror.com.ph

Integration remains an elusive dream for Phl steel industry continued from A1

One of the primary reasons for the high import dependence in the sector today is the decision of the Indian investor to shut down Global Steel, formerly the National Steel Corp. The iron and steel industry’s production capacity in the flat products subsector severely declined after the shutdown due to the lack of an upstream sector for flat products. Global Steel was the dominant producer of cold-rolled steel and was the country’s sole producer of hot-rolled coils and plates, which are semiprocessed products in the supply chain of flat products. Owing to the displacement caused by cheaper imports and dearth in production capacity, employment in the sector of flat products declined, according to the Philippine Iron Steel Institute (Pisi). The lack of upstream steel- manufacturing facilities after the closure of Global Steel, Pisi said, has led to the downscaling, if not outright closure, of many steel plants. This reduced the employment in the iron and steel industry from an estimated 19,700 in 2003 to only 15,648 in 2009, and further to less than 2 percent of the manufacturing industry’s employment total today. According to Pisi’s road map, over the past five years, import volumes from Chinese, Russian and Japanese companies amounted to an average of 860,552 MT, 593,675 MT and 503,387 MT per annum, respectively. The combined volumes from these three countries accounted

for close to 60 percent of the country’s total imports of iron and steel products. Today, the Philippines imports 80 percent of the country’s crude steel requirements, referring to the flat and long products’ main input materials, which are slabs and billets, said Roberto Cola, president of Pisi, in an interview. The Philippines has been a net importer of iron and steel, but so are other Southeast Asia Iron & Steel Institute (Seasi) membercountries, which include Australia, Indonesia, South Korea, Malaysia, Singapore, Thailand and Vietnam. Japan and Taiwan, also Seasi members, are the exceptions. The Asean 6 countries, composed of Indonesia, Malaysia, the Philippines, Thailand, Singapore and Vietnam, registered a steel consumption of 67 MMT in 2014. The majority of the 2014 demand was filled by a net importation of around 40 MMT. But the insufficiency is more glaring in the Philippines. Although other Asean member-states are importing large quantities of steel from China, they have better iron and steel-making (ISM) capacity. The local industry actually puts the Philippines’s ISM capacity at zero, while other comparable Asean economies, even if they are also importing iron and steel products, have been moving toward integration of their ISM to include the production of slabs and billets. The Philippines’s lack of ISM capacity limits the products that

Country

Fully Integrated** ISM Capacity (million MT)

Degree of self-sufficiency*

Existing

Under Construction

Total

Malaysia

4.4

0.7

5.1

57%

Thailand

6.0

−

6.0

37%

Indonesia

2.8

3.0

5.8

46%

Vietnam

1.8

7.3

9.1

83%

Philippines

NIL

*Degree of self-sufficiency computed from ISM capacity vs. annual steel consumption per country **Both iron and steel-making

the country can offer for export to just long products. It also placed the country at a disadvantage when the economic integration within Asean occurs and trading activity is bolstered. Adding to the crippling effect of the shutdown of Global Steel is the gradual phaseout of MFN (most favored nation) tariffs imposed on semifinished steel products, as well as the excess capacity worldwide. While there are still investments in long products, importations have completely displaced flat-product capacity. Billets, or the long products’ semifinished main input, are also imported. Cola affirmed that investments in the industry are now only concentrated in the production of long products. These products have low-

er investment requirement per ton than flat steel. Despite these challenges, however, the local iron and steel industry is bent on bridging the gaps in steel production, especially with apparent steel consumption (ASC) seen to balloon to 20 million MT (MMT) by 2030. “ASC tracks gross domestic product [GDP] growth by 3 percent to 4 percent. If the average GDP growth of the Philippines is 6 percent, steel consumption would be at 8 percent,” Cola said. Given the Philippines’s steady economic growth in the past several years, and the foreseen ramping up of public and private infrastructure spending to come, Pisi said the 20 MMT estimate by 2030 is possible. National Economic and Devel-

iron and steel MANUFACTURING capacity (million metric tons)

5.1

6.0

5.8

9.1

Malaysia

Thailand

Indonesia

Vietnam

Philippines

opment Authority (Neda) Deputy Director General Rolando G. Tungpalan also said the Philippines can anticipate a rise in the demand for locally produced steel products, as “the country’s real-estate sector continues to grow, the shipbuilding industry is starting to emerge, and the implementation of government infrastructure projects is continuing to roll out.” “The ongoing reconstruction and rehabilitation of disaster-affected areas and retrofitting works for disaster-resilient infrastructure are also expected to increase the demand for iron and steel in the coming years,” Tungpalan said. As the Philippine economy continues its high-growth path and the Asean integration takes place by the end of 2015, he said the government

expects a surge in developments within and outside Metro Manila, in addition to the many key infrastructure projects that are already on stream and in the pipeline. The increase is happening. In 2012 the industry saw an unprecedented spike in ASC to reach 6 MMT, a 50-percent increase in two years’ time, PISI said. From the 6 MMT in 2012, consumption further expanded by 12 percent year-on-year to 6.7 MMT in 2013. Since then, consumption has grown by double digits yearly. If the industry remains in its uncompetitive state, however, there is little chance it will beable to achieve its ambition of increasing the share of domestic production in the demand—now at 43 percent—to 70 percent in 2030. To be continued

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Legislator to govt: Protect Recto Bank from China By Jovee Marie N. dela Cruz

WING to the territorial dispute in the West Philippine Sea, a lawmaker on Sunday urged the government to protect the oil- and gas-rich Recto Bank, which holds the key to the country’s energy independence. “We must secure and defend Recto Bank at all costs. We should assume jurisdiction over the conservation, exploration and exploitation of the seamount’s vast hydrocarbon deposits for the benefit of future Filipino generations,” House Deputy Minority Leader Arnel Ty said. “We should not allow China’s protests and pestering to disrupt our efforts to harness Recto Bank’s oil and gas assets,” Ty, who speaks for the minority in the House energy committee, added. Also called Reed Bank, Recto is a large underwater mount that rises just 9 to 45 meters short of the sea level. While the bank is well within the Philippines’s 200-mile Exclusive Economic Zone, it is the subject of a territorial row with China. Ty, citing former National Security Adviser Roilo S. Golez, said China has been raring to seize and occupy Recto Bank. Earlier, the US Energy Information Administration, citing geological surveys, estimated that the West Philippine Sea may contain up to 5.4 billion barrels of oil and 55.1 trillion cubic feet of natural gas, “with the bulk of the resources likely in the contested Reed Bank at the northeast end of the Spratlys.” “Actually, studies of extensive seismic data indicate that Recto Bank’s Sampaguita gas field alone has up to 4.6 trillion cubic feet of natural gas and 115 million barrels of oil,” Ty said. “To put this in perspective, the fully operational Malampaya gas field contains only up to 2.7 trillion cubic feet of natural gas and 85 million barrels of condensate,” he added. The largest hydrocarbon deposit

ever discovered in the Philippines, Malampaya now produces 146 billion cubic feet of gas every year, and the fuel drives three of Luzon’s largest power plants that are based in Batangas. Meanwhile, the lawmaker also called on the government, particularly the Department of Energy (DOE), to lift the order that has shut down oil and gas drilling activities in Recto Bank, which lies just 80 nautical miles northwest off the Palawan coast. In addition, Ty said that the consortium that runs the Recto Bank petroleum service contract (SC) should be permitted to resume its search for oil and gas supplies. Forum Energy Plc., the private operator of SC 72, was originally set to drill two exploratory wells in Recto Bank this month. However, in March, the DOE granted a force majeure order on SC 72, citing the territorial dispute with China and the ongoing United Nations arbitration proceedings. Owing to the force majeure, Forum had to abandon all exploration work “until further notice from the DOE.” Forum has a 70-percent interest in SC 72, with the remaining 30 percent held by Monte Oro Resources and Energy Inc. Forum is majority owned by Philex Petroleum Corp., a Philippine Stock Exchange-listed entity run by businessman Manuel V. Pangilinan. Tidemark Holdings Ltd., controlled by former Trade Minister Roberto V. Ongpin, also has a minority stake in Forum. Meanwhile, an Australian-Filipino consortium over the weekend began drilling a deepwater exploratory well in the West Philippine Sea, hoping for an oil strike. The group, led by Otto Energy Investments Ltd., intends to drill 1,000 meters below the sea bed and hopes to hit the top of a promising hydrocarbon reservoir in SC 55, a deepwater block in the southwest Palawan Basin that is not in disputed territory.

Bill revives death penalty for recruiters of drug couriers

MEASURE imposing the death penalty against recruiters of Filipino drug couriers has been filed at the House of Representatives. House Bill 5874, filed by the chairman of the Committee on Dangerous Drugs, Liberal Party Rep. Vicente F. Belmonte Jr. of Lone District of Iligan City, seeks to amend Section 5 of Republic Act 9165, or the Comprehensive Dangerous Drugs Act of 1992, which pertains to the sale, trading, administration, dispensation, delivery, distribution and transportation of dangerous drugs and controlled precursors and essential chemicals. The bill defines a recruiter as person who is using his or her influence, power or position in canvassing, enlisting, contracting, transporting, utilizing, hiring persons to be a drug courier. In filing the bill, Belmonte said that despite the continuing campaign of law-enforcement agencies against the illicit trade, drug syndicates have become fearless and resourceful in plying their nefarious trade utilizing drug couriers.

“Some drug couriers who were apprehended here and abroad told police authorities that fellow Filipinos recruited them for employment abroad but were later on duped into transporting illegal drugs,” Belmonte said. He said that of the 1,288 Filipinos who were arrested for drugrelated offenses, 41 are facing the death penalty. Filipinos who are in death row include 18 in Malaysia, 21 in China, one in Saudi Arabia and one in Indonesia—Mary Jane Veloso—who was given a temporary reprieve by Indonesian President Joko Widodo, Belmonte said. Veloso was arrested in 2010 in Indonesia upon her arrival from Malaysia for transporting 2.6 kilograms of heroin concealed in her luggage. In addition, Belmonte said a Nigerian syndicate based in Malaysia is behind the recruitment of Filipinas as drug couriers to China. “In one incident, a Filipina was even arrested carrying nine capsules of heroin in her privates, 48 capsules in her rectum and 11 capsules in her intestine,” Belmonte said. Jovee Marie N. dela Cruz

Not only China, even allies are grabbing Philippine-claimed islands in Spratlys

By Rene Acosta

HE Philippines lost four of the 11 islands it is claiming in the Spratlys to its allies Vietnam and Taiwan, in addition to the four reefs that China is now converting into military facilities.

During the forum on the West Philippine Sea held late last week, Defense Undersecretary for Strategic Assessment Raymund Quilop said that out of the 11 islands claimed or owned by the Philippines, three have been occupied and claimed by Vietnam, while the biggest island, Itu Aba or Taiping Island has been occupied by Taiwan. Unlike China, Vietnam and Taiwan have not militarily fortified the islands that they have occupied during the past years, but instead developed them for commercial purposes or even resorts, escaping the attention of the Philippines and the international community. One of the islands occupied by Vietnam, the Southwest Cay, is just more than a kilometer away from the Northeast Cay, which is occupied by Philippine troops. When Vice Adm. Alexander Pama was still the Navy

flag officer in command, the Philippines and Vietnam agreed to jointly patrol the two islands and their surroundings against China. Quilop said that the Philippineclaimed Kalayaan Islands Group (KIG) is composed of 11 islands and 86 features, that are also being claimed by China and Brunei Darussalam, in addition to Vietnam and Taiwan. Of KIG’s reefs, two are occupied by the Philippines, 17 by Vietnam, three by Malaysia and seven by China. China’s ongoing reclamation or development of the seven reefs that it occupies by turning them into military bases with ports that can accommodate its largest vessels and runways for its aircraft is making the international community and the country nervous because the activity was being undertaken to support its plan of dominating the

Probe of University Belt forgers sought by legislator

LAWMAKER has asked the House of Representatives to investigate the continuous forgery of documents, such as diplomas and school transcripts, in Claro M. Recto Avenue on Manila’s University Belt. In House Resolution 2230, Partylist Rep. Leah S. Paquiz of Ang Nars described Claro M. Recto Avenue or “Recto University” as a one-stop shop for those who resort to “manufactured” documents for employment and other purposes. Paquiz, citing a report by the Philippine Council of Engineers and Architects in the Kingdom of Saudi Arabia (KSA), said the Saudi Council of Engineers (SCE) has gathered data showing that a number of Filipinos working as engineers and architects in KSA used fraudulent documents. “The reported data shows that a total of 120 in 2011, 143 in 2012, 281 in 2013, 460 in 2014 and 497 in 2015 Filipino engineers and architects were found to have been using forged credentials,” she said. The lawmaker added that the Philippine Embassy in Riyadh, KSA, has reported that it is presently handling a number of criminal cases alleging the involvement of Filipinos who presented fake credentials in entering the Kingdom. “One such case is that of a Filipino nurse in Jeddah, who not only faces criminal prosecution for the felony of forgery of documents but stiffer penalties and prison terms for the crime of malpractice,” Paquiz said.

PAQUIZ: “The Recto University is in itself passively allowing discrimination to proliferate against our workers as we are being branded as fraudulent workers.”

She said the lower chamber should investigate the adverse and damaging activities at the so-called Recto University and for the government, in cooperation with the private sector and other instrumentalities, to find a successful mechanism and systematic means to put a stop to these illegal activities. “It is public knowledge that documents, such as identification cards, receipts, school transcripts, diplomas and documents supposedly authenticated with red ribbon by the Department of Foreign Affairs or any other forged documents, can be sourced at Recto University for a fee and in a few hours,” Paquiz said. She also said the illegal practice has placed Filipino professionals and skilled workers, here and abroad, in a disadvantageous position by having the workers’ images tainted with deceit. “The Recto University is in itself passively allowing discrimination to proliferate against our workers as we are being branded as fraudulent workers,” Paquiz added. Jovee Marie N. dela Cruz

Skyway starts A. Bonifacio Avenue traffic dry run

ITRA Central Expressway Corp. (CCEC), the proponent of Skyway Stage 3 project, and its contractor, Engineering Equipment Inc. (EEI), has started a threeday traffic dry run on A. Bonifacio Avenue in Quezon City, between Sgt. Rivera and 7th avenues. This is in preparation for its board-up work or enclosure of the 250-meter work site on the road median before EEI starts the project’s

foundation work. Three travel lanes on both directions will be maintained and be available for motorists’ use even if these lanes are narrowed or tapered. As traffic is expected to slow down, an adequate number of traffic and safety personnel will be deployed before, along and after the worksite to guide and help motorists. Traffic and safety signages will also be put up in strategic locations.

Editor: Dionisio L. Pelayo • Monday, August 3, 2015 A3

The traffic dry run and other traffic-related activities are closely coordinated with the traffic and safety authorities of Quezon City and the concerned government agencies. As CCEC and EEI appeal for public understanding and cooperation, they assure the public that they will do everything possible to minimize public inconvenience and keep the motorists, pedestrians and worker safe.

The Skyway Stage 3 project is a 14.8-kilometer, six-lane elevated expressway that will connect the South Luzon Expressway with North Luzon Expressway from the Buendiaend of the Skyway in Makati City to Balintawak, Quezon City. It aims to decongest the major roads of Metro Manila, particularly Epifanio de los Santos Avenue and C-5, and reduce travel time from Buendia to Balintawak from two hours to 20 minutes or less.

South China Sea. These reefs that are being made into artificial islands are Kagitingan Reef (Fiery Cross Reef), Calderon Reef (Cuarteron Reef), Burgos Reef (Gaven Reef), Mabini Reef (Johnson South Reef), McKeenan Reef (Hughes Reef), Panganiban Reef (Mischief Reef) and Zamora Reef (Subi Reef). The Navy spokesman, Marine Col. Edgard Arevalo, said Subi Reef, where a runway is also being built by China, was the source of at least six challenges or harassments of Philippine patrols over the past weeks. In those instances, China told the

Filipino pilots to turn away because they are in Chinese territory. China also challenged on two occasions US patrols, but its warnings were laughed off by US pilots. Supreme Court Associate Justice Antonio Carpio said the reclamation on Mischief Reef has reached about 500 hectares while that in Kagitingan Reef, already covers about 200 hectares. Additional structures and fortifications are being built in the reclaimed areas. Carpio said that at Burgos Reef, a four to five storey building has also been constructed.

Palace assures additional funding in 2016 budget for Yolanda rehabilitation By Butch Fernandez

ALACAÑANG assured additional funding in the 2016 national budget for the timely provision of viable shelters away from risky zones for thousands of Typhoon Yolanda refugees. Communications Secretar y Herminio B. Coloma Jr. made the assurance on Sunday, as he acknowledged findings by United Nations Special Rapporteur Chaloka Beyani, who checked on the status of Yolanda refugees. Beyani, at the end of a 10-day visit, prodded the government “to followthrough with its commitments and devote much-needed attention and resources to internally displaced persons [refugees] until durable solutions are attained and their futures are secured.” The UN official, in a statement, lauded the government “for its responses to the massive internal displacement caused by Typhoon Yolanda,” even as he expressed concern that “attention and resources appear to be waning before durable solutions are achieved.” Yolanda, which made landfall in Tacloban in November 2013, killed over 6,300 victims and displaced thousands more, mostly in the Visayas. On Sunday Coloma reaffirmed assurance that adequate provisions were made for Yolanda rehabilitation efforts in the national budget. “Sa panukalang 2016 budget, mayroong karagdagang pondo para sa pagpapatuloy ng pagbabagongtatag ng mga komunidad na lubhang naapektuhan ng mga kalamidad katulad ng Typhoon Yolanda at ang mga kaganapan sa Zamboanga at Cotabato,” Coloma said over state-run Radyo ng Bayan. He said the government was grateful for Beyani’s visit, as well as his comprehensive report containing concrete proposals on how to further improve government response to calamity situations. “Nagpapasalamat tayo kay UN Special Rapporteur Chaloka Beya-

COLOMA: “Patuloy ang pagtutok ng pamahalaan na bigyan ng sapat na tulong ang mga internally displaced person, partikular hinggil sa pagtatayo ng mga permanente, ligtas at disenteng tahanan.”

ni sa kanyang pagbisita noong nakaraang sampung araw at sa kanyang mga kongkretong panukala kung paano pa higit na mapahusay ang pagtugon ng pamahalaan sa kalamidad,” he added. Coloma, however, said he still needs to double-check the total allocation and confirm the final figure with the Department of Budget and Management. Still, Coloma affirmed the government’s commitment to provide relief to internally displaced victims of calamities. “Patuloy ang pagtutok ng pamahalaan na bigyan ng sapat na tulong ang mga internally displaced person, partikular hinggil sa pagtatayo ng mga permanente, ligtas at disenteng tahanan,” Coloma said. He added that various government agencies, including the National Housing Authority, Department, of Social Welfare and Development and the Department of Public Works and Highways were given marching orders to continue coordinating with local government units in quickly responding to the needs of affected communities so lives of typhoon survivors could return to normal. “Tinitiyak natin sa United Nations na higit pang pag-i-igtingin ang determinasyong makumpleto ang trabaho ng rehabilitasyon upang tiyakin na lahat ng mga nawalan ng bahay dahil sa bagyong Yolanda ay maililipat sa permanente at disenteng mga human settlements na malayo sa danger zones na kanilang pinanggalingan,” Coloma said.

Economy

A4 Monday, August 3, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

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DTI eyes ecozones for tech start-ups

By Catherine N. Pillas

he Department of Trade and Industry (DTI) said it is mulling over the creation of economic zones, or ecozones, for technology start-ups to help make it a “significant contributor” to economic growth. Following the official Asia-Pacific Economic Community (Apec) startup event, SlingshotMNL, Trade Secretary Gregory L. Domingo said an “enabling environment” is necessary to develop the infant industry. “We want to fully support that sector, this could be the next business-process outsourcing [BPO] type of industry. We’ve seen the success of the BPO, it could be even bigger than that, at least in terms of revenue,” Domingo said in an interview last week. “One of the ideas is to have a special ecozone for tech start-ups and for R&D type of work where you have a much more relaxed environment in terms of regulations with the purpose to generate em-

DOMINGO: “We want to fully support that sector, this could be the next business-process outsourcing [BPO] type of industry. We’ve seen the success of the BPO, it could be even bigger than that, at least in terms of revenue.”

ployment and eventually contribute tax revenues,” he added. Locators in the ecozone will enjoy simplified regulations in terms of labor and taxation, Domingo said.

While the idea for these “tech ecozones” is still being conceptualized, a differentiated tax-incentive scheme will be part of the government’s bait to lure in locators and investors. In the SlingshotMNL forum, speakers and young technology entrepreneurs highlighted the d if f icu lt y of comply ing w it h tax obligations. If the proposal comes to fruition, the DTI will have to enact a law to formalize the creation of the “tech ecozones” as locators will be accorded special treatment in terms of regulatory compliance. “We have to do informal discussions with provincial governments, we have to identify a site, talk to local government and Congress if it’s possible and of course to the Bureau of Internal Revenue, if they agree. It’s a long way ahead,” Domingo said. To help tech start-ups, the DTI said it is targing to make the SlingshotMNL forum an annual event. This, the department said, would further expose and facilitate knowledge-transfer between local tech entrepreneurs and international counterparts. The first SlingshotMNL, held in July, was part of the Apec meetings which the Philippines is hosting.

AFFORDABLE BLOUSES

A stall in Baclaran, Parañaque, sells blouses of various colors and sizes for as much as P200 each. Clothes sold in stalls are usually cheaper than those sold in malls in the Philippines. NONIE REYES

Drilon bats for early passage of seafarers bill By Recto Mercene

O strengthen and boost the competitiveness of the Filipino work force, Senate President Franklin M. Drilon pushed for the early passage of a proposed measure that seeks to modernize the practice of naval architecture in the country. Senate Bill 2482 seeks to modernize the practice of naval architecture and marine engineering by updating and incorporating innovations to the existing law in line with the latest international practices and standards. The measure was sponsored on the floor by Sen. Antonio Trillanes IV last Tuesday. “Given the advances in the technology and developments in the profession, the law, which has been in existence for 50 years, is no longer responsive to the needs of the Filipino professionals,” said Drilon, author of the bill. The Senate leader said it is important that this area of profession be updated to modern standards given that the country’s shipbuilding and

repair industry is starting to be recognized by other countries. “Our position of influence in the global maritime industry has started to encompass the shipbuilding sector. In 2012 the Philippines ranked fifth largest shipbuilding country following China, Japan, South Korea and Brazil,” Drilon said. “The economic upswing in this sector rests on the appeal of our naval architects, who are highly valued for their proven competence and remarkable diligence,” he said. He noted that nearly one-third of the world’s 1.5 million seafarers are Filipinos which helped fuel the economy with $5.2 billion in remittance in 2013. “We need to ensure the global competitiveness of our shipbuilders and secure our position as a leading global maritime nation. We can only do this if we harness the skills of our naval architects by providing them continuing professional development and training,” Drilon said. He said Filipino naval architects and maritime professionals will be more in demand with the upcoming

DOLE urged to check on Ricky Reyes salons’ compliance with labor laws

he Trade Union Congress of the PhilippinesNagkaisa (TUCP-Nagkaisa) is urging the Department of Labor and Employment (DOLE) to look into the labor law compliance of all salons owned by famous hairstylist Ricky Reyes following the reported termination of an employee afflicted with HIV/AIDS. The group, the country’s biggest federation of labor unions, along with the group Pinoy Plus HIV-positive community, wants the DOLE to determine whether Reyes’s salon is complying with lawful wages, mandated monthly payments to Social Security System, Philippine Health Insurance Corp. and Pag-ibig premiums. It was not immediately known how many salons Reyes own or operate. But Ricky Reyes has become a brand name for beauty salons or parlors. Former employees of Ricky Reyes salons who establish their own beauty parlors use celebrity hairstylist and beauty consultant’s name to attract more customers. Alan Tanjusay, TUCP-Nagkaisa spokesman, said they received reports that salons owned and operated by Reyes commmit labor law violations as reported by 47-year-old Rene Nocos, an HIV-positive who came out in public on June 30. He accused his former employer of unlawful termination, discrimination, under payment of

wages and nonpayment of 13thmonth pay and other benefits. He was a hairstylist in of one of Reyes’s salons for 10 years. Nocos said he was fired on February 28 last year by Reyes after learning that he has HIV despite him presenting a doctor’s certification that he is fit to work. Reyes is facing multiple labor violations at the National Labor Relations Commission filed by Nocos. HIV-positive support group Pinoy Plus Association Inc. expressed support to Nocos. “We are standing behind Rene in his struggle against discrimination and illegal dismissal. We are normal people who also have the right to live and work to support our family and contribute to the progress of the country. People who have HIV have the same capacity and all the right as anybody else. We don’t deserve discrimination,” the group said in a statement. According to Tanjusay, Labor Secretary, Rosalinda Baldoz should use her visitorial and enforcement powers to conduct inspection of workplace establishments under Article 128 of the Labor Code through its Labor Law Compliance Officers using assessment checklist. Under the rule, if found failing to comply with the law, establishments are given 10 calendar days within which to correct deficiency. Jonathan L. Mayuga

Asean economic integration, because of the expected rise in cargo and shipping activities. Drilon said the bill also aims to revise the definition of naval architecture, update the scope of the professional practice, strengthen the Professional Regulatory Board of Naval Architecture, and outline the procedure and requirements for licensure examination and registration, and impose heavier penalties for the practice of such profession without a valid certificate of registration and professional identification card. Its counterpart bill in the House of Representatives was authored by Angkla Party-list Rep. Jess Manalo. In 2014 when more than 80,000 Filipino seafarers faced the threat of losing their jobs in EU-flagged vessels because of the country’s failure to comply with the international convention on seafarers, Drilon and Manalo were instrumental in the passage of the Marina law which introduced major structural changes to the maritime regulatory system and thus, helped avert such threat.

Palace awaits Congress ok of lower income tax rates bill By Butch Fernandez

alacañang is not yet ready to commit support for a pending proposal to lower income-tax rates—listed among the highest in the region— but would consider the long pending tax-reform measure once Congress approves it. Deputy Spokesman Abigail Valte indicated over the weekend the Palace was not closing the door on downward adjustments of personal income-ta x r at e s b e i n g pu s he d b y S e n . Juan Edgardo Angara and other House leaders. Valte made the clarification when asked if President Aquino would heed Congress leaders appeal to lower income-tax rates as the “best gift” Mr. Aquino give to private and government workers before bowing out of office on June 30, 2016. “That bill, I think, is still being deliberated in Congress,” Valte said, “but we will certainly discuss it once it reaches the President.” Earlier, Angara pleaded for Palace endorsement of the tax-reform bill to fast-track passage of the measure as Congress reconvenes regular sessions. In the House, Rep. Magtanggol Gunigundo of Valenzuela, deputy majority leader, filed a counterpart bill to lower individual income tax from 32 percent to 15 percent and corporate income-tax rates from 30 percent to 15 percent.

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Time to revisit securities, investment laws–Sen. Poe By Recto Mercene

N the wake of get-rich-quick schemes proliferating in the country, Sen. Grace Poe said the Senate should revisit securities and investment laws to plug loopholes being exploited by unscrupulous companies to deceive the public into joining bogus investment and networking scams. Poe filed Senate Resolution 1454, urging the Senate Committee on Banks, Financial Institutions and Currencies to conduct an “omnibus inquiry and assessment in aid of legislation, on relevant securities and investment laws, regulations and measures, with the end goal of introducing remedial amendments to better battle deceptive investment schemes and stop insidious networking scams.” The chairman of the Senate Committee on Public Order and Dangerous Drugs filed the resolution in the aftermath of the reported P3-billion investment scam involving Batangasbased firm One Dream Global Marketing Inc. The lawmaker noted that One Dream is registered with the Securities and Exchange Commission (SEC) as a firm involved in trading, buying and selling of various goods, but it has no permit to engage in the selling and marketing investment products. “With One Dream being an SEC-registered firm, unsuspecting investors could have been made to believe that it is safe to invest their money into the company. Amendments may have to be made to prevent companies engaged in deceitful means from circumventing existing securities and investment laws, regulations and measures,” Poe said. Investors have filed a syndicated estafa case against One Dream officers, led by owner Arnel Gacer, after the company refused to return their money after repeated demands. Complainants alleged that One Dream deceived them through a “system profit scheme,” in which investors were required to put in P888 with the promise of a “payout” of P1,300 after four days. Poe said the government should already intervene to protect the public from being preyed upon by “networking groups” amid the strong appeal of their marketing strategies. “Would-be investors are enticed by ‘networking groups’ by emphasizing the seeming lavish lifestyle of their ‘successful members’ through their posts in social media showcasing their money, cars, watches, free trips or other material things,” the senator said. A few days after the One Dream scam broke out, the SEC also warned the public against being conned by other investment scams, particularly entities like Freedom Life Advanced Global Prosperity Marketing Inc. (Flag Prosperity) in Laguna province, and the Metro Manila-based “SUCCESS200 International Marketing Corp.,” with operations in other parts of the country and overseas. Both firms had no SEC registration. “Desiring to improve one’s financial status and one’s quality of living by investing one’s hardearned money is commendable and is beneficial not only to the investor but to the economy, but to prey on our countrymen through deceitful and unscrupulous means is simply wrong and the government ought to step in to ensure the protection of our countrymen’s investments and dreams,” Poe said.

Monday, August 3, 2015 A5

DTI extends safeguard duty on angle bars

he Department of Trade and Industry (DTI) has approved the final extension of the safeguard measure imposed on imported steel angle bars, with the additional levy pegged at P3,345 per metric ton (MT) in the first year of imposition of the additional four-year reprieve.

This gave the local industry another chance to ramp up competitiveness against imported competition. In an order published on Thursday, the DTI endorsed the findings of the Tariff Commission (TC) that continued importations of the said commodity have been damaging the performance of the local steel angle bar manufacturing industry. The TC concluded its formal investigation on steel angle bar imports in January, following the petition of local manufacturers Lunar Steel, Cathay Metal, Maxima Steel and 21st Century to extend

the safeguard measure that has been in place since 2009. All four petitioners are members of the Steel Angles, Shapes and Sections Manufacturers Association of the Philippines Inc. (Sassmapi). Safeguard measure is a type of trade remedy that may be exercised by a government if it finds that the increase in the importation of a product is damaging to the competing domestic industry. Safeguard measures come in different forms, as determined by the implementing authority: increased tariffs (including tariff quotas), sur-

charges, quantitative restrictions and import authorizations. The TC recommended an additional duty of P3,345 per MT on imports of steel angle bar, to be gradually lowered in four years. It said the local industry remains in danger given the excess production of neighboring Asian countries, especially China. This is the final extension given to the local industry to prop up its production, growth and overall competitiveness. In the TC’s findings, even with the existing imposition, the imports of steel angle bars from China rose significantly from June 2013 to June 2014. This was also aggravated by the elimination of tariffs on steel angle bars from China and the general excess production of major suppliers in Asia that increased the share of imports in the Philippine market. This affected the financial viability of the petitioners and forced the local players to implement costcutting measures in production to lower their price vis-à-vis imports. The government approved the first imposition of safeguard duty in

2009 at P7,700 per MT. The industry sought for an extension in 2012, and imports were slapped with a reduced additional duty of P3,901.08. Safeguard duties, by law, should be reduced gradually year-on-year. “For 2015, it will be P 3,34/MT; P 3,178/MT for 2016; P 3,019MT for 2017; and P 2,868/MT for 2018,” said lawyer Luis M. Catibayan, director of DTI’s Bureau of Import Services.

Increased production

Sought for comment, Ramon Khu, executive director of Sassmapi, said they welcome the approval, but cannot disclose any production or growth targets yet. The industry, however, has plans to increase production. “The approval is a welcome action for us, as that will make the playing field even, and encourage us to increase production. We will consult with our members on their plans now,” Khu said in a phone interview. However, the Sassmapi official also raised the question of the industry getting its share in the collected duties from the imposition of safeguards to aid local steel

angle bar makers in improving their competitiveness. “I’m not sure of the amount but marami na ang na-collect from the safeguard measures since it was first imposed. From what I know, 20 percent to 25 percent of the safeguard duties collected by the government should be given back to the industry for us to invest in machinery and equipment,” Khu added. Khu said thus far, there has been no word from the government on when these funds will be allocated. The Safeguard Measures Act states that: “Fifty percent of the revenue collected from such fees, charges, and safeguard duties shall be set aside in a Remedies Fund, which shall be earmarked for the use of these agencies [The Department of Agriculture, the DTI and the TC] in the implementation of remedies, including the safeguard measures. The remaining 50 percent shall be deposited under a special account to be created in the National Treasury and shall be earmarked for competitiveness enhancement measures for the industries affected by the increased imports.” Catherine N. Pillas

‘Personality has more weight than degree in landing jobs’

N employee with a degree and a great personality fit is more likely to excel, compared to an employee with the same degree, but with a bad personality fit. Many hiring managers feel that seeking professionals with the desired personality fit is as difficult, as finding a candidate with the required educational background and the right skillsets for the company. As personality fit is increasingly catching the eyes of employers, is it starting to weigh more than education? For job seekers, including senior executives, which is more important in securing that job offer today? According to research firm The Sutton Trust, 49 percent of companies in the United Kingdom will favor a candidate with a degree over a candidate without one. Even more so, Northwestern University in the US conducted a research and found that some elite firms only hire from top tier institutions, such as Harvard, Yale, Princeton, Stanford and Wharton. Senior management roles regularly list a degree as a prerequisite, while Universum’s 2020 Outlook Study found 58 percent of CEOs surveyed placed more importance on work experience. Employers and hiring managers see work experience as the proof of a candidate’s success. Increasingly, companies are starting prioritize personality in the hiring process. Laszlo Bock of Google stated that those who find interest in “figuring out stuff where there is no obvious answer” are desirable employees. Personality plays a big role in your day-today job tasks, and in the long run, these traits will show and interact with your working experience and achievements. Employers and hiring managers increasingly recognize the link between job responsibilities and personality traits needed to excel and flourish. Traits associated with the job, when positively matched will have a positive impact on your engagement, feelings of satisfaction and promote commitment

RETAIL TOURISM

Fridge magnets are displayed for sale at a store in the D’Mall shopping area of Boracay, Philippines. The Philippines, an archipelago of more than 7,000 tropical islands, attracts less than 5 percent of travelers to Southeast Asia. Bloomberg

and loyalty toward the company, reducing turnover for employers. Richard Branson, founder and CEO of Virgin Group, prides himself in prioritizing personality when hiring. He emphasizes on choosing a candidate based on their personality and their fit to the company’s culture before even considering degree and qualifications. Branson further claims that it is better to be short on talent than have an employee with a bad cultural fit, stating the success of the company is based on “perfect mix of people.” After finding the “winning” personality he then looks

are the candidate’s qualifications. Amazon.com combines degree and personality in their hiring process. While some positions, including managers, do not require degrees, but some specialist roles do require formal education and training as a basic requirement. For mid to senior level positions, Amazon is rigorous in its assessment of candidates. Candidates have to go through hiring managers, as well as “bar raisers,” who are existing employees from different functions at Amazon charged with the duty of inter-

viewing and assessing candidates exclusively for personality fit. Other multinational companies, including McKinsey & Co, CVS Caremark and McDonald’s have added personality tests such as the Myers Briggs Personality tests in their recruiting and training processes. McDonald’s in particular requires potential employees to take the personality test before applying for positions. According to the American Management Association, 20 percent to 25 percent of an employee’s effectiveness on the job is attributed to

personality. With the link between personality and productivity, companies are increasingly placing more importance to the assessment of personality fit during the hiring process. It is important for employers to combine qualifications together with personality in the assessment of candidates so hiring managers and candidates can both find the perfect fit. While your degree, qualifications and related work experience will get you an interview, your personality is what makes you stand out and excel in both the interview and at work. Bó Lè Associates

Roxas hit for ‘grabbing’ credit on growth of BPO industry

group of business-process outsourcing (BPO) industry employees criticized Interior Secretary Manuel A. Roxas II for “stealing” the credit on the growth of outsourcing in the country from the Filipino talent pool. The BPO Industry Employees Network-Philippines (BIEN-Philippines) said the camp of Roxas should not grab the industry’s phenomenal growth as his “prized trophy.”

The group was reacting to a paid advertisement which gives credit to Roxas as “Mr. BPO” because of his contribution to the industry’s birth and phenomenal growth. The industry now employs over a million Filipinos and more foreign investors are looking to relocate in the Philippines. Instead of claiming credit for the BPO industry’s growth, the group said Roxas and other would-be

candidates should work against the rampant practice of project-based employment or contractualization. According to BIEN Philippines, BPO firms choose the Philippines despite the competitive global market “because Filipinos are topof-the-class customer serviceoriented people.” “BPO workers would even risk life and limb just to go to work even during the worst forms of disaster to hit

the country,” the group said in a statement, citing that at the height of the Yolanda devastation, the Cebu-Bohol earthquake and many other calamities, BPO employees remained committed in providing stellar service to its clients. BIEN has been calling on Malacañang to enforce work s u s p e n s io n du r i n g n at u r a l calamities, with BPO companies, refusing to declare work holidays

even during typhoons, severe flooding or earthquakes. ThegroupsaidtheBPOcompanies’ “self-regulating practice,” which it blames on Roxas, is the reason employees are required to go to work even during calamities. The group said most policies i mp l e m e nt e d b y c o mp a n i e s are either left unchecked by state agencies or are not being regulated. Jonathan L. Mayuga

Tourism

A6 Monday, August 3, 2015 • Editor: Carla Mortel-Baricaua

SO, YOU WANT T

TYBEE beach in Savannah, Georgia, USA.

S  P  H D. T

ODAY, traveling has become a major part of life for modern man. This is especially true in Asia, where you could go and see mesmerizing locations, eat exotic foods and immerse in a totally different culture.

PLANES at Melbourne Airport

While most travelers find their journey memorable and exciting, there are those who come home frustrated and exhausted. A few unfortunate ones even end up facing life imprisonment or the death penalty. There are several reasons for travel fiascos, but most of them can be avoided. Here are some basic rules to keep in mind when traveling abroad: n Secure a passport from any offices of Department of Foreign Affairs. A passport is a document issued by the national government, which certifies the identity and nationality of its holder for the purpose of international travel. A passport entitles the passport holder to return to the country that issued the passport. The elements of identity contained in all standardized passports include information about the holder, including name, date of birth, gender and place of birth. n Get a travel visa for countries that require it. A visa (from the Latin charta visa, literally “paper that has been seen”) generally gives noncitizens clearance to enter a country and to remain there within specified constraints, such as

THE iron ore carrier

a time frame for entry, a limit on the time spent in the country and a prohibition against employment. Among the countries that are frequented by Filipinos and required a visa include the US, Canada, most European countries, Australia, New Zealand, Japan, Egypt and South Africa. However, there are less than 40 countries Filipinos can visit and most of these are the neighboring countries in Southeast Asia, some countries in South America and in Africa. In Indonesia, Lao PDR, Macau, Malaysia, Singapore and Thailand, a Filipino can stay up to 30 days without visa. In Israel, it’s up to 90 days, but only up to 21 days in Cambodia, Mongolia and Vietnam. In Brunei Darussalam and Hong Kong, a Filipino is allowed to stay only up to 14 days if he has no visa. n Get ready. Get to know the country you’re visiting. Buy a travel book and a map of the city you’re going to. Get phone numbers of your friends or relatives who may be living in the area (just in case you get lost). Be sure to have all the necessary documents: a valid passport (check six months’ validity), visa (if the coun-

try you’re entering requires it), plane tickets, letters from your sponsors (if you’re invited), identification card and other pertinent papers. If possible, make a check list and check all items you put into your luggage. That way, you won’t miss anything. In addition, read up and make sure you know what you need to know. Before leaving, get some firsthand information from your government through its travel advisory. Ask friends or relatives for tips. Read news stories about the country you’re visiting, but don’t believe everything you read or hear. n Have yourself (and your companions) get vaccinated—if needed. There is no point in spending hours choosing your swimwear, beach bag and flip-flops if you barely think about the bugs and other health risks that could ruin your holiday. Infectious diseases can make you very sick, spoil your holiday, and even kill or disable you. Vaccinations protect you against many travel-related infections, such as yellow fever, typhoid and hepatitis A. n Observe regulations when checking in. Be at the airport at least two hours before departure. Carry-on luggage must fit under the seat or in an overhead compartment. Dangerous articles, such as compressed gases, explosives, flammable liquids and solids, and poisons and infectious substances, are not allowed in carry-on luggage. n Do not carry drugs. In most Asian countries, travelers found carrying illegal substances undergo the death penalty or life imprisonment. n Entry into a foreign country is subject to passengers meeting the customs requirements. In the Philippines, for instance, fruits are subject to quarantine laws and such they should be accompanied

SHANGHA THEME PA R

ECENTLY The Walt Disney Co. unveiled creative elements of Shanghai Disneyland cluding its six themed lands filled with wo class attractions and live entertainment spect lars—many of them a first for a Disney park. Disney Chairman and Chief Executive Bob revealed a scale model of the world-class the park and displays showcasing key highlight unique attractions, entertainment, dining hotels at a presentation held at the Shan Expo Centre. “We are building something truly special h in Shanghai that not only showcases the bes Disney’s storytelling, but also celebrates incorporates China’s incredibly rich herit to create a one-of-a-kind destination that delight and entertain the people of China generations to come,” Iger said. “We are tak everything we’ve learned from our six deca of exceeding expectations—along with relentless innovation and famous creativit create a truly magical place that is both auth

m&Entertainment

tourism@businessmirror.com.ph • Monday, August 3, 2015 A7

TO TRAVEL ABROAD?

STATUE of Liberty

THE Blaans perform during a news conference of Pyesta Kolon Datal (Koronadal International Folklore Festival) held at Cultural Center of the Philippines. KIKO CABUENA

WHITE House

ZEBRAS in Durban, South Africa

with import documentation from the country of origin. In Singapore, chewing gums are strictly prohibited. n Expect the unexpected. Losing a luggage is one of the most-often complaints of air passengers. If you lose your luggage while flying, seek help from airline personnel and present your luggage tags, advises the Philippine Travel Agencies Association (PTAA). If the airline locates your luggage, ask to have it sent to your hotel. If you lose your baggage outside the airport, inform local authorities. What if you lose your travel documents? The PTAA suggests that you present photocopies of your documents—if you have them. Be prepared for delays. If you lose your plane ticket (these days, e-ticket is more preferable), inform your travel agent or airline so they can send you a substitute ticket. If you lose your passport and/or visa, you can no longer continue your trip. Visit the nearest embassy to arrange for temporary travel documents. As a result of losing your visa or passport, you need to cancel or reschedule your trip. To do this, call your travel agent or airline. There is usually a last-minute penalty for cancellation. In some instances, penalty can be waived for valid reasons like sickness or death in the family—but be sure to present pertinent documents. n Pick your seat. A 2007 study by “Popular Mechanics” found passengers sitting at the back of a plane are 40 percent more likely to survive a crash than those sitting in the front. Although the article quotes Boeing, the US Federal Aviation Administration (FAA) and a web site on aircraft safety, all claim there is no “safest” seat. The article studied 20 crashes, not taking into account the developments in safety after those accidents. However, a flight data

SAMPLE of stamped passport

recorder is usually mounted in the aircraft’s empennage (tail section), where it is more likely to survive a severe crash. n Secure travel insurance. This is intended to cover medical expenses, financial default of travel suppliers, and other losses incurred while traveling, either within one’s own country, or internationally. The most common risks that are covered by travel insurance are: medical emergency (accident or sickness); emergency evacuation; repatriation of remains; return of a minor; trip cancellation, trip interruption, accidental death; overseas funeral expenses; lost, stolen or damaged baggage; personal effects or travel documents, delayed baggage (and emergency replacement of essential items); missed flight connection due to airline schedule; and travel delays due to weather. n Get ready for jet lag. Most experts believe that jet lag occurs when a traveler’s internal biological clock is out of synchronization with the time zone of a person’s destination, thereby disrupting the normal daily rhythms of sleeping, eating and other activities. And the more time zones you cross, the worse your jet lag. To zap out of jet lag, experts recom-

mend that before flying, get enough sleep. During the flight, drink plenty of fluids, avoid alcohol, pretend you’re not on a plane, socialize and relax. When you arrive at your destination, don’t take a nap—especially if it is still afternoon. Wait until it will be dark and you have eaten your dinner. n Shop ‘till you drop. This is one of the most common things you, a foreigner, usually do in another country. Before going out, however, have a good idea of what it is that you want to buy and don’t deviate from it. Also, research the product beforehand and decide what your price limits are. n Mind your manners. When visiting temples and mosques in Cambodia, India, Indonesia, Thailand and Vietnam, wear proper attires and remove shoes at the entrance. In Myanmar (Burma), remove your shoes before entering homes. Touching someone on the head is considered rude in Vietnam. In Japan, if bowing does not make you feel awkward, bow. When sitting in South Korea, do not stretch your leg out in front of elderly people or women. When eating a Chinese meal in Singapore, never stick your chopsticks into your food. In most Asian countries, the left

hand is regarded as unclean, so avoid using it when handshaking, touching, eating or passing food, papers, and money. In Malaysia and other Muslim countries, avoid giving a bottle of alcoholic drink or a pigskin wallet. The culture of the country you’re visiting is different from yours. n Say cheese. An unknown author once penned: “One photo out of focus is a mistake, ten photos out of focus are experimentation and one hundred photos out of focus are a style.” When it comes to travel photography, Jose Martin Punzalan, editorial coordinator of “Travel Plus” and photographer, says: “Traveling is a great way for aspiring photographers to practice their skills, as they will surely encounter a whole wide range of shooting situations that will test their versatility and creativity in taking unique photos.” Punzalan shares the following tips: Get a good camera. Shoot much of the same thing, but make each one different from the other. Get away from where other tourists are shooting. Copy other great photos. Always have your camera on hand and ready. Take pictures of people, too. n Enroll in a frequent-flyer program. It is a loyalty program offered by many airlines. Typically, airline customers enrolled in the program accumulate frequent-flyer miles (kilometers, points, segments) corresponding to the distance flown on that airline or its partners. There are other ways to accumulate miles. In recent years, more miles were awarded for using cobranded credit and debit cards than for air travel. Acquired miles can be redeemed for air travel; for other goods or services; or for increased benefits, such as travel class upgrades, airport lounge access or priority bookings. To end this piece, the statement of Paul Fussell seems to apt: “All the pathos and irony of leaving one’s youth behind is thus implicit in every joyous moment of travel: one knows that the first joy can never be recovered, and the wise traveler learns not to repeat successes but tries new places all the time.”

AI DISNEYLAND: FIRST ARK IN MAINLAND CHINA

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b Iger eme ts of and nghai

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PYESTA KOLON DATAL 2015

tically Disney and distinctly Chinese.” A joint venture of Disney and its partner Shanghai Shendi Group, Shanghai Disneyland is designed to appeal to Chinese guests—taking the best of Disney and delivering it in a way that is created especially for this audience. It will extend the 60-year legacy of Disney Parks around the globe. Since breaking ground in 2011, Disney and Shanghai Shendi Group announced that they were expanding the park by adding additional attractions and entertainment to allow more guests to have a spectacular Disney experience at the grand opening in spring of 2016. Shanghai Disney Resort, part of the Shanghai International Tourism and Resorts Zone, is a complete vacation destination and at opening will include several attractions. Shanghai Disneyland is a theme park with six themed lands, such as Adventure Isle, Gardens of Imagination, Mickey Avenue, Tomorrowland, Treasure Cove and Fantasyland, with its Enchanted Storybook Castle.

Shanghai Disneyland Hotel and Toy Story Hotel is an imaginatively themed and adjacent to the theme park. Disneytown is the an international shopping, dining and entertainment district, adjacent to Shanghai Disneyland and including the Walt Disney Grand Theatre, home to the first-ever Mandarin production of the Broadway hit Disney’s The Lion King. Wishing Star Park is the central point of the resort with beautiful gardens, a walking path and a glittering lake. Shanghai Disney Resort guests will find something for everyone. They will be immersed in popular Disney stories that come to life at the largest castle in a Disney park, at the first pirate-themed land in a Disney park, on the longest Disney Parks parade route and in more enchanting places filled with thrills, creativity and adventure. Throughout the resort, visitors will be treated to the Disney difference: warm hospitality and world-renowned guest service delivered by Disney cast members.

DISNEY Chairman and CEO Bob Iger unveils Shanghai Disneyland model.

HE City of Koronadal, in cooperation with the Cultural Center of the Philippines (CCP), the Department of Tourism and the National Commission for Culture and the Arts, holds its first ever Koronadal International Folklore Festival dubbed as “Pyesta Kolon Datal” from August 9 to 18, featuring twelve participating countries and four Philippine cultural groups. The event was discussed by Koronadal City Mayor Peter B. Miguel in a recent news conference held at the CCP. The countries include performing groups from Armenia, Chinese Taipei, India, Indonesia, Japan, Mexico, Poland, Russia, Slovenia, Sri Lanka, Thailand and Turkey. The Philippine cultural groups consist of the University of the Philippines Filipiniana Dance Group, Philippine

Normal University Kislap-Sining Dance Troupe, Philippine Baranggay Folk Dance Troupe, Edwin C. Duero Dance Company of the Philippine, and Koronadal Hinugyaw Cultural Dance Troupe. These groups will showcase hundreds of their own traditional songs and dances in full shows, pocket performances and lecture-demonstrations. The event is held in celebration of the intangible cultural heritage fostered by International Council of Organizations of Folklore Festivals and Folk Art (CIOFF) in partnership with United Nations Educational, Scientific and Cultural Organization under the Intangible Cultural Heritage Committee. Pyesta Kolon Datal of Koronadal Philippines is recognized by CIOFF as its associate member chaired by Dr. Peter B. Miguel.

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of 10 persons. Simply present your company ID to avail yourselves of our promo offers. This promo is valid until September 2015. One Pacific Place Serviced Residences is at 161 H.V. de la Costa Street, Salcedo Village, Makati City.

TheElderly

BusinessMirror

Monday, August 3, 2015 • Editor: Efleda P. Campos

news@businessmirror.com.ph

A work in progress: The state of PHL policies for the elderly By Faye Carreos & Lea Salvosa | Special to the BusinessMirror

First of two parts

HE elderly in the Philippines have traditionally received due care and concern from both the family and society, rooted from the long-held national attitude of reverence for the elderly.

For the longest time, older persons have relied on the other members of the household for sustenance, yet in the face of rapid urbanization, traditional family support systems have become insufficient and unreliable. According to a study by the Asian Development Bank, older people today often find themselves “impoverished, neglected and deprived of access to essential medical and other social services.”

Notwithstanding the country’s rapid economic growth in recent years and the passage of new laws catering to the needs of senior citizens, the challenges and costs faced by the elderly population in the Philippines remain undiminished, if not exacerbated. The P500 social pension granted by the Philippine government for “indigent older persons” as mandated by the Expanded Senior Citizen Act of 2010 remains insufficient

to cover their basic needs. While the age for the monthly stipend was lowered to 65 years old following the resolution filed by Sen. Pia Cayetano in 2014, the Expanded Senior Citizen Act of 2010 requires the social pension to cover all indigent senior citizens aged 60 and over. The full implementation of the social pension provision of the law is yet to be realized as Global Age Watch 2014 Index of HelpAge International, an international non-governmental organization devoted to supporting the rights of older people worldwide, reveals that only 28 percent of senior citizens aged 65 and above receive their social pension. “The amount is still small and we’re still striving to increase that and also to increase the coverage,” Department of Social Welfare and Development (DSWD) National Coordinating and Monitoring Board Unit Head Germaine Trittle Leonin admitted. With a bigger budget allocation for 2016 as promised by the

Department of Budget and Management and Congress, the DSWD aims to cover all indigent elderly aged 60 and above. While the Philippines ranks comparably low in old-age social pension against its Asean neighbors, Leonin saidthe country bears a legislative advantage. “We have a legal basis, we have the Constitution. That is my comparison to the other Asean countries. [The elderly] are not mentioned in their laws, in their respective Constitutions. There is no special mention [that they are] in need of special protection,” Leonin said. The Philippines experiences no shortage of initiatives in addressing the issues of its aging population and entitling senior citizens to benefits and privileges. The 1987 Philippine Constitution echoes the national attitude toward the elderly: “The family has the duty to care for its elderly members but the State may also do so through just programs of social security.”

Even before its amendment, the Expanded Senior Citizens Act of 2003 already granted a 20-percent discount from their basic needs and prime commodities. With the 2010 amendment, the law now mandates that all senior citizens are endowed with an exemption from value-added tax (VAT), a new addition to the benefits received. “They were saying, ‘We’re not enjoying the full amount of the discount. We should not be charged with VAT.’ So it was removed, [...] and they no longer experience the burden of paying VAT under those specific purchases,” Leonin said. Together, the benefits made health care more accessible to senior citizens—from the purchase of medicine and drugs to medical supplies and equipment, professional fees of attending physicians and licensed health workers who provide home health-care services, and medical and dental services in private facilities. Domestic land, air and sea transportation fare are also subjected to

the discount and VAT exemption. The benefits extend to accommodations and other amenities in hotels and recreation centers; admission fees in theaters, concert halls and cinemas, restaurants and similar establishments; and funeral and burial services. In 2014 the Aquino administration landed a milestone in health care for senior citizens with the recent amendment of the Philippine Health Insurance Corp. coverage dictated by the Expanded Senior Citizen Act of 2010 with Republic Act 10645. The law expanded the mandatory PhilHealth coverage from indigents to all Filipino citizens aged 60 and above in the country. The Philippines also ranks high in fostering capability among the elderly, as well as developing an enabling environment for them. Senior citizens are granted by the law the opportunity to pursue their education or continue employment. To be concluded

50 years of living in the streets does not diminish old lady’s upbringing

HERMINIA P. Rodriguez (right), 101, keeps her turf at Plaza Santa Cruz in Manila with Mansueta de la Serna, a distant relative and 76-year-old retired teacher.

Story and photo By Oliver Samson Correspondent

CHILDLESS widow, 101 years old, sleeps alone. She sells newspapers, candies, cigarettes, and horse-race programs on the sidewalk of a commercial building near Santa Cruz church in Manila. Herminia P. Rodriguez, fondly called Mamang by people in the area who know her, has been in the streets for about half of her life. Born in Angeles City, Pampanga, on May 7, 1914, she was only 6 when her parents migrated to Manila in search of the proverbial greener pasture. They settled in Sampaloc after her father found work as a firefighter. Her mother chose to remain a housewife to take care of the children. Out of 15 siblings, only she and her 83-yearold sister, who lives today in Barangay Payatas in Quezon City, are still alive.” Her husband was a police officer who died over a decade ago. Their union was not fortunate. They grew old without children. Selling newspapers, candies, cigarettes, horse race program has been Mamang’s source of living for roughly 50 years now.

With the modest amount she earned, she was able to help her siblings educate about 10 of their grandchildren. Today, she sleeps on a pane of cheap wood, mounted on wooden legs that serve as a stand during the day to display her merchandise. Large umbrellas serve as her covering against the rain. “She has been sleeping here for over 40 years now,” said Mansueta de la Serna, a 76-yearold distant relative and retired teacher. Mamang makes P2 for a copy of the tabloids sold, P5 for the broadsheets, and P2 for the horserace program. Today she grosses about P200 daily. “I make a meager amount daily,” she said in Filipino. “Just enough for my food. Sometimes I save P10 in a day.” In the past years, she could sell as much as P1,000. Then, she sold soft drinks and watched over cars on hazard parking at Plaza Santa Cruz. “I got paid P10 a car,” she said. Today, she can hardly sell two packs of a particular brand of cigarette a day. Same with candies. She barely gets a glimpse from passersby. For her food, she buys a cup of boiled rice for P10 and an order of viand for P35. She has never been a vegetarian. She loves pork and chicken. Today she eats cabbage and beans, both cooked with ground pork. Mamang had collapsed twice. It was due to fatigue, her doctor said. The centenarian is fortunate for some storekeepers hand her food occasionally, de la Serna said. One of the stores in area, even allows her to use its toilet, Mamang said. The guard at a nearby fast-food outlet keeps an eye on her at night, because despite her obvious poverty, she has been robbed twice, de la Serna said. In one of those thefts, she lost her savings amounting to P2,500 and the silver spoon from her mother that she treasured. On Saturday nights, Mamang enjoys a sleep at her sister’s house, where her laundry is washed. On Sunday afternoons, she returns to Plaza Santa Cruz, vending her merchandise and living on the street again for the week. “I will not retire as long as I am able,” she said. “If I stop doing this, I will have nothing to eat.” Mamang has dreamt of someday becoming a physician and despite her years on the street, her demeanor and speech remained untouched by the coarseness of the streets. She speaks of no bitterness, embraces challenges, and accepts life as a treasure.

grandpa ‘photog’

Domer Fariñas, 72, a photographer at Burnham Park in Baguio City, enjoys taking pictures of park visitors. Charging P150 per print, Fariñas was park photographer for 20 years. mau victa

Taguig honors centenarian and WW II veteran By Claudeth Mocon-Ciriaco Correspondent

T age 100, Jose Santiago Quilatan Sr. has outlasted two world wars, fought in one of them, spanned over four generations and lived through all Philippine presidents except Emilio Aguinaldo. Most likely, he will still have a say in deciding who succeeds President Aquino in the 2016 presidential elections. The local government of Taguig City on July 26 honored Quilatan as the first bona fide and living centenarian under a program established under Mayor Lani Cayetano’s term aiming to recognize Taguigenos who are 100 years of age and above. “It is but just and right to honor Taguigenos who reach the age of 100 because this is no easy feat. And as an added qualification worthy of this city’s recognition is the fact that Mr. Quilatan is also a World War II veteran,” said Cayetano, who led the awarding ceremony held at Santa Ana Church in Taguig. “In awarding this distinction, we celebrate the life of Mr. Quilatan for every day that he

lives over 100 years,” she said. He will be receiving a cash award of P100,000 as part of the city’s program for centenarians. Quilatan was born in Tipas, Taguig, on February 15, 1915, during World War I. He has already outlived some of the world personalities also born in 1915 such as legendary singer Frank Sinatra, Casablanca actress Ingrid Berman and Chilean dictator Augusto Pinochet. But this is not the first time Quilatan has received an award. On March 28 he received a Certificate of Recognition for reaching 100 years old and his consistent dedication as a World War II veteran during the Barangay Assembly Day in Barangay Ibayo-Tipas, Taguig City. He was also featured in a national newspaper article entitled “Memories, Life Lessons: Stories from World War II Veterans.” Records at Taguig’s Office of Senior Citizens Affairs disclosed that Quilatan was born in Tipas, Taguig, to father Ambrocio Quilatan and mother Dominga Santiago. He was baptized at the Saint John the Baptist parish church based on the baptismal certificate authenticated by the city hall.

‘Rename the Elderly Page’ contest

HE BusinessMirror needs your brains. We are holding a contest called “Rename the Elderly Page.” The contest is open to everyone and ends on August 8. Please send your entries to “Rename This Section” contest, care of news. businessmirror@gmail.com. The winner is entitled to an overnight stay for two at the Bellevue Hotel in Makati City, breakfast for two included. The BusinessMirror reserves the right to the winning entry.

Health spending on elderly to gobble up more of US economy in next decade

PENDING on health care will take up an increasing proportion of the US economy over the next decade as the population ages and more people gain insurance coverage under Obamacare, a government report said. Payments for hospitals, doctors, drugs and insurance will rise by about 5.8 percent a year through 2024, 1.1 percentage points faster than overall economic growth, actuaries at the Centers for Medicare and Medicaid

Services said last week in an annual study. Health spending will account for 19.6 percent of gross domestic product in 2024, up from 17.7 percent last year. The acceleration in health spending is a change from the past few years, when the recession that ended in 2009, and its aftermath, kept growth about in line with the economy. Still, it’s slower than in the three decades before the economic downturn, when it rose at about 9 percent

a year, according to the report. “There are some long-lasting factors that will most likely keep growth in health spending modest, even with a greater amount of the population insured,” Sean Keehan, a CMS economist, said on a conference call with reporters. A lot of the spending growth comes from millions of people gaining insurance through the Patient Protection and Affordable Care Act (ACA). The

insured share of the population is projected to climb from 86 percent in 2013 to 92.4 percent by 2024. At the same time, the country is aging. By 2024 the number of Medicare beneficiaries will climb to 70.3 million from 54.5 million this year, while Medicaid members will number 78.1 million, up from 70.5 million. Medicare covers the elderly and disabled, while Medicaid is intended for the poor. What’s not yet clear is whether

provisions of the Affordable Care Act designed to rein in the pace of spending increases, particularly in Medicare, will be effective. The US no longer provides a forecast for what health spending would be in the absence of the ACA. “To the extent that these programs have been implemented and actually illustrated savings, they’ve been incorporated,” Gigi Cuckler, a CMS economist, said on a conference call with reporters. “It’s still too early

to determine whether these demonstrations will have a lasting effect on health spending.” The spending-growth rate isn’t expected to return to pre- recession levels in part because higher deductibles and co-pays mean that consumers are bearing more of the costs of care than in the past, according to Keehan. Individuals may be more reluctant to spend money on health services that aren’t covered by insurers. Bloomberg News

The Regions BusinessMirror

news@businessmirror.com.ph

Monday, August 3, 2015 • Editor: Dionisio L. Pelayo

briefs

‘CDC acted above law in forced closure of firm’

Coast Guard seizes smuggled rice

PUERTO PRINCESA CITY—The Coast Guard seized on Friday morning 1,700 bags of rice from the crewmen of a motor launch that attempted to smuggle the cargo in this city. Initial reports from the Coast Guard said the alleged smuggled bags of rice were confiscated from ML Nathalie in the waters off Puerto Princesa City. The report said the cargo was shipped from Mapun, Tawi-Tawi, on Wednesday. The crewmen of ML Nathalie were unable to show legal shipment papers. What was presented was only was barangay clearance issued by a kagawad. The motor launch is currently in the custody of the Coast Guard at the Puerto Princesa City Port. Investigation is ongoing. PNA

By Ashley Manabat Correspondent

LARK FREEPORT—Ranking officials of the Clark Development Corp. (CDC) were named anew in a supplemental complaint for misconduct filed with the Ombudsman. This time, CDC Vice President for Finance Noel F. Manankil was included as respondent together with President and CEO Arthur P. Tugade, Mariza O. Mandocdoc, lawyer Perlita C. Mateo-Sagmit, Evangeline G. Tejada, Ricardo C. Banayat, Thelma C. Ocampo and lawyer Juvy Manwong. “Ours is a government of laws and not of men.” Thus, said the opening statement of the complaint pegged on CDC’s alleged defiance of a 72-hour temporary restraining order (TRO) earlier obtained by the complainant, Eung Il “Steve” Kim, from the court. Kim’s legal counsel, Tricia S. Santos, said: “While the government has the duty and privilege to enforce the law, it should not consider itself above it.” Santos said CDC’s defiance of a lawful court order constitutes “misconduct” which is a valid ground for an administrative complaint. It can be recalled that around 3 p.m. on January 12, CDC employees went to Kim’s office at the Holywood Park Development Corp. (HPDC) here and forced his visitors and corporate officers to vacate the premises. Kim said a “food blockade” was enforced by CDC personnel when an HPDC employee refused to leave. The employee was forced to leave the premises at around 9 p.m. when he can no longer stand his hunger, Santos said. She added that the CDC personnel evicted Kim and his employees and visitors from the premises “despite full knowledge and in defiance of the TRO issued by the Executive Judge of the Regional Trial Court in Angeles City.” To compound the situation, it was later found that the CDC had already “directly negotiated with the tenants of [HPDC] and convinced them to enter into a new lease agreement, furthering the damages suffered by HPDC,” Santos added. She said foreign investors come to the Philippines “because of the representations of the government that they can enjoy a favorable business climate in the country.” She pointed out that “the tenants of HDPC or occupants of retirement facilities built and managed by HPDC are 100-percent retired foreigners. “Unfortunately for them, they became witness to the kind of enforcement that CDC is capable of when heavily armed men and other security personnel suddenly showed up at the office,” Santos said. She added that, “such actions by CDC create a big dent on the efforts of the government to convince investors and foreigners to stay in the Philippines.” Santos said: “What was clearly established from the events that transpired is that aside from the almost one-sided terms and conditions of doing business at Clark under Tugade’s administration is that CDC is not afraid of the law because it acts like it is above the law by showing no qualms in defying a direct order issued by the court.”

Task force confiscates illegally cut logs

WELCOME TO U.P. BAGUIO Facing the Baguio Convention Center amid verdant pinewoods, the iconic Oblation welcomes freshmen to the University of the Philippines (UP) Baguio with an orientation today. A campus tour for first-year students is, likewise, scheduled today. SUZANNE JUNE G. PERANTE

San Miguel, Clark power firms seek alternate electricity supply

By Lenie Lectura

AN Miguel Energy Corp. (SMEC) and Clark Electric Distribution Corp. (CEDC) are asking the regulators to approve changes in their power-supply agreement (PSA) and, at the same time, to issue a provisional authority (PA) so they can implement it prior to the scheduled shutdown of the Sual power plant. SMEC is the independent power producer administrator of the 1,000-megawatt (MW) Sual power plant, while CEDC is a distribution utility that supplies power within the Clark Special Economic Zone. The customers of CEDC are mostly industrial locators whose

Davao City launches ₧108-million underground utility cable project

HE local government of Davao City has started the implementation of its P108-million underground utility cable project. Davao City Mayor Rodrigo Duterte said that under the project, all utility cables and wires for telecommunications, electricity and other lines hanging in posts and dangling all around the city will be buried underground, and will be hidden from plain sight. The operation will be finished shortly, in time for the start of the Kadayawan Festival on the third week of this month. So just like in the US, all cables or wires hanging in wooden or cement posts will be a thing of the past and will never be an obstruction anymore. The project is presently being undertaken only within the vicinity of the Davao City

Hall which serves as a pilot area, but will eventually be spread all over the city. In an e xecut ive order, Duterte created the Davao City Wires and Cable technical team to oversee and manage the underground cable project. The technical team was ordered coordinate with the Davao Light Power Co. (Davao Light) a subsidiary of the Aboitiz Power Corp. The WAC technical team is composed of members of the applicable government agencies, private corporations affected by the project and other private entities. In a recent interview, Arturo M. Milan, executive vice president of Davao Light, said that the project was immediately implemented upon the approval of the company’s application by the Energy Regulatory Commission.

operations are heavily dependent on sufficient and steady supply of electricity at stable rates. They already have an existing PSA valid from March 2013 up to December 2019. Under their PSA, SMEC shall supply power to CEDC for a contract capacity of 70,000

kilowatt-hours (kWh). CEDC pays P4.6045 per kWh to SMEC. The power supplied to CEDC comes from the Sual power plant. The Sual power plant, however, is scheduled to undergo maintenance shutdown from August 8 to September 6. In order for CEDC to continue being supplied with stable and affordable power during the shutdown of the Sual power plant, the two companies asked the Energy Regulatory Commission (ERC) to “approve the PSA, as amended,” and to “grant provisional authority to implement the PSA, as amended.” T he c ha nge in t he PSA is mainly focused on replacement power during outages. Specifically, CEDC “shall procure replacement contract capacity and replacement associated energy from the WESM [Wholesale Electricity Spot Market].” However, the power supplier may offer replacement contract capacity and replacement associated energy

from other sources and CEDC shall have the option to accept said offer, provided , it shall be lower than CEDC’s forecast replacement power cost from the WESM. If CEDC accepts the offer, the cost of such replacement power shall be a pass-through cost. “Without SMEC, CEDC would have no choice but to source all of its requirements from the WESM at constantly fluctuating prices, which are generally higher than prices fixed in contracts with power suppliers,” CEDC pointed out. If CEDC is to source power from WESM it would pay an average of P4.6678 per kWh, which is higher than what it pays SMEC. “Considering the scheduled outage of the Sual power plant from August 8 to September 6, 2015, the immediate issuance of provisional authority to implement the PSA, as amended, will shield CEDC from sourcing all the electricity requirements of its customers from the WESM,” their application read.

Church groups seek closure of Semirara coal mine By Claudeth Mocon-Ciriaco Correspondent

he Antique Diocesan Social Action Center of Antique, together with the Roman Catholic Church’s social action arm, on Sunday called for the complete closure of the Semirara coal mines in Antique following the recent incident which claimed the lives of nine miners. “We strongly reiterate our call for the complete closure of the Semirara coal mines and for the prohibition of mining anywhere else in Antique,” the joint statement of the diocese and the National Secretariat for Social Action-Caritas Philippines (Nassa-Caritas) said in a statement. The groups particularly cited studies which showed how the Semirara coal mining activities destroyed over 83.92 hectares of mangrove with 31 species and more than 2 kilometers of coral reefs from 2009 to 2014 alone.

Nassa-Caritas and the diocese added that Semirara also introduced toxicity to the surrounding waters and destroyed a rich fishing ground shared by Antique, Romblon, Mindoro and Palawan. “Of the fossil fuels, coal is the most dangerous insofar as global warming is concerned,” the joint statement added. Semirara accounts for 7.5 million metric tons of the 7.8 MMT of coal produced locally. Global warming is largely caused by carbon dioxide and methane emissions which come from coalpowered plants. It is a phenomenon that is melting polar ice caps and is raising sea levels, which makes the Philippines No. 8 among countries most affected by it. T hese are the reasons the groups expressed serious concern over the extension of Semirara’s operating contract to 2027 and expansion of its coverage from the original 5,500 hectares to the current 12,700 hectares.

“Unong Pit, a Semirara mining area abandoned after its resources were depleted, is now underwater. The 400-hectare Panian Pit is walking toward this watery death, as well,” they said. The tragedy which killed nine miners earlier this month occurred at the north wall of the Panian Open Pit of the coal mine in Semirara, Caluya, Antique. Back in 2013, an acciddent in the same mine pit claimed the lives of ten people. “We demand that the government recognize the direct contribution of coal mining and coalpowered operations to global warming. It is the entire country that stands at a loss for every environmental disaster that hits it. Typhoon Yolanda alone…is a clear and strong testimony to the fact that the government can barely cope with the disasters brought about by global warming. Yolanda is not going to be the last of these disasters,” they added.

BUTUAN CITY—A joint task force against illegal logging confiscated what was believed to be illegally cut forest products worth some P.5 million early morning on Thursday in town at the boundary of Agusan del Sur and Compostela Valley provinces. Reports from the Agusan del Sur police command to the regional headquarters here on Friday said the confiscation happened 5:30 a.m. on Thursday at Barangay Cuevas, Trento, Agusan del Sur. The police report said that a unit of wing-van truck bearing license plate RLZ-134, driven by Isebro Pana, 28, of Bunawan, Poblacion, Davao City, was intercepted loaded with some 12,000 board feet of illegally cut Lawaan, with market value at P500,000. Pana and his helper, identified as Joemarie Narag, 28, a resident of Purok 10, Valencia City, Bukidnon, were arrested. The seized forest products are now in the custody of the 133rd Regional Public Safety Company (RPSC) in Barangay Bunawan Brook, while Pana and Narag are detained at the Trento Police Station. The joint task force is composed of personnel from the Trento Police Station, Agusan del Sur Police, 133rd RPSC, 13th Regional Public Safety Battalion, and the Department of Environment and Natural Resources’ AntiIllegal Logging Task Force. PNA

CIAC official denounced for using govt resources in mayoral campaign

LARK FREEPORT—For allegedly using government resources for his personal use, Clark International L. Airport Corp. (CIAC) Vice President Reynaldo Catacutan is in trouble. Catacutan, a former mayor of Capas, Tarlac, was the subject of a letter-complaint filed recently by incumbent Mayor Antonio “Tj” Rodriguez to CIAC President and CEO Emigdio “Dino” Tanjuatco III. In the letter-complaint, Rodriguez bared the alleged “questionable acts” of Catacutan “in his desire to make a comeback as mayor of Capas, Tarlac.” Rodriguez said Catacutan has been using government personnel and vehicles in his political activities. The mayor said that on June 19, Catacutan held a news conference that was organized by CIAC employees during office hours. Catacutan also used a CIAC vehicle when he attended a court hearing in the morning of that day. Rodriguez said that Catacutan was often seen in Capas using CIAC vehicles when going to funeral wakes, visiting his private properties and when talking to people who are affected by the Green City project of the Bases Conversion and Development Authority. “We are wondering whether your good office or even Malacañang is aware of these dubious acts of Mr. Catacutan considering that he is a presidential appointee,” Rodriguez said. “We strongly support President Aquino’s tuwid na daan rallying call and we believe his appointees, especially in higher offices, should toe the line and not abuse their positions for their personal ambitions,” the mayor said. “Our people deserve only the best service from the best men,” he added. Rodriguez said if no corrective action is initiated against Catacutan, “we will be compelled to file administrative charges against him.” The letter-complaint was also sent to Malacañang and the Department of Transportation and Communications. Tanjuatco said he has forwarded the mayor’s letter-complaint to Catacutan. “We are just waiting for him to answer the complaint,” he said. Ashley Manabat

A10 Monday, August 3, 2015

Opinion BusinessMirror

editorial

TPP is dead–for now

he US-initiated Trans-Pacific Partnership (TPP), envisioned as a free-trade bloc covering 40 percent of the global economy, has been completely stalled for the time being. While the Philippines is not a founding member of the group, the government has expressed an intense desire to join. We have written several times how this agreement is not in the best interest of our nation. Based on the latest round of negotiations, many other countries feel the same way. Trade representatives—numbering 650—from the 12 nations negotiating the TPP, stretching from Japan to Chile, have been meeting in the US to finalize the proposal, and so far are not successful. While a Pacific free-trade bloc may have some advantages, this trade union is not good for us. Multilateral trading agreements covering many unequal economies are difficult to negotiate and are prone to failure, the European Union (EU) being the prime example. Like the classic political wisdom, the negotiating trading blocs are like two wolves and a lamb voting on what to have for dinner. The TPP is failing because every nation has an obligation to protect its own interests, and that contradicts the US position to forge an agreement for the “greater good.” New Zealand, the world’s largest exporter of dairy products, will not agree unless the US, Japan, Canada, and Mexico open their markets to New Zealand exports. Japan and the US have reached an agreement on the free trade of automobiles, but Mexico—the fourth-largest car exporter in the world—wants to protect its industry. Canada supports Mexico’s position. Further, Japan imports car parts from Thailand, currently not a TPP member, which is confusing the issue of whether the car was completely “manufactured” in the TPP zone. The US wants a 12-year protection on the production of generic drugs, but Australia will accept only five years, and Chile, by virtue of its laws, offers no such protection. In addition, smaller nations want greater access to the larger markets, but are extremely concerned about provisions that allow multinational (read USA) companies to directly sue foreign governments if those governments pass any law that affects the company’s profitability. The EU trading bloc is failing because of conditions such as the fact that Greece depends on buying German-manufactured goods, while the Greek economy depends on the nonessential spending of German tourists. The free-trade bloc of Southeast Asia is going to be successful because— with the exception of Myanmar, Cambodia and Laos—the economies are relatively equal and complementary. Wealthy Singapore is geographically small and depends virtually 100 percent on importing all the food that its people need. Vietnam is a large rice exporter. Thailand builds cars. Indonesia provides minerals. Malaysia and the Philippines export electronic goods but to different markets. The Philippine banking sector is the strongest in the region. Asean integration will not be a competition between David and Goliath economies as in the TPP. And in the free-trade arena, Goliath always wins.

PCSO extends services through hospital help desks, grants Atty. Jose Ferdinand M. Rojas II

RISING SUN

he Philippine Charity Sweepstakes Office (PCSO) recently added 13 more hospitals as its partners under the PCSO ASAP (At Source Ang Processing) Program.

The program was launched on April 22 with the signing of an agreement between the PCSO and St. Luke’s Medical Center. The PCSO ASAP Program makes it more convenient for the public to access the agency’s services by establishing a PCSO Desk in partner-hospitals. The 13 hospitals recently added to the program are Justice Abad Santos General Hospital, Ospital ng Muntinlupa, Quirino Memorial Medical Center, Philippine Children’s Medical Center, Rizal Medical Center, East Avenue Medical Center, Jose B. Reyes Memorial Medical Center, Las Piñas General Hospital and Satellite Trauma Center, National Children’s Hospital, National Kidney and Transplant Institute, Lung Center of the Philippines and Amang Rodriguez Memorial Medical Center. The PCSO Desk is manned by a social worker of the hospital and

trained by the PCSO in request evaluation and recommendation. Patients who require financial assistance under the PCSO Individual Medical Assistance Program for their hospitalization, dialysis, medicines, and other medical- and health care-related concerns may submit their applications for assistance at the desk, instead of at a PCSO office. We had been working on this plan for several years, developing a procedure and training program, and negotiating with various hospitals to give it a try. We appreciate the cooperation and support of our 14 partnerhospitals in helping us extend the PCSO’s services to the public. The PCSO’s Charity Sector and Branch Operations Sector just finished holding a series of briefing sessions all over the country, with the last one held last Thursday and Friday in Tagaytay City, attended by representatives of hos-

pitals from the Southern Tagalog and Bicol region. We look forward to adding more partner-hospitals to our ASAP Program in the coming months. nnn

The PCSO also recently allocated P19.86 million to orphanages and homes for street children and the elderly across the country, affirming its support for residential and care facilities that provide needed social services for vulnerable sectors of society. To be allocated varying amounts in the National Capital Region are White Cross Children’s Home, Laura Vicuña Foundation Inc., Hospicio de San Jose, Philippine National Red Cross, CRIBS Philippines Inc., Kadiwa sa Pagkapari Foundation Inc. and Reception and Study Center for Children. In Region 3: Nazareth Home for Children, Tahanang Mapagpala ng Immaculada and Bahay ni San Jose Orphanage Inc. In Region 4: Sta. Ana-San Joaquin Bahay Ampunan, Golden Acres Haven for the Elderly, Taw Kabui for a Child Inc. and Casa Dei Bambini. In Region 5: Orphanage of the Virgin of Guadalupe. In Region 8: Western Samar Development Foundation Inc. and SOS Children’s Village. In Caraga: Balay Silonganan Home for Street Children, Gesu Eucaristo Children’s Inc. and Por

Cristo Foundation Inc. Home of the Abandoned Elderly. Partner-facilities selected for the PCSO’s Institutional Partnership (IP) Program must meet certain requirements, including Department of Social Welfare and Development accreditation and a license to operate. No more than 15 percent of the PCSO funding for IPs may be used for administrative costs; the rest is to be allocated for programs. Liquidation must be performed in line with applicable laws and PCSO and Commission on Audit rules and regulations. This is, likewise, the policy for PCSO’s Endowment Fund program, which provides financial assistance to public hospitals. Recently, 52 primary, secondary and tertiary public hospitals, 14 of them facilities under the Department of Health, were allotted P110.4 million in grants to be used for the care of patients who request and qualify for financial subsidies. T he hospita ls received amounts ranging from P200,000 to P5 million. The grant of financial assistance to IPs and public hospitals are another way to extend the PCSO’s services across the country. Atty. Rojas is vice chairman and general manager of the Philippine Charity Sweepstakes Office.

IMF gets smart about Greece

By Mohamed A. El-Erian | Bloomberg View

Y hesitating to play a full financing role in the latest bailout program for Greece, the International Monetary Fund (IMF) risks alienating both the Greek government and its European partners. Yet, the institution’s approach isn’t just warranted; it could well hold the key to the success of the challenging task of restoring Greece’s growth and financial viability within the euro zone.

The IMF, a lthough w illing to join in the creditor negotiations with Greece, has indicated that its willingness (indeed, ability) to participate in a new funding arrangement depends on progress on some important and long-standing unfinished business. It wants to see a comprehensive pro-growth economic-reform program for Greece; progress in its implementation; guarantees for the country’s financing needs; and debt relief. The IMF is right to insist on these four cond itions. Wit hout t hem, t he latest ba i lout agreement would face the same fate as the previous two, wh ic h bought some time for Greece and its euro-zone partners, but at a high cost. Those bailouts neither reversed the damage to the country’s languishing economy nor relieved the great

hardship for Greece’s long-suffering citizens. Although Greece and its European partners, like different parts of the IMF’s conditionality, neither is happy with the whole; and all worry that a less-than-fully committed IMF spells huge trouble for the third bailout. Without the IMF, some creditors (such as Germany, the European Central Bank and other European financial institutions) would face trouble getting their leaders to giving back large amounts of new funding to Greece. And without the IMF, Greek Prime Minister Alexis Tsipras would find it hard to mobilize the internal unity needed for the successful implementation of unpopular domestic economic reforms, including those that cross his party’s “red lines.” These are risks worth taking

The IMF, although willing to join in the creditor negotiations with Greece, has indicated that its willingness to participate in a new funding arrangement depends on progress on some important and long-standing unfinished business. It wants to see a comprehensive pro-growth economic reform program for Greece; progress in its implementation; guarantees for the country’s financing needs; and debt relief. for the IMF. In the two earlier bailouts, the IMF was forced by political pressures (mainly from Europe but also from the US) to participate in programs that, in addition to facing design f laws and considerable implementation uncertainties, violated two of its long-standing conditions: first, “financial assurances” that underpin domestic implementation with sufficient external funding; and “debt sustainability” to ensure that growth isn’t undermined by the persistence of excessive debt.

In the process, the IMF risked its own credibility and effectiveness while exposing its members’ funding to considerable Greek default risk down the road. This time the IMF is insisting on better analytical and operational anchors for a new arrangement for Greece. And it is right to do so, since it isn’t only the integrity of the institution that is at stake. Its brave stance, including the four conditions that it is insisting on, is critical for the success of this expensive third bailout. Almost 14 years ago, the IMF was bullied into lending yet again to Argentina when it was clear to many that the best its involvement could do is buy a few months for the country—concerns that painfully played out when, just three months later, Argentina defaulted and its economy imploded. This time around, the IMF is seeking to abide by the harsh lessons of its own past and avoid making yet another costly mistake. In the process, it is pointing to one of the very few ways that this third Greek bailout can succeed. Others should follow the IMF’s lead, especially if Greece is to avoid a fate similar to Argentina’s.

Opinion BusinessMirror

opinion@businessmirror.com.ph

The law of sustainable development

Economists and equities Paul Donovan

Atty. Lorna Patajo-Kapunan

legally speaking

he Philippines continues to enjoy a very high investors’ confidence in the second quarter of the year due to the following factors identified by the Bangko Sentral ng Pilipinas: Robust consumer demand, coupled with expected influx from the tourism sector; increased activities in the construction sector due to government-driven infrastructure development; higher volume of production due to increase in orders, new contracts and projects; business expansion and launch of new product lines; and continuing confidence in the Aquino administration.

On top of everything, the current administration has provided the necessary hard and soft facilities in accelerating the rollout of infrastructures and other development projects under the Public-Private Partnership Program. Our economy is moving forward in an unprecedented pace in our history. Stable inflation and low interest rates are needed. Favorable macroeconomic conditions, coupled with sustained foreign direct investment inflows and overseas Filipino workers remittances, will further drive up investors’ confidence, outlook and optimism.

inforce a system of accountability for adverse environmental impacts by focusing mainly on prevention rather than on control to encourage cooperation and self-regulation among Filipino citizens and industries. This is where the active and conscious role of business and investments, and other stakeholders, are needed; governing boards to operationalize further these laws do not limit their composition solely to the government. It is wise to include development partners, such as business and civil-society organizations.

The Philippine Constitution and sustainable development

To establish further the mandates of the state, Presidential Decree (PD) 1151 of 1977 and PD 1586 established the Philippine Environmental Policy and the Philippine Environmental Impact Statement system requiring sponsors of projects, and direct investments affecting the quality of the environment. In 2010 important to the pursuit of the Constitution, the Supreme Court en banc came out with another landmark and revolutionary Resolution AM 09-6-8-SC to address the urgency of coming up with remedies to protect the environment. The resolution provides the following legal remedies: writ of kalikasan, writ of continuing mandamus, citizen’s suit, including ordinary civil action and criminal action, allowing any natural or juridical person, or any entity authorized by law to file cases on behalf of persons whose constitutional right to a balanced and healthful ecology is violated, or threatened with violation. These effectively give stakeholders a stronger voice in nation-building.

As we are expected to get more progressive economic updates in the coming months, it is important for us to contextualize everything around the self-executing Section 16, Article II of the 1987 Constitution recognizing the right of the people to a balanced and healthful ecology in accord with the rhythm and harmony of nature. It is important to stress the importance of this constitutional provision to guide investments to recognize reality and the responsibility of sustaining our abundant resources to provide ecosystems services for future generations. The Philippines is recognized as the epicenter of global marine biodiversity, and hosting high endemism of both flora and fauna, and rich deposits of economically important minerals, and other important drivers of development, such as air and water. These facts should not only drive corporate social responsibility but should be the core consideration for investments and businesses. Ensuring the integrity of our resources entails understanding of the central role our natural environment plays in national development.

Greening the Philippine economy

Pursuant to the Philippine Constitution, the government came up with progressive legal mechanisms to protect the country’s resources through Republic Act (RA) 8749, or the Clean Air Act of 1999, RA 9275, or the Philippine Clean Water Act of 2004; RA 9003, or the Ecological Solid Waste Management Act of 2000. Aside from these laws, we also have laws on forestry, land-use plan and management, and mining. These landmark laws recognize the impacts of a degraded environment to the health and well-being of the people and the economy. For example, in Manila alone, based on data from the Department of Health, 60 percent to 70 percent of medicines sold in the market are for upper respiratory problems, such as asthma and bronchitis, among others. Water is becoming an expensive resource due to water pollution, lack of a septage treatment program and efficient sewerage systems. In August 2012 the Metropolitan Manila Development Authority (MMDA) reported that it collected as much as 1,800 tons of trash of mostly plastic bags and wrappers, consistent with waste audits conducted by Greenpeace and EcoWaste Coalition in 2006 and 2010 showing that more than 70 percent of waste in the Manila Bay consists of plastic bags and packaging. These laws go beyond the frame of “polluters pay principle,” and re-

Incentives for partnerships in nation-building

Intergenerational responsibility

The concept of intergenerational responsibility of the Oposa v. Factoran case placed the Philippines on the world map as a country of laws that looks at novel concepts in protecting its future—having strong environmental policies and progressive courts carrying out the function of the state as parens patriae. On a practical note, businesses can always look at working models that retain zero waste, and bring down energy and water utilization. These practices will not only cut their environmental footprints, but also optimize economic returns by cutting a lot of operational costs. The government, through its laws and the society, in return, incentivises these good practices. In the era of climate change, and in the current state of our environment, and the socioeconomic status of people dependent on it and at the rate of our progress, the situation necessitates an unprecedented partnership and cooperation by all sectors, governed by the precautionary principle. Capital needs to recognize that sustainable profit will continuously emanate only from a healthy work force and environment. All of these measures seek to increase investors’ perception and confidence. Current trends in investment direction favor strong environmentalprotection measures provided for by the government, and current financial behaviors seek to stand around a naturally built environment. Remember, without a healthy planet, there isn’t a healthy anything, and there is no business to be done on a dead planet.

he recent moves of the Chinese equity market provoked a flurry of questions directed at economists. Underlying these questions was an assumption that equity markets are in some way intimately linked with the workings of economies. This is not so. In fact, for economists, equity markets are something of a side show. It is worth emphasizing that rising equities are not always a good thing. Suggesting equities had a “good” day if they rose and a “bad” day if they fell does not make economic sense. Equities have a good day if they are fairly valued according to economic fundamentals. Equities have a bad day if they are deviating from fair value. An equity market that is bubbling ever higher is not “good”. An equity market that, having overheated, corrects down to fair value is not “bad”. Nonetheless, the Orwellian simplicity of “up=good, down=bad” has become so entrenched that even policy-makers can be sucked into this. It is common for policy-makers to try to limit “short selling”—the sale of equity one does not own in expectation of a fall in the price. However, it is relatively rare for them to ban the use of credit to purchase equities in the hope of a

rise in the price. The latter is actually a short selling of cash (one is handing over cash one does not own in exchange for equity), but this is considered acceptable. The false idea that “down=bad” justifies a policy that prevents selling on credit but does not prevent buying on credit. For economists, a fall in equity markets correcting from a bubble tells us no more about the economic outlook than did the inflated expectations that preceded it. The relationship between equities and economies is limited. Generally speaking, large companies account for around 40 percent of private-sector activity in an economy, and maybe 30 percent of private employment. Most business is carried out by small businesses in a modern economy, and the government sector will also be important. In developed economies, companies quoted on the equity market will account for maybe a quarter of

Monday, August 3, 2015 A11

total economic activity and a fifth of total employment. The last two recessions in the G-7 economies are a good study of the consequences of this. The most recent recession in the wake of the global financial crisis of 2008 was essentially a small business recession. Large businesses suffered too, but the policy responses have generally helped large businesses a lot more rapidly than they have aided small businesses. However, the 2001 recession (which, depending on how one wants to define recession, may not have been a recession at all) was primarily a problem for larger companies. Smaller businesses fared relatively better in that economic downturn. Judging the world entirely on the basis of large corporate performance would have given a distorted view of economic performance this century. Moreover, the relationship between equity markets and their local economy has become ever more stretched as economic activity has become ever more globalized. Large listed companies are increasingly transnational—that is to say a large proportion (often a majority) of their earnings come from overseas sales, and often a large part of their operations, and thus costs, are incurred overseas. Which equity market these companies are listed on is often little more than an accident of history. This means that the relationship between equities and individual economies is frayed further.

One could make a case that equity markets signal something about a proportion of global economic activity, but to ascribe equity performance to domestic economic activity is dangerous. So is there anything equities can tell economists? There are certainly links. Equities are an asset, and as such contribute to household wealth and have a bearing on financial stability. Wealth effects are important to consumer spending, and thus to economics. Loss aversion is a powerful force for consumers; people dislike losses more than they like profits, so if equities go from 100 to 200 then back to 100, equity holders will be more negative about life at the end of the process than they were at the start. This has some relevance to China’s recent volatility—equities are higher than they were at the start of the year but that does not mean that there will not be a negative reaction to what has happened to date. Equity markets should not therefore be ignored, but they need to be seen in their proper context. Equities represent a subsection of any economy, and they are likely to be influenced by global forces as much as domestic forces. Equities have a bearing on economics, through the wealth effect. Beyond that, there are better indicators to watch as a guide to economic performance. For a web version of the article, visit www.ubs.com/pauldonovan

PHL needs DICT for its own protection in cyberspace Henry Schumacher

view from the 19th floor

he Philippines faces an unrelenting cybercrime crisis and is threatened by an increasing spate of cyberattacks on government and business, mostly from external sources.

Th i s p r o b l e m i s g e t t i n g worse. Consider a few recent cybercrime incidents. For the second time since 2012, hacktivists decided to “commemorate” the Philippines’s Independence Day by defacing web sites of the Philippine government. Last Independence Day a group of hacktivists, calling themselves the “Global Security Hackers,” defaced the web site of the National Historical Commission of the Philippines and posted a scathing message taking President Aquino to task for his alleged failures. It ended its online tirade with the warning, “Security Can’t Stop Our Curiosity.” Before this, or on June 12, 2012, hacktivists, under the alias “PrivateX,” defaced seven government web sites to protest some provisions in the Cybercrime Prevention Law, or Republic Act 10175. And today there’s the continuing—if little known—cyberwar being waged by China against the Philippines, which is one of only two Asean member-states defying China’s claim to own practically the entire West Philippine Sea. The government’s response to attacks by a Chinese government hacker group, named Naikon, that has been stealing secret data for years from supposedly secure agencies, such as the Office of the President, the National Security Council and the National Intelligence Coordinating Agency, was to organize an ad-hoc group, consisting of personnel from the Department of Science and Technology, to bolster cybersecurity on government web sites. These few examples in a continuing wave of cyberattacks cast a harsh light on the apparent incapacity of lone government agencies working by themselves to counter web-site defacements and other more serious cyberattacks,

despite past hacking experiences. It’s true many government agencies have the money and manpower to protect their own web sites and digital terrain. But these agencies work solo. They only try to protect themselves and don’t usually coordinate with other departments, as well as they should. As can be seen in the example above about the Chinese hackers, the information technology units of government agencies only seem to come together after a cyber crisis. But isn’t prevention infinitely better than any cure? If this were a war (some would argue there is an ongoing cyberwar), what the government urgently needs is a general staff to command and control the disparate cyber campaigns being waged by lone government agencies to make the total war effort more efficient and vastly more effective. This general staff for information-technology (IT) matters exists—but only on paper for the time being. It’s called the Department of Information and Communications Technology, or DICT. T he only reason the DICT hasn’t been organized yet is the seeming government misconception that it is an “unnecessary bureaucracy” and, therefore, a waste of money. That was the view held in 2004, when the bill creating the DICT was introduced in Congress. However, the government’s reasons for holding back on establishing the DICT are no longer valid. In the meantime, the cyberworld has changed, and is now a more dangerous place than before, especially for the unprepared. It’s time for the government to shed its past history of indifference toward the DICT and fully support a new bill (Senate Bill 2144) put forward by Sen. Teofisto Guingona III in 2014 to

The government’s response to attacks by a Chinese government hacker group, named Naikon, that has been stealing secret data for years from supposedly secure agencies, such as the Office of the President, the National Security Council and the National Intelligence Coordinating Agency, was to organize an ad-hoc group, consisting of personnel from the Department of Science and Technology, to bolster cybersecurity on government web sites.

create the DICT. The reasons put forth over a decade ago against establishing the DICT are no longer relevant. What remains relevant are the mounting dangers faced by Philippine business and government in cyberspace, and the utter need for a single government agency— the DICT—to take command and control, and to unify the government’s fractured cybersecurity operations. Support for the DICT remains strong in the private sector. Eleven Filipino and foreign chambers of commerce (including the European Chamber of Commerce of the Philippines) earlier this year urged Congress to pass the bills creating the DICT and raising the priority of IT in government. The chambers of commerce said in a letter to Senate President Franklin M. Drilon and Sen. Ralph Recto, chairman of the Committee on Science and Technology, that the DICT will place the Philippines on a level playing field with the rest of the world, where 80 percent of all countries have separate departments, ministries or agencies responsible for IT. The Philippines is one of four Asian countries without a separate IT depar tment in government. Both the Senate and the House of Representatives conducted technical working-group meetings on legislative measures seeking to create a DICT, with the view

of passing the bill by the middle of this year. The Senate has approved a new DICT legislation. Unfortunately, the House bill is still resting in committee. Pro-DICT business groups, such as Arangkada Philippines, in May found an ally in Foreign Affairs Undersecretary Laura del Rosario in their quest to raise the status of IT with the creation of the DICT. This June the Chief Information Officers Forum (CIOF) Foundation Inc. that champions ICTbased issues stated its support for the creation of the DICT. CIOF believes the major challenge facing the ICT sector is the lack of clear support from many top government leaders and legislators for a progressive policy on ICT and its rapid deployment in government. It also noted the abolition of the Commission on Information and Communications Technology, and its replacement with the sub-Cabinet-level Information and Communications Technology Office was the final blow against efforts to make ICT a major driver of economic growth. T he Inter net accou nts d irectly for about 3.4 percent of the gross domestic product in many countries, said the Pacific Economic Cooperation Council. About half of this comes from e-commerce and a third from IT infrastructure investments by private firms. On the other hand, global losses to cybercrime range from $80 billion to $400 billion a year, according to the Washington-based Center for Strategic and International Studies. It’s not yet too late for the government to change course and throw its weight behind establishing the DICT. The government will find a strong partner in business when it chooses to do so. The DICT will both be the shield and sword protecting government operations in cyberspace from criminal attacks. It will also open the door wider to further growth in the country’s digital economy and will facilitate Philippine competitiveness in new digital battlefields, such as Big Data. Both the government and the private sector need protection in cyberspace, that is why we need to have the DICT now.

2nd Front Page BusinessMirror

A12 Monday, August 3, 2015

Now is the best time to pass RFI–Domingo T By Catherine N. Pillas

he Department of Trade and Industry (DTI), long opposed to any change in the administration of fiscal incentives, is now looking for ways to convince the private sector to accept the will of President Aquino to rationalize the grant of perks to qualified undertakings, as he indicated in his last State of the Nation Address (Sona).

“We’re not 100-percent consolidated with the Department of Finance [DOF], but very little na lang ang hindi mapagkasunduan [was not agreed upon]. Now is the best time to pass it,” Trade Secretary Gregory L. Domingo said in a recent interview with reporters. Before the Sona last week, the Rationalization of Fiscal Incentives (RFI) bill was foreseen to languish

in Congress, much in the same way it failed to progress in the last 16 years due to the continued disagreement between the DTI and the DOF. But things have changed, as the two Executive offices have mended their differences on the RFI bills, much the same way they have agreed to push through with the Tax Incentive Management and Transparency Act (Timta).

They initially agreed to just push the Timta, as it seemed easier to sell to lawmakers and the private sector. However, Mr. Aquino included the RFI bill on his priority legislation agenda in last week’s Sona, forcing the DTI, the DOF and lawmakers to go back to the contentious measure. In the draft compromise bill of the DTI and the DOF in February, both agencies have already agreed on giving a “15 for 15” (15-percent reduced corporate income tax for 15 years) incentive package to companies registered with the Board of Investments (BOI). This will replace the BOI’s income-tax holiday (ITH) given to qualified firms for up to eight years. For the Philippine Economic Zone Authority (Peza), two options were given: Maximum ITH availment is capped at four years. After the fouryear period, Peza-registered companies may enjoy a 5-percent gross income tax in lieu of local and national taxes, except value-added tax (VAT) and real-property tax (RPT), for 11 years; or

A 15-percent reduced corporate income tax (CIT) in lieu of local and national taxes, except VAT and RPT, for 11 years. Domingo said the hurdle now is convincing the private sector, which remains lukewarm about the idea of changing the incentive package given by the investment-promotion agencies (IPAs) to investors. “The challenge now is getting the private sector to accept it. Any change, even if it’s good, will always be met with opposition. That’s why we advised the foreign chambers to study and do the calculations first [on the new incentive scheme] before they oppose it,” Domingo said. Even with foreign chambers consistently listing the RFI in position papers as a negative move on the part of the government, the DTI is urging action on the legislation before the end of the year so it would not be derailed by budget deliberations and the campaigning of lawmakers. “Yes, kailangan [i-fast-track ’to], along with mining taxation and taxes on soft drinks,” said House Ways and Means Committee Chairman Rep. Romero S. Quimbo, when asked if the House of Representatives will fast-track the bill. Senate Ways and Means Chairman Sen. Juan Edgardo M. Angara added: “It’s always been a priority, as evidenced by the numerous consultations we have.” “We’ve passed a lot of legislation that was deemed ‘unpassable’ before, like the fair competition bill, the cabotage bill and the ‘sin’ tax bill. I’m hoping this is another major legislation we can pass before the present administration ends,” Domingo said.

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RENEWABLE-ENERGY SECTOR TO SEE MORE FDI SANS 60-40 RULE By Lenie Lectura

eworking the restrictions on foreign ownership should encourage investors to come and participate more in the renewableenergy (RE) projects of the Philippines, European Union (EU) Ambassador Guy Ledoux said. “That would be a good measure to further attract EU investments, including in renewable energy,” he said in an interview at the recently concluded bilateral meeting between the EU and the Philippines on energy. This was not the first time that the proposed easing of the 60:40 equity rule, which prevents foreign firms from owning more than 40 percent of business ventures in the country as prescribed by the Constitution, was raised. In 2014 United Kingdom Trade envoy to the Philippines George Freeman and British Ambassador to the Philippines Asif Ahmad reiterated a statement made by former UK envoy to the Philippines Stephen Lillie in February 2013. Leaders of international and local business chambers have also called for the easing of rules on foreign ownership. “You need certainty of ownership, and be able to convince financiers that the project is secure for the long term. To promote that, we need to revisit the 60-40 rule,” Freeman had said. Ledoux said he finds it“strange”that the rule does not apply to coal-power projects. “We find it strange for non-RE like coal that 100-percent ownership is accepted. But for RE, the 60:40 rule applies. It’s so surprising,”the diplomat said. According to him, the equity restriction may be lifted without enacting a new law. “We might find a solution without enacting a law.” He said the energy sector is one of several priority areas for development cooperation between the Philippines and the EU over the next six years.

“If relaxed, this will stimulate [even] more investments in the field of RE,” he added. So far, the EU has committed P12 billion in the field of energy cooperation for the period 2014 to 2020. An inaugural program worth P3 billion to support the Department of Energy (DOE) is currently being finalized. The program will focus on supporting the DOE’s 90-percent electrification target through policy reforms, supporting existing electrification programs, and the deployment of RE technologies and innovative energy solutions for the poor. “Today the EU has become the world leader in renewables. Some EU member-states are also directly involved in the policy formation, like Germany, which has provided technical assistance for some aspects of the Renewable Energy Act, including the feed-in-tariff, net metering and interconneciton standards,” he pointed out. Former Energy Secretary Carlos Jericho L. Petilla earlier said relaxing the 60-40 rule is vital in promoting investments on RE, since it requires huge amounts of capital. “They are really just looking on [RE] projects, which can be owned 100 percent by foreign firms—something that our legislators can look into. Solar- and wind-energy projects are [more] capital-intensive than coal- or gas-fired plants, and we need foreign investors for these projects. So, to get that, we have to revisit the 60-40 law,” Petilla said. The chairman of the House Committee on Energy, Oriental Mindoro Second District Rep. Reynaldo Umali, also earlier said the proposal is still being studied. Meanwhile, Speaker Feliciano Belmonte Jr. seeks to insert the phrase “unless otherwise provided by law” to provisions in the Constitution which limit foreign ownerships of land and businesses to 40 percent.

Govt’s spending woes affect ODAs. . . Continued from A1

P rojec t s t h at e x per ienced b ot h pro c u re me nt proble m s and budget issues were implemented by four agencies—the departments of Agrarian Reform (DAR), Environment and Natural Resources (DENR), Agriculture (DA) and the Interior and Local Government (DILG). Agencies that implemented projects which experienced procurement problems were the Department of Public Works and Highways (DPWH), National Irrigation Administration (NIA), Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), Local Water Utilities Administration (LWUA) and the Department of Energy (DOE). The projects that had procurement issues included the Agrarian Reform Communities Project II of the DAR; Flood Risk Management Project for Cagayan River, Tagoloan River and Imus River of the DPWH; Logistics Infrastructure Development Project of the DBP; Manila Wastewater Management Project of the LBP; and the National Irrigation Sector Rehabilitation & Improvement Project of NIA. The list includes the Participatory Irrigation Development Project of the NIA; Philippine Rural Development Program of the DA; Provincial Towns Water Supply and Sanitation Program III of the LWUA; and the Scaling up Response on HIV and AIDS of the DILG.

As of the writing of the report, the procurement issues of four projects have already been resolved. The projects that had resolved procurement issues are the Forestland Management Project of the DENR; Integrated Coastal Resources Management Project (ICRMP) of the DENR; Market Transportation through Introduction of Energy Efficient Vehicles Project of the DOE; and the Haiyan Agriculture Rehabilitation Program of the DA. In terms of budget bottlenecks, affected were the ARCP II; Community-based Forest and Mangrove Management Project in Panay and Negros of the DENR; ICRMP; Mindanao Sustainable Agrarian and Agriculture of the DAR; Tulay ng Pangulo Para sa Kaunlarang Pang-Agraryo of the DAR; and the Establishment of Modern Integrated Rice Processing Complexes in the Four Provinces of the Philippines of the DA. The list also includes the InCountry Training Program-Training of Trainers on Scientific Method of Processing Fingerprints of the DILG; Integrated Organic Pollutants Management Project of the DENR; and the Philippine Climate Change Adaptation Project of the DENR. The Neda said the budget issues of the Rapid Food Production Enhancement Program of the DA were resolved as of the ODA report’s writing. The report stated that the country’s total ODA portfolio as of De-

cember 2014 amounted to $14.37 billion, consisting of 76 loans worth $11.18 billion and 449 grants worth $3.19 billion. The World Bank was the country’s biggest source of ODA loans, ,with 39.8-percent share, or $4.45 billion, followed by Japan International Cooperation Agency and the Asian Development Bank, with 28.3 percent, worth $3.16 billion and 20 percent, or $2.23 billion, shares, respectively. For ODA grants, the United States, the United Nations System and Australia were the three leading providers, with 36.1 percent worth $1,148.6 million, 19.1 percent worth $608.5 million and 18.4 percent worth $587.02 million, respectively. In terms of distribution per sector, the Infrastructure Development sector accounted for the largest share (39 percent) of the loans portfolio, amounting to $4.32 billion, for 34 loans. It is followed by the Social Reform and Community Development (SRCD) sector and the Governance and Institutions Development (GID) sector, with 24-percent and 22percent shares, respectively. On the other hand, the SRCD sector was the major recipient of grants amounting to $1.19 billion (comprising 151 projects), or 37 percent of the total grants portfolio. The GID and the Agriculture, Agrarian Reform and Natural Resources sectors followedwith25-percent and18-percent shares, respectively.