Businessmirror august 03, 2017

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Thursday, August 3, 2017 Vol. 12 No. 294

Auto sector to get ‘triple whammy’ from tax plan

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By Butch Fernandez

@butchfBM

n top of increasing excise tax on petroleum products and automobiles, the Duterte administration is also poised to impose higher registration fees for all motor vehicles, Senate President Pro Tempore Ralph G. Recto reported on Wednesday.

“The government has a ‘triple whammy’ tax proposal on vehicles,” Recto warned.

Noting that while the public was already alerted about the proposed additional taxes on motor vehicles

and the fuels that run them, the senator said “not yet on the public radar is the third one”, which seeks to double car-registration fees, or what is officially known as the Motor Vehicle User’s Charge (MVUC).

“Under the proposal, the MVUC on what is classified as a medium passenger car, one which has gross vehicle weight of 1,601 kilos to 2300 kilos, will go up to P6,552 from P3,600,” he said.

Rene E. Ofreneo

laborem exercens

T

he Philippines has been implementing land-reform programs for over a century. For this, the country should get a Guinness World Record award.

The first reform program was introduced in the 1900s by the American colonizers as part of the pacification of the archipelago. They tried to break up the large Spanish friar lands, which were the object of so much hatred by the peasant masses in Luzon and the Visayas.

In the 1930s the Commonwealth government tried to resettle landless farmers from Central and Southern Luzon to underdeveloped and underpopulated areas of the country such as Mindanao. The land colonization and resettlement programs were continued after World War II. However, the government also enacted laws reforming tenancy arrangements in the rice and corn areas. Harvest sharing between the kasama and the landlord was altered in favor of the former.

Recto recalled that current rates were pegged in 2004, as the fourth tranche of the fees mandated by Republic Act (R A) 8794, which took effect in 2000.

Recto pointed out that one of the weaknesses of the Department of Finance (DOF)-endorsed proposal is that, “It merely revises the rates stipulated in RA 8794, when the pressing revisions it needs cover the

Continued on A11

Continued on A2

Aviation growth drags as exodus of air-traffic controllers continues

By Recto Mercene

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@lorenzmarasigan

See “NSRP,” A2

CARP: Quo vadis?

The proposed Motor Vehicle User’s Charge under the DOFbacked tax-reform package, almost doubling today’s P3,600

By Lorenz S. Marasigan

A

business news source of the year

P25.00 nationwide | 4 sections 28 pages | 7 days a week

₧6,552

NSRP South gauge change costly, to delay project further ltering the technical and financial specifications of the P285-billion NorthSouth Railway Project (NSRP) South Line at this stage is a waste of time and money, possibly delaying the completion of the facility by two more years, according to a known rail expert.

According to Rene S. Santiago, a railway expert, the government has entered into a policy shift that will just cost it more money and more time, no matter the urgency of the need for a connection between Manila and Albay.

The Manila-Albay line, which was earlier priced at P171 billion by the Bicol Regional Development Council, is now endorsed at P285 billion by the National E conom ic a nd De ve lopme nt Authority (Neda).

The new cost covers standardgauge railroad tracks that could accommodate trains running at 150 kilometers per hour (kph), while the original version only proposed narrow gauge tracks where trains could run at a speed of 75 kph.

Originally, the project was only to be constructed along the

2016 ejap journalism awards

PHL HOSTS ASEAN FOREIGN MINISTERS’ MEETING A tourist poses for souvenir photos with the logo of the 50th Asean Foreign Ministers’ Meeting and its regional partners on Wednesday in Manila. An initial draft of a joint communique to be issued by the Asean foreign ministers, says they would ask senior diplomats to immediately initiate talks on the so-called code of conduct in the disputed South China Sea after their governments agreed on a framework of the accord with China in May. Related stories on A3 and A9. AP/Bullit Marquez

WESM doing wonders for power sector

By Lenie Lectura @llectura

T

Conclusion

he Department of Energy (DOE) has approved changes to the Wholesale Eletricity Spot Market (WESM) rules enhancing the market’s design and operations.

The approved enhancements are 1) shortening of dispatch interval from one hour to five minutes to lessen intra-hour deviations and imbalances; 2) single-pricing mechanism as a result of the shortened

PESO exchange rates n US 50.3970

dispatch interval that will no longer require ex-post runs; 3) automatic pricing re-runs that will yield to availability of prices in real-time; 4) reduction of gate closure from one hour to 30 seconds or less that will provide trading participants flexibility in managing risks for unplanned events; and 5) co-optimized energy and reserves that will ensure optimal scheduling of energy and ancillary services.

These enhancements, the Philippine Electricity Market Corp.

(PEMC) said, will address market operational audit findings

and introduce new features and functionalities, such as simplified compliance-reporting process and demand-side bidding. “ T he DOE’s timely action shows the conf idence in the WESM in its role in encouraging efficiency and transparency in the power industry,” said PEMC President Melinda Ocampo.

Enhancements in the WESM desig n a nd operat ions were based on the WESM design study commissioned by the DOE, and results of the yearly independent Continued on A12

@rectomercene

ast year the Manila Tower handled 280,000 landing and takeoff [runway events], an average of 767 aircraft a day. That is about 63 runway events per hour during a 12-hour peak period, or an average of 33 events per hour for 24 hours, according to the president of an air-traffic association.

More flights could have been handled, but the aviation authorities limited them to not more than 40 events per hour for safety considerations, said Rudy Buktot, president of the Philippine Air Traffic Contoller’s Association of the Philippines [Patca], during their 55th anniversary celebration held recently.

“The International Civil Aviation Organization [Icao] said that 280,000 a year would double in the next five years. But our capacity has not improved. We need to address several related problems, such as airport efficiency, the continued exodus of air-traffic controllers and the need to train more of them,” Buktot stressed. “Presently, there are 700 air controllers nationwide, assisted by some 100 non-ATC at the communication facility.”

He said according to the Icao forecasts, the countr y needs 1,400 to 1,700 air-traffic control-

We are expecting to see five more of our colleagues leave for Abu Dhabi this year because they could not resist the high salary compared to what we are receiving.”—Buktot

lers in the next five years to cope with the corresponding increase in air traffic.

Buktot noted that the congestion at the Ninoy Aquino International Airport (Naia) had eased somewhat because some of the local carriers have transferred part of their operations to Clark International Airport.

“What the Civil Aviation Authority of the Philippines [Caap] is doing is to transfer some airlines to other hubs like Kalibo, Mactan, Clark, because of the increasing number of flights. Hopefully, the planned transfer of the CNS/ATM from the Department of Transportation to the Caap will push through come September,” he added, referring to the Communications, Navigation See “Aviation,” A2

n japan 0.4567 n UK 66.5644 n HK 6.4502 n CHINA 7.4984 n singapore 37.1248 n australia 40.1513 n EU 59.4785 n SAUDI arabia 13.4399

Source: BSP (2 August 2017 )

A2 Thursday, August 3, 2017

BMReports BusinessMirror

www.businessmirror.com.ph

Auto sector to get ‘triple whammy’ from tax plan Continued from A1

way the collections are earmarked and spent.”

“The more than 17 years that the law has been in effect provides a trove of reform opportunities which can remedy inherent defects in the utilization of MVUC income,” he said.

In a statement, the senator added that over P135 billion was collected in road user’s tax from 2000 to 2016. He noted a special audit conducted by the Commission on Audit (COA) in 2009 already flagged weaknesses in fund use, which should have triggered remedial measures.

“First, it is time to end MVUC’s protected status as automatic appropriations whose utilization

Aviation. . .

Continued from A1

and Surveillance coupled with the Air Traffic Management system, the next-generation scheme. This system is linked to satellites to speed up the transmission of clear voice and electronic communications between pilots and air controllers.

The ATM part is the enhanced capability of ground air controllers to keep track of hundreds of airplanes in the air.

The new scheme allows them to process tons of data, aided by computers, so aircraft operators would be able to meet their planned departures and arrival. The system also allows pilots to stick to their preferred flight profiles with minimum constraints and without compromising aviation’s high level of safety. This results in less congestion. Buktot said once in operation, several airtraffic control facilities nationwide will be combined in one big operations room at the Caap compound.

The room, filled with banks of radar screens, could accommodate about 180 personnel, although there would be a total of 70 to 80 personnel

Grab, Uber. . .

Continued from A12

Party-list Rep. Rodel M. Batocabe of Ako Bicol raised the issue of accountability and liability of Uber and Grab vehicles. In case of an accident or untoward incident, Batocabe said the passenger cannot file a case against Uber or Grab since it is not a carrier but only a technology platform.

“In case of accident, who do I file cases against? Who do I ran after for indemnity as a result of reckless driving? Who has the contract of carriage?” he asked.

Batocabe also urged the LTFRB to strengthen its regulatory function so it can better enforce its policies and guidelines, especially in the case of Uber and Grab, which are not motorized vehicles but “only technology/digital platforms”.

is outside the ambit of Congress,” Recto said. “At present, the fund is exempt from the scrutiny of the elected representatives of the people.”

The senator lamented that “seven unelected bureaucrats” comprising the Road Board decide how this fund is used, even as the Philippine Constitution clearly stated that, “No fund must leave the Treasury without an appropriation from Congress.”

“For the sake of transparency, it must be included in the itemized listing of the DPWH’s annual budget,” Recto recommended. “Booking it as an off-budget account distorts the picture of total infra spending.”

Moreover, the senator stressed “it is time to revisit the manner by which the funds are apportioned”,

noting that at present, collections are divided into four special accounts: Special Road Support Fund (80 percent), Special Road Safety Fund (7.5 percent), Special Vehicle Pollution Control Fund (7.5 percent) and Special Local Road Fund (5 percent). According to Recto, the COA has repeatedly tagged irregularities in the use of the vehiclepollution-control fund.

“In 16 years, P10.6 billion had been allotted for clean-air projects, whose benefits, if any, are concealed by the smog of the metropolis,” he said.

At the same time, Recto recommends that “the menu must be revamped. A perpetual negative list must be put in place.

The procurement of road signs, highway barriers, reflectorized

signs, in gigantic quantities in the past, should be rationalized. The Philippines is abloom in signs but lacking in road order.”

In addition, the senator suggested the need to align a portion of MVUC collections in solving road congestion. “We should smash current orthodoxies like the manifest bias of the fund toward paving asphalt.”

Recto said the embargo in buying emergency response and obstruction-removal vehicles must also be lifted.

“If car-registration fees are being collected in the name of the motorists’ safety, then we should be open to the purchase of equipment that will keep them from harm, especially in Metro Manila, where one accident was reported every five

on duty at every shift.

“Once the new system is turned over to the Caap, the Manila Area Control and Mactan Area Control would be housed in the same operations room, including the Manila, Mactan, Bacolod, Kalibo and Davao Approach Control,” Buktot added.

This arrangement would enable Manila and Mactan and the rest of the other air-traffic control hubs to communicate on the same “hotlines”, without being constrained by bad communication and distance.

According to Buktot, air-traffic controllers constantly talk with each other through the hot lines, but distance and bad communication most often interferes, which give rise to heated arguments and bad blood among them. This happens every day and in the long run, those from the different air-control group band together, giving rise to the “fraternity mentality”, where each group does not necessarily mingle with the other.

This is dangerous since air safety requires the cooperation of each group from the Area Control to the Approach Control and the Manila tower, said Manila International Airport Authority General Manager Eddie V. Monreal,

once an airline executive.

Although the Caap expects to have the CNS/ATM by September, Director General Jim C. Sydiongco said it would take more than a year to iron out the kinks. “In the meantime, the old and the new radar systems would run together so that the performance of the old one could be compared with what is seen on the new radar screen. This is called ‘shadowing’, comparing that the mirror images of both old and new radars ‘agree’ with each other.”

“After a year, or maybe more, when the new system is found to have met all the parameters, meaning the aircraft altitude, identification and position are accurate, then the CNS/ ATM would be officially in operation,” Sydiongco added.

Meanwhile, Mike Mapanaw, the chief of the Air Traffic Service , said the Caap Training Center (CATC) would continue to train more airtraffic controllers until the required number is met. He said the CATC churns out an average of 44 per year, a small number because of limited instructors, who are air-traffic controllers themselves and therefore have to attend to their duties, as well.

Mapanaw is inv iting col lege

The lawmaker said he supports the proposal of House Speaker Pantaleon D. Alvarez to require Uber and Grab to secure a congressional franchise.

“They [Uber and Grab] cannot just operate without regulation, especially since their operation involves the protection and welfare of our people,” Batocabe said.

“They must come to Congress to operate this kind of technology,” he added.

Earlier, House Committee on Appropriations Chairman and Rep. Karlo Alexei B. Nograles of the First District of Davao City and Party-list Rep. Jericho Nograles of the Puwersa ng Bayaning Atleta filed House Bill (HB) 6009 to clarify the requirements, guidelines and standards for the operation of these transportation network companies (TNCs), like Uber and Grab.

The lawmakers said the bill also seeks to end the “raging” controversy over the decision of the LTFRB

to suspend the operation of some Uber and Grab vehicles caused by the absence of a legal framework that would address the distinct character of TNCs as a public conveyance.

HB 6009, or the proposed Transportation Network Service Act, seeks to institutionalize the TNCs as an alternative mode of public transport and provide the regulations for the operation of transportation network services “to ensure that the paramount interest of the public is protected and conserved, while encouraging free enterprise and economic development”.

Under the proposal,TNCs and and transportation network drivers are declared as common carriers for purposes of determining the liability and degree of diligence that must be observed in the course of transportation network service, and the presumption of negligence in case of breach of contract of carriage shall, likewise, apply to them.

minutes in 2015,” he said, adding: “MVUC should fund ambulances which can be stationed in trafficprone highways, patrol cars which can run after overspeeding vehicles at night and tow trucks to clear roads of stalled vehicles.”

No commitment

Congress leaders, in a meeting with President Duterte at the Palace on Tuesday, gave no firm commitment lawmakers can quickly pass the pending tax bills endorsed

by Malacañang.

“Nope”, Senate Majority Leader Vicente C. Sotto III said when asked if Duterte implored Senate and House leaders to fastback approval of pending revenue measures intended to raise additional funds to bankroll the administration’s

graduates to apply at the CATC, who would receive a starting salary of P40,000 per month once they have received their license.

Buktot said the air controllers’ exodus continue, saying three of his colleagues left this year for the Middle East. “We are expecting to see five more of our colleagues leave for Abu Dhabi this year because they could not resist the high salary compared to what we are receiving.”

He added the Abu Dhabi and Qatar governments are doing the recruiting, and some of their agents go to the provinces to recruit more air controllers, who cannot turn down the P200,000 starting salary per month. “And that is for assistant air controller who does not even need to handle a microphone to talk to the pilot.”

He said the air controllers could only ask for more additional benefits, and, hopefully, other forms of compensation so the government could stop the hemorrhaging.

It takes about six months to train a new air controller. They are required to stay in the government for two years to pay for their training before they are allowed to leave the service to seek greener pastures.

Duterte. . .

Continued from A12

a better way. Perhaps, parliamentary systems can be more successful in addressing the issues of performance. The President should be some kind of a CEO presiding over a rational organization, making the state a modern organization,” Magno added.

Top analysts and the civil society assessed Duterte’s second State of the Nation Address in a forum hosted by the Stratbase ADR Institute and Democracy Watch in Makati City.

“President Duterte’s change-driven mind-set has not only rocked the boat, all the signs indicate that the President is keen on keeping that boat rocking,” said Dindo Manhit, president of Stratbase ADR Institute.

“His focus on law and order is as potent as ever, the infrastructure program is as ambitious as ever, and the promise of better government services is as urgent as ever,” Manhit added.

Dr. Julio Teehankee, president of the Philippine Political Science Association, said Duterte is now changing the institution of the presidency.

“Through his controversial actions, what we can surmise is that he is repudiating the world order, the existing order. He is changing the narrative or the storyline. He represents a president whose antithetical to the previous one,” he added.

“He is repudiating the reformist or be it elitist narrative of the previous democratic regime established three decades ago with the ouster of the Marcos regime.”

“The Philippines has a weak state and a strong presidency. It is weak because the Philippines is captured by distinct interests. It cannot insulate itself from rent-seekers, oligarchs, dynasties, warlord, and etc. However, the irony is that structurally, the Philippines is one of the strongest,” Teehankee said.

NSRP. . .

multiyear infrastructure program, dubbed as “Build, Build, Build”.

“We merely discussed possibilities of tweaks to the tax reform bills,” Sotto said, adding: “The President was open to it.”

The Senate leader disclosed the finance and budget officials were the ones opposing congressional amendments in the tax bills.

“The economic managers, the DOF and DBM are against any revisions in the tax bills,” Sotto told the BusinessMirror, referring to the administration-endorsed Tax Reform for Acceleration and Inclusion, also known as TRAIN bill.

Sotto said Duterte indicated he was open to tweaks by Senate allies in the version of the tax-reform package crafted by the House of Representatives.

Continued from A1

Philippine National Railways (PNR) tracks. The existing tracks are currently specified as narrow gauge, which measures 1,067 millimeter (mm).

Changing it to standard gauge will require a wider 1,435-mm stretch, thereby increasing the area covered by the facility.

“Due to these changes, I think it will be delayed by at least two years,” he told the BusinessMirror. “To shift to standard gauge on the same alignment of the PNR will be difficult because the right of way of PNR was on the basis of narrow gauge. To widen it, you have to buy additional right of way.”

Joseline A. Geronimo, the spokesman of the state-run railway system, admitted that the government will have to acquire new easement to make way for the shift in gauge specifications.

“There will be new right-of-way acquisitions, since there might be areas in need of clearing,” she said.

Santiago noted that faster train speeds also entail a change in curvature alignment for the track, which may also cause more delay. Despite this, the PNR General Manager Junn B. Magno assured that the project will still be finished within the term of President Duterte.

“The NSRP is built on top of the existing narrow gauge line.

There will just be an overlap in time where the narrow and standard gauge will coexist,” he told the BusinessMirror. “There has been a six-year delay already. It is but proper that we will be two years ahead in terms of capacity building.”

The talks about changing the gauge specifications of the project started two years back.

To recall, the Neda approved the construction and subsequent operation and maintenance of a narrow-gauge railway in February 2015. A year later, the then-Department of Transportation and Communications proposed for the facility to be changed to standard gauge, but was subsequently scrapped by the Neda Interagency Investment Coordination Committee-Cabinet Committee, as it was “a waste of time and government resources”.

August last year saw the same committee—with different sets of Cabinet officials sitting as members—approving the gaugechange proposal, thereby increasing the price of the facility by P114 billion.

Now a ‘hybrid’

The project, originally a full public-private partnership deal, was modified to the Duterte administration’s preferred “hybrid” on March 21.

Hybrids are funded partly by the government using taxpayer’s money or official development assistance packages to immediately kick-start construction. The operations and maintenance component of these projects will then be auctioned off to the private sector.

“Through this, we will reduce the procurement period of general consultants and contractor, but it would still be within the law,” Transportation Undersecretary for Rails Cesar B. Chavez told the BusinessMirror, referring to the shift in the project’s procurement mode.

The P285-billion project is set to be officially approved this month, as part of the administration’s “Build, Build, Build” initiative, which will increase infrastructure spending to P8 trillion from 2017 to 2022.

The NSRP was already delayed multiple times due to late bidding announcements and proposed modifications. Bid awarding and contract signing was originally due for the first quarter of 2016. It will be built on two phases. The first phase entails the construction of a 653-kilometer long-haul railway line that will traverse from Metro Manila to Legazpi City, Albay, along with additional commuter lines operating between Tutuban and Calamba.

The second phase is an extended 56-km commuter rail line running between Calamba and Batangas, together with an extension between Legazpi and Matnog.

The whole facility is expected to cut travel time and provide an alternative means of transportation to commuters coming to and from the Bicol region.

No change for commuters

But for Santiago, the increase in cost and speed will be of little benefit to commuters. “There are a lot of changes. You’ll have to close down the PNR section. For commuters, they cannot benefit from the higher speed.”

Despite the higher speed, commuters will experience no difference between narrow and standard gauge tracks, because of the number of stations of the line. “It will just accelerate then stop at the next station, the commuters cannot benefit from higher speed,” Santiago explained. With Inna Christine Cabel

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Duterte approves validity extension of passports and drivers’ licenses

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resident Duterte has extended the validity of passports and driver’s license to rationalize and strengthen state policies on identification cards.

Signed into law on Wednesday are Republic Acts (RA) 10928 and 10930. RA 10928 prolongs the validity of the Philippine passport, while RA 10930 extends the validity of the driver’s license.

Under RA 10928, Duterte amended the validity of regular passports stated in Section 10 of RA 8239, or the Philippine Passport Act, from five to 10 years. For individuals under 18 years of age, however, a passport valid for five years shall be issued.

The amended provision also grants the Department of Foreign Affairs (DFA) the authority to limit the period of validity of a passport to less than 10 years whenever necessary to maintain national economic interest or political stability.

The DFA, as the issuing authority, is mandated to produce the implementing rules and regulations of the passport validityextension law and was told to converge R A 10928 with government efforts to make passportprocessing system “seamless, convenient and pro-people”.

On the other hand, RA 10930 extends the validity of the driver’s license to five years, from three years.

The law said the amendment was in part of the government’s bid at establishing a system that promotes the ease of access to public services and efficient transportation regulation favorable to the people.

On top of this, holders of professional and nonprofessional driver’s license who had not committed any violation under RA 4136, or the Land Transportation and Traffic Code, and other traffic laws, rules and regulations during the five-year validity of his passport shall be entitled to a renewal for 10 years, subject to the assessment of the Land Transportation Office (LTO). Elijah Felice E. Rosales

Palace to Noynoy: Look who’s talking

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By Elijah Felice E. Rosales

@reneacostaBM

A

pparently taking the cudgels for President Duterte, the military on Wednesday branded exiled Communist Party of the Philippines (CPP) founding chairman Jose Ma. Sison a “master deceiver” and a “liar” in a continuing word war following the suspension of peace negotiations.

In a news statement, Armed Forces Chief of Staff Gen. Eduardo M. Año also accused the New People’s Army (NPA), CPP’s armed wing, of having traded the communist ideology it espouses for money.

The top military chief issued the statement in response to the rebels’ continuing “extortion” activities around the country.

“The local New People’s Army tasked to do the collection of revolutionary tax that resents that iniquitous sharing is likely to deny that Mr. Sison and other CPP-NPA honchos derive monetary benefits.

They all are guilty of extortion, grave

@alyasjah

alace officials took a swipe at former President Benigno S. Aquino III on Wednesday for saying that the war on drugs has not changed the Philippine social landscape.

Aquino on Tuesday said the government’s crackdown on illegal drugs has changed nothing at all. Chief Presidential Legal Counsel Salvador S. Panelo, for one, labeled Aquino’s remark as “shamelessly cocky and an outrageous chutzpah”.

“Former President Noynoy Aquino’s comment on President Duterte’s war on drugs as being ineffective

is shamelessly cocky and an outrageous chutzpah. The criticism comes from someone under whose watch the drug menace proliferated in unsurpassed magnitude due to the previous administration’s gross incompetence in curbing it or criminal neglect in stopping its spread,” Panelo said in a news statement.

Panelo added the war on drugs

shall carry on “until the last bastion of the drug syndicate is destroyed pursuant to [the President’s] constitutional duty to serve and protect the people”.

On the other hand, Presidential Spokesman Ernesto C. Abella opted to make use of numbers to refute Aquino’s remark on the war on drugs.

“The Duterte administration’s antidrug campaign resulted in the unprecedented voluntary surrender of more than 1.3 million drug personalities. 96,703 drug personalities have been arrested in the first year of the present administration’s antidrug campaign compared to 77,810 drug personalities arrested in the six years of the previous administration,” Abella said.

On top of this, Abella added about 2,500 kilograms of methamphetamine, locally known as shabu, were

By Jonathan L. Mayuga @jonlmayuga

E

Let there be light Energy officials push the button signifying the energization of the National Electrification Administration’s (NEA)

12th million consumer in Tagum City, Davao del Norte on Wednesday. (From left) NEA board members Rene Gonzales and Agustin Maddatu, Energy Undersecretary Petronilo L. Ilagan, NEA Chief Edgardo R. Masongsong, Energy Secretary Alfonso G. Cusi, Sen. Sherwin T. Gatchalian and Assistant Secretary Jonas S. Soriano led the lighting ceremony during NEA’s celebration of its 48th founding anniversary and the launch of the Eighth National Electrification Awareness Month. PNA/Abs A. Abando

coercion, destructive arsons and kidnapping,” Año said.

“The AFP maintains that the group of Mr. Sison has traded ideology for money, principles for perks, cause for benefits. Their group has become a big burden to business and employment opportunities for the people,” he added.

Sison has been in a word war with Duterte, following the latter’s suspension of the talks with the rebels.

The exiled communist leader has called Duterte as the country’s No. 1 drug addict for taking a regulated drug and asked the Philippine National Police to arrest him.

Año said Sison and other communist leaders are expected to deny taking any amount from the extortion activities of the NPA. “That is expected. Mr. Sison and other top leaders of the CPP-NPA will deny taking [the] lion’s share of the extortion money they exact from plantation owners, contractors and business persons,” Año said.

North Korea’s ICBM launch leaves Asean envoys uneasy

By Recto Mercene @rectomercene

T

op diplomats of Asean have expressed grave concern over the recent developments in the Korean Peninsula.

“We continue to express grave concerns over the developments in the Korean Peninsula, including the most recent testing by the Democratic People’s Republic of Korea [DPRK] of an intercontinental ballistic missile on July 4, on top of its previous nuclear tests and ballistic missile launches.” the foreign ministers said in a draft joint communique.

“Noting that these developments threaten peace and stability in the entire region, we urged the DPRK to fully and immediately comply with its obligations under the relevant UN Security Council Resolutions.”

The foreign ministers are in Manila for the 50th Asean Ministerial Meeting that will be conducted from August 2 to 8 at the Philippine International Convention Center in Manila.

Foreign ministers and senior officials from 27 countries are expected to attend the event. They are expected to issue several document during the meetings.

The group, likewise, reiterated their support for the denuclearization of the Korean Peninsula, “and, in this regard, called for the resumption of dialogue on the Korean Peninsula to defuse tensions and create conditions conducive to peace and stability.”

The Asean parliamentarians and lawmakers are expected to stress the importance of the Asean work plan against illicit drugs and the declaration of a Code of Conduct on the South China Sea.

Senators support plan to beef up military in fight against terrorism

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resident Duterte has expressed his desire to recruit additional soldiers to reinforce the Armed Forces of the Philippines (AFP), amid reports of terror groups’ other planned attacks in Mindanao, senators said on Wednesday.

Senate Minority Leader Franklin M. Drilon and Sen. Juan Edgardo M. Angara made this confirmation a day after Duterte summoned sena-

captured by authorities in the opening year of the war on drugs. “Much ground has been gained in the campaign against hard drug traffickers and violators, but the mission is to end the demand, production, distribution and sale of illegal drugs,” the President’s spokesman said.

“Comments like the above from past leaders simply imply a jaded cynicism borne of a history of political opportunism,” Abella said.

Duter te’s war on dr ugs has earned the backlash of local and international human-rights groups, such as the Human Rights Watch and Amnesty International, for the alleged bloodbath it has caused in urban-poor areas.

The crackdown on illegal drugs has led to the detention of Sen. Leila M. de Lima, a political ally of Aquino, due to charges related to the drug trade in the New Bili-

Comments like the above from past leaders [like Aquino] simply imply a jaded cynicism borne of a history of political opportunism.”

—Abella bid Prison. Authorities continue to operate under the President’s marching order to hunt down drug personalities and to shoot them should they resist arrest.

Group dares Cimatu to uphold Lopez’s mine-closure orders

AFP chief blasts Joma’s ‘deception’

By Rene Acosta

Editor: Vittorio V. Vitug • Thursday, August 3, 2017 A3

tors and congressmen for a meeting on Tuesday.

“The President said he would like to upgrade the Armed Forces in terms of capabilities and personnel and I think those reforms are necessary,” Angara told reporters in an interview.

In a separate interview, Drilon said that it was Defense Secretary Delfin N. Lorenzana who requested for “additional manpower” of “about 20,000 soldiers”.

Both senators said that these requests were made following intelligence reports on “new threats” posed by the ISIS group in the South. “[The President] briefed us on the intelligence information on new threats posed by the ISIS in the South and he is looking into at a closer regional cooperation with neighboring countries, particularly Indonesia,” Drilon said.

Angara said the Senate has ex-

pressed willingness to help through filing appropriate measures to support initiatives to upgrade the Armed Forces.

Senators Richard J. Gordon and Panfilo M. Lacson also agreed with the President’s plan. “The Marawi threat was just a culmination of it and it can go to other places, like Surigao, Agusan, Sulu, Zamboanga, so we really would require a beefing up of our Armed Forces,” Gordon said. PNA

nvironmental and antimining group KalikasanPeople’s Network for the Environment (Kalikasan-PNE) on Wednesday said mining companies are unlikely to adhere to Environment Secretary Roy A. Cimatu’s call for biodiversity integration in their operations.

“There is a natural conflict between exploitation and conservation. The very nature of mining requires massive destruction of the environment, which leads to biodiversity loss,” Clemente Bautista, national coordinator of KalikasanPNE, told the BusinessMirror in an interview.

For mining companies to adhere to such policy, Bautista said, Cimatu should put into writing his order by issuing a department or administrative order requiring mining companies to integrate biodiversity in their programs.

Bautista was reacting to a recent policy pronouncement by the DENR chief urging companies to integrate biodiversity protection and conservation in their operations following an international study, which revealed that the Philippines’s main island of Luzon has the highest concentration of mammals in the world.

The 2016 Field Museum of Chicago (FMC) study was cited by Cimatu as the reason for the need for biodiversity integration in mining operations.

“He [Cimatu] should first stop the mining operation in the 23 mines that were recommended for closure by [former Secretary Regina Paz L. Lopez. These areas are environmentally critically areas. [He could] then issue an order to the remaining 18 companies to ensure biodiversity integration,” Bautista told the BusinessMirror in mixed Filipino and English.

The Kalikasan-PNE official, likewise, chided Cimatu for issuing a “press release” without actually doing something about the problems, citing the case of Ipilan Nickel. “I don’t know why the DENR has not filed a case against Ipilan Nickel Corp. months after he ordered the tree-cutting activities within and outside its mining tenement in Brooke’s Point, Palawan, was stopped,” Bautista said.

“It is a national project and the DENR should not let Cenro’s [Community Environment and Natural Resources Office] or Penros [Provincial Environment and Natural Resources Office] to act on violations of this kind of large-scale project,” he added.

Past administrations have tried and failed to “urge” the industry to engage in honest-to-goodness biodiversity conservation to no avail, Bautista said.

Cimatu’s recent statement, he added, reveals his perception of biodiversity conservation as mere “greenwashing” for mining companies to give a “positive image to the general public”.

“Such a perspective fails to grasp the importance of biodiversity conservation in developing related sectors, such as research and development, medical research, and even industrial innovations,” Bautista said.

The FMC study explained that “sky island ” habitats provided by the mountains of the Luzon islands led to the f lourishing of such a high biological diversity, as species adapt to very specific environments.

The study’s proponents noted that allowing the native forest to regenerate will encourage endemic species, which comprised 95 percent of the FMC study’s 56 newly discovered mammal species, to return to the rehabilitated environment.

Maintaining these pockets of unique habitats will require the extensive rehabilitation of deforested and polluted areas.

Extractive, destructive and pollutive projects will be restricted not only for their direct impacts, but for their possible impacts that could travel along the water, air and land pathways.

Considering that the country has 228 key biodiversity areas covering 6,008,813 hectares, it is almost impossible for the current setup and scope of the large-scale mining industry not to overlap with the country’s biodiversity corridors, Bautista said.

The large-scale mining industry, he added, would have to undergo a complete overhaul in its industrial development framework, tenurial instruments, technology, community development and other management practices if we are to “mainstream” biodiversity conservation in the industry.

“Cimatu should immediately enforce the closure, suspension of the big mines until such time when stricter biodiversity conservation regulations are passed and enforced,” Bautista added.

Bautista, likewise, said the DENR should conduct a comprehensive scientific assessment of the extent of damages and current risks presented by the mining industry to the environment and communities.

In doing so, Bautista added the DENR should tap independent experts from academe and civil society coming from different relevant fields of expertise to ensure that the industry will not interfere with the study.

“The comprehensive assessment will guide the country’s judicious utilization of mineral resources based on people’s needs and ecological boundaries,” he said.

Economy

A4 Thursday, August 3, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

news@businessmirror.com.ph

Faeldon to some lawmakers: Shame on you!

By Joel R. San Juan

C

@jrsanjuan1573 & Butch Fernandez

@butchfBM

ustoms Commissioner Nicanor E. Faeldon taunted lawmakers on Wednesday to “try harder” in booting him out of office, following President Duterte’s assurance that he still enjoys his confidence, despite the failure of the bureau to stop the entry of P6.4 billion worth of illegal drugs from China.

At a news briefing, Faeldon even lashed back at some government officials, including lawmakers, who are trying to meddle with the affairs of the Bureau of Customs (BOC). He said some of these legislators could even be held liable for corruption.

He disclosed that there are legislators who are backing certain people in the bureau wanted him to influence the promotion board for their own interest. Faeldon, however, declined to reveal their identities.

“I don’t want to name names, but this is what they want: They want me influence that promotion board so that their people here will be promoted and I told them right in their face I will never lift a finger to influence the promotion board. Why? Because that is a form of corruption,” Faeldon told reporters.

The customs chief assured that influence peddlers have no place in

the bureau as long as he remains at the helm.

“Please, I’m appealing to you.

You know that your request is a form of corruption and you insist and get mad at me. My God! Shame on you, stop it, this is not just your country, this not your property, this is not mine, this is the country’s Bureau of Customs, this is the Filipino people’s Bureau of Customs, so don’t act like you own this,” Faeldon said.

The customs chief noted that while his qualifications does not suit his current position, his ability to say “no” to influence peddlers was the main consideration by Duterte in appointing him to his post.

“I’m appealing to you stop it, even if you get angry at me, try your best to boot me out here everyday, but as long as I’m here I will continue to say no,” Faeldon said.

House Speaker Pantaleon D.

A lvarez and other lawmakers have urged Faeldon to step down for allegedly bungling the operations to apprehend those behind the entry of P6.4 billion worth of illegal drugs in the country.

Aside from the House of Representatiaves, the Senate has also started its own probe on the matter.

The call from lawmakers’ for Faeldon’s resignation came after the Phillippine Drug Enforcement Agency (PDEA) accused the agency of violating certain laws and procedures in connection with the seizure of the P6.4billion illegal drugs.

They insisted that Faeldon embarrassed the President by failing to detect the drug shipment at the Manila port.

“If tomorrow they will succeed in booting me out of here, that’s going to be the happiest day of my life, who wants this job, come on, this is not the job for me,” Faeldon told his critics.

The embattled BOC chief, however, acknowledged that accuracy of the statements made by PDEA Regional Director for Metro Manila Wilkins M. Villanueva.

Villanueva recounted what transpired on May 26 in Paso de Blas, Valenzuela, when joint operatives of the Customs Intelligence and Investigation Service, the National Bureau of Investigation-Anti-Organized Transnational Crime Division and PDEA raided a warehouse owned by a certain Richard Tan. Villanueva told lawmakers that when Faeldon called him to be part of the operations, drugs were already spread all over the place.

PDEA officials said he insisted on conducting a controlled delivery in order to apprehend all those involved, including the possible endusers and use the shabu shipment as evidence.

However, Villanueva said Faeldon insisted that the controlled delivery should involve only one metal cylinder containing about 100 kilos of shabu after consulting a lady lawyer, who the commissioner admitted was his fiancé who is also a private lawyer.

Faeldon admitted that he insisted that the controlled delivery should only cover one metal cylinder because of time constraint.

He noted that PDEA operatives were informed about the operation at 9 a.m, but Villanueva’s group arrived four hours later.

Faeldon said it would take them hours to conduct the controlled delivery if all the five cylinders would be included in the controlled delivery.

“If he arrived earlier, those procedural errors that we have committed would have been corrected,” the customs chief added.

Faeldon disclosed that Executive Secretary Salvador C. Medialdea has referred the matter also for investigation by the Presidential Anti-Crime Commission.

System ‘failure’

A new system implemented by Customs, instead of reducing irregularities at the BOC, facilitated release of “more illegal importations”, Sen. Richard J. Gordon reported, summing up initial findings of the Senate Blue Ribbon Committee inquiry into

“Please, I’m appealing to you.

You know that your request is a form of corruption and you insist and get mad at me. My God! Shame on you, stop it, this is not just your country, this not your property, this is not mine, this is the country’s Bureau of Customs, this is the Filipino people’s Bureau of Customs, so don’t act like you own this.”—Faeldon

Study cites need to raise financing and awareness on IB models

By Cai U. Ordinario

Cusi says DOE may accept private-sector proposals for Batangas LNG project

By Lenie Lectura

A

@cuo_bm

T

he lack of financing and awareness on inclusive business (IB) models have hampered Filipino businesses to consider serving people living at the base of the economic pyramid (BoP).

This was based on a study, titled “New Horizons: How Inclusive Business is Helping Achieve the SDGs in the Philippines”, conducted and released by the the IB advocacy platform Business Call to Action (BCtA), United Nations Development Program (UNDP), and Philippine Business for Social Progress (PBSP).

Filipino companies also encounter problems, such as the lack of readiness to implement IB models, as well as skills and capacity among BoP participants in the value chain.

“When you create a new business model, you are talking about the ecosystem so that you are able to reach the poor and vulnerable, and there are costs assigned to that,” Board of Investment (BOI) Assistant Secretary Felicitas A. Reyes told the BusinessMirror.

Reyes said this is the reason the BOI is offering incentives to companies who are willing to tweak or change their businesses to include an IB model.

These incentives include proposals to extend a two-year income-tax holiday, incometax deductions, tax credits and special exemptions for companies with IB models under the 2017 to 2019 Investment Priorities Plan.

Currently, Reyes added the BOI is working with two businesses who are creating new business units to cater to BoP participants.

The UNDP and the Asian Development Bank define BoP as a group of people earning around $8 per day worldwide, or around P400 daily in the Philippines.

“It’s really part of advocacy because big businesses could be very comfortable with how they currently do business and in the process of promoting a new way of doing business, by doing well profitably and by doing good, we need a little bit of a carrot. It’s a small carrot so that they are able to create a new business model as part of their core business that is inclusive,” Reyes said.

The BCtA said there are about 4.5 billion

their district and subports.

The committee was informed that, under Faeldon’s memo, only the Office of the Commissioner, through the Command Center (ComCen) created under Customs Special Order 45-2016, is authorized to issue alert orders. The ComCen is headed by Gerardo Gambala.

Gordon, however, rejected BOC officials’ claim that the drug shipment consigned to EMT Trading was placed under Customs’ green lane for priority cargos because Customs officer Lambert Hilario, head of the BOC-Risk Management Office, “failed to update the entries on the required parameters for the EMT shipment”.

The senator suspects there could have been “bigger shabu shipments that were allowed to pass undetected ” through the BOC’s green lane and that the seized shipment may have been “a decoy for bigger shipments”.

the P6.4-million shabu shipment from China seized at a warehouse in Valenzuela last month.

“Their new system went awry,” Gordon said, noting that the BOC system for tagging suspicious cargoes “collapsed”, allowing the illegal drug shipment to pass through customs officers unchecked.

Senate probers were told that in order to prevent unnecessary issuance of alert orders and protect the integrity of the alert order system, Faeldon issued Customs Memorandum Order 23-2016, which revoked an earlier memorandum giving authority to issue alert orders to the Deputy Commissioner (DepCom), Intelligence Group; DepCom, Enforcement Group; and the DepCom Assessment and Operations Coordinating Group on issues concerning rules of origin, valuation and classification of goods, including all district collectors for shipment arriving within

Clothing line A dry-goods entrepreneur on wheels parks his pedicab on a Makati City side street to conduct an inventory of his merchandise, composed mostly of used imported clothes, locally known as ukay-ukay. Be at some malls or on the streets, the ukay-ukay market in the Philippines has kept its market prominence. Alysa Salen

people living at the BoP. They are estimated to spend over $5 trillion per year, in terms of 2005 purchasing power parity, making them a bigger consumption segment than middleand higher-income earners combined.

In the Philippines, people at the BoP spend $34 billion per year, which is almost 50 percent of the country’s entire household expenditure. BCtA estimates that the number of people living at the BoP in the country will soon exceed 20 million.

Basing its findings on input from representatives from 53 companies and over 100 stakeholders who participated in workshops led by the PBSP, the report finds that many IB models are already operating in the Philippines.

“The Philippines is among the leading examples globally of how the private sector can support inclusive growth. This publication aims to provide different perspectives

on the effectiveness of IB in the country by analyzing the current state of private-sector development initiatives across various sectors and presenting actual IB cases in food and agribusiness, health, housing and financial services,” said UNDP Philippines Country Director Titon Mitra.

With more than a quarter of the Philippines’s 100 million-strong population living below the poverty line, efforts to tackle poverty and improve living, working and health conditions must be stepped up if the populous Southeast Asian nation is to achieve its Sustainable Development Goal (SDG) commitments by 2030.

The report included 13 companies who are already contributing to a range of SDGs, including SDG 1: No Poverty; SDG 3: Good Health and Well-Being; and SDG 8: Decent Work and Economic Growth.

The SDGs, or Global Goals, is a set of

17 socioeconomic goals that 193 United Nation member-countries, like the Philippines, committed to meet by 2030. The goals are composed of around 169 targets and over 300 global indicators. The SDGs were adopted in September 2015.

The Global Goals aim to end poverty and hunger, promote universal health, education for all and lifelong learning, achieve gender equality, sustainable water management, ensure sustainable energy for all, decent work for all, resilient infrastructure and reduce income inequality between and among countries.

The goals also include create sustainable cities, ensure sustainable consumption and production, take action against climate change, conserve and sustainably use oceans and marine resources, reduce biodiversity loss, achieve peaceful and inclusive societies and revitalize global partnership for development.

@llectura

plant to build the country’s first liquefied natural gas (LNG) facility is now open to unsolicited proposals, Energy Secretary Alfonso G. Cusi said on Wednesday.

“Yes, so we can get what is really beneficial for the country,” Cusi said when asked if the government was now considering this approach.

Earlier, the Philippine National Oil Co. (PNOC) received government-to-government (G2G) proposals from China, Japan, South Korea, Indonesia, Singapore and the United Arab Emirates. The state firm was supposed to announce its preferred partner last month. However, a highly placed source said “there was no acceptable proposal” from these six countries.

According to Cusi, the proposals are still being evaluated by the PNOC, which is closely reviewing details on LNG storage, liquefaction, regassification, power plant and distribution channel. “[The PNOC] is still working on it. It has not yet chosen. They are still working on the LNG framework,” Cusi said.

Cusi did not categorically say if the Philippine government would no longer pursue a G2G approach. He only said the proposals from the private sector “could be possible”.

Groundbreaking for the LNG project, possibly in Batangas, was targeted to happen early next year, with project completion being eyed within the six-year term of President Duterte.

“We will try to make it happen within the target schedule. The important thing is we do it properly to be sure that it can be completed,” he added.

Cusi said the government is aiming to turn the Philippines into a hub for LNG, amid a depletion of natural gas from the Malampaya gas field in Palawan in less than a decade.

“Two objectives. One, is for our national energy strategy when the Malampaya is depleted. Two, we want to put the Philippines in the LNG hub for Asia to complement Japan [and] Singapore. We want to take that opportunity for our country’s economic development,’ Cusi said.”

LNG is natural gas that has been converted into a liquid state for easier storage and transportation. Upon reaching its destination, LNG is regasified so it can be distributed through pipelines as natural gas.

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Thursday, August 3, 2017

A5

PHL gets additional US sugar quota

L

By Jasper Emmanuel Y. Arcalas

@jearcalas

ocal producers will be allowed to export more sugar to the United States at preferential tariff rates after Washington increased Philippine raw sugarcane allocation for the current fiscal year by 63,830 metric tons (MT).

The US Trade Representative (USTR) announced the additional allocations under its tariff-rate quota (TRQ) system in two statements it released on July 31.

Of the additional volume, 48,898 MT was granted to the Philippines under the USTR’s revised fiscal year (FY) 2017 TRQ for raw cane sugar. The remaining 14,932 MT came from the unused volume of other sugar quota holders.

“This quantity is in addition to the minimum amount to which the US is committed under the World Trade Organization Uruguay Round Agreements,” the USTR said, adding that the allocations were based on the countries’ historical shipments to the US. Manila got the highest reallocation volume from Washington among sugarexporting countries.

“The US Department of Agriculture also announced that all sugar entering the US under the FY 2017 raw sugar TRQ will be permitted to enter US Customs territory through October 31, a month later than the usual last entry date,” the USTR said.

The Sugar Regulatory Administration

(SRA) said the Philippines is capable of filling the additional quota.

“The Philippines has enough sugar. [The] issue will be on price, because world prices are falling,” SRA Administrator Anna Rosario V. Paner told the BusinessMirror. “[This] will dampen the appetite [of exporters].”

Sugar industry stakeholders welcomed the additional quota, saying this would help reduce the country’s high sugar inventory level and stabilize sugar prices.

“Filling up the quota will reduce greatly our sugar inventory, relieve sugar mill warehouses of congestion and give us a fresh start in the new crop year,” Philippine Sugar Millers Association (PSMA) President Francisco D. Varua told the BusinessMirror.

“Definitely, PSMA can find a way to fill up the additional quota,” Varua said, adding that the additional shipments could arrive in the US by September.

Given this development, Varua said they expect the mill-site price of sugar in the next crop year to stabilize and settle at P1,500 per 50-kilogram bag (Lkg) to P1,600/Lkg. “We hope [the price] would increase even

DA needs funds to conduct feasibility study for tire factory T

he Department of Agriculture (DA) is looking for other sources of funds for a feasibility study for the country’s first tire factory, after the proposed budget for it was thumbed down by the Department of Budget and Management (DBM).

Philippine Rubber Research Institute (PhilRubber) Executive Director Rodolfo L. Galang said P100 million was allocated for the feasibility study for the construction of the Pilipinas Agila Tyre Factory (PATF) in the DA’s 2018 budget proposal.

“There are no funds for the feasibility study at the moment. So we have to identify other sources for it,” Galang told reporters in an interview on Wednesday.

Galang said the money could be sourced from the budget of the Office of the Secretary or from official development assistance.

The PhilRubber official added the figure was computed based on the recommendation of the DA’s Project Development Service that the budget for the feasibility study should be 1 percent or 2 percent of PATF’s total construction cost. PATF, which will be built in Mindanao, is estimated to cost $200 million.

“That’s why there is a special order [creating a committee for the conduct of the feasibility study]. And one of the functions of the committee is identify and source out funding for the conduct of the feasibility study,” Galang said.

Following the decision of the DBM to reject the initial budget for the feasibility study, he said the cost has been slashed to P50 million.

Despite this, Galang noted the government is optimistic that construction for the first Philippine tire factory remains on schedule and will start in 2019.

“Based on the estimate of Black Donuts Engineering Inc. [Black Donuts], the construction could take about two years,” he said. “I’m hopeful and I want to be positive that we’re on track.”

Black Donuts is currently preparing the project proposal for the factory, according to Galang.

He added PhilRubber had proposed a budget of P650 million for 2018, the bulk of which would be used to expand rubber plantations.

However, the DBM had allocated only P32 million for the attached agency of the DA. In May Agriculture Secretary Emmanuel F. Piñol announced that the DA will sign a memorandum of agreement with Finnish tire-manufacturing company Black Donuts by September. This will formalize the conduct of the feasibility study for the construction of the PATF. The DA chief said the establishment of the PATF would help stabilize the price of local raw rubber by giving farmers an assured market for their produce.

“We expect the tire factory to stabilize the price because when rubber is dependent on world market prices, then we will really be affected whenever the price drops,” Piñol said.

Phoenix Petroleum Philippines Inc. is the main investor for the PATF, a 50-hectare rubber-manufacturing plant that is capable of producing at least 4 million tires a year, according to Galang.

He said the tires are suitable for regular cars, pickup trucks and other small-type trucks.

Galang added 40 percent of the tire to be produced will be made of natural rubber. Each tire requires around 10 kilograms of natural rubber.

The goal of producing 4 million tires per year would need at least 16 million kilograms of rubber or 16,000 metric tons (MT) annually.

Galang noted that the Philippines produces around 110,000 MT of rubber a year, but domestic consumption is pegged at only 30,000 MT. According to government data, Mindanao accounts for 99 percent of the country’s rubber production. Jasper Emmanuel Y. Arcalas

a little bit. We do not expect it to go up significantly, but we’re thinking [it would] stabilize at about P1,500 to P1,600 per bag,” he said. “That should be a good price already.”

Varua added that the price of sugar in the global market has started to recover and had even increased by almost 15 cents.

He said he was “surprised” to learn that the Philippines received the highest reallocation volume and not Brazil. However, Varua added that this may be due to a shift in Brazil’s sugar policies.

“Brazil decided to reduce the tax on ethanol. So the production of Brazil that was supposed to be diverted for sugar exports is now for ethanol production,” he said.

Sugar Alliance of the Philippines Spokesman Emilio Yulo echoed Varua’s statement, adding that the price of “A” sugar destined for the US is more favorable than the “D” sugar, or those shipped to other countries.

“We gladly welcome the additional US quota. It will definitely help flush out the existing overhang, plus the fact that the price of ‘A’ sugar is higher than the ‘D’ sugar,” Yulo told the BusinessMirror.

Price monitoring by the SRA showed that, as of July 9, mill-site price of “A” sugar was at P1,198.13 per 50-kilogram bag. The figure was slightly higher than the July 2 price of P1,192.44 and was also 22.72 percent higher than the P976.33/ Lkg recorded at the start of the current crop year.

The latest data from the SRA showed that, as of July 9, the Philippines has already shipped 136,188.73 MT commercial weight of sugar to the US. For FY 2017, the Philippines was earlier

File photo

allocated 136, 201 MT. Preliminary data from the SR A, a gover nment- ow ned a nd - cont rol led corporation attached to the Department of Agriculture, showed that sugar production in crop year 2016-2017 has

reached 2.495 million MT. The figure is 11.48 percent higher than the 2.238 MMT produced in the previous crop year. It is also 10.88 percent higher than the SRA’s initial projection of 2.25 MMT.

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TheBroa

Business

Thursday, August 3, 2017

T

By Mary Noll Christine P. Caadyang Intern

HE Philippines’s Sarah Connor, relax: robots are still far from being Terminators. And they would still need humans, according to Science and Technology Undersecretary for Research and Development Rowena Cristina L. Guevara.

“Robots are not creative, [and] they cannot solve problems, [so] they need humans,” Guevara told the BusinessMirror. “What you command [the robot] is the only thing it can do, so it does not replace us [humans].”

It is understandable that Guevara, an engineer, doesn’t share the queasy feeling of many on the rise of robotics since the Philippines has yet to feel its impact.

According to the United Nations Commission on Trade and Development (Unctad), “Much of the discussion on the economic effects of the use of robots has concentrated on the effects in developed countries.”

This view is shared by the International Data Corp. (IDC), which said its data revealed China is the single largest and the fastest-growing robotics market in the world, and will account for more than 30 percent of the worldwide robotics spending in 2020.

“Manufacturing continues to dominate China spending in robotics, with discrete and process manufacturing accounting for over 50 percent of spending in 2016,” IDC said.

Nonetheless, the Unctad said with the march toward greater industrialization, countries will have to account for the rapidly increasing spread of new automation technologies and artificial intelligence in the form of robots.

“Optimists state that any adverse effects will be short-lived and that robots may help overcome slowdowns in productivity growth

and increase worker income and well-being,” the 2016 Unctad Policy Brief 50 said. “Pessimists point to the rapid pace and increasing scope of new technological breakthroughs, and state that, due to their microprocessors, robots may require only a small number of better-skilled workers for their operation, rather than the requirement for large numbers of low-skilled workers that complemented earlier technological breakthroughs, such as the steam engine.”

Age of robots

ROBOTS appear to have permeated the daily grind of people’s lives.

Think of Internet of Things (IoT), the interconnection of electronic devices, as one.

Prior to the IoT, however, robotics or automation has been animating economies ever since.

The Robot Institute of America (1979) defines a robot as “a reprogrammable, multifunctional manipulator designed to move material, parts, tools, or specialized devices through various programmed motions for the performance of a variety of tasks.”

According to the International Organization for Standardization (ISO) 8373, robots require a certain “degree of autonomy”, which is in context of the “ability to perform intended tasks based on current state and sensing, without human intervention.”

Although the Philippine socioeconomic sphere is largely dominated by the growth contributions coming from the service sector, the

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Time to be sc entry of robots has been progressively utilized in agriculture, retail trade, manufacturing, transportation, administration and construction industries, among many others, in the country.

In a McKinsey & Company Manila report released last February, Suraj Moraje said the effects of automation in the Philippines showed a significant stance.

The McKinsey Global Institute (MGI) forecasts that 48 percent of the employees’ activity, which is equivalent to 18.2 million jobs, could be automated.

“Almost half of the activities that people are paid to do can be automated using currently available technologies,” the report said.

“Filipino innovators can establish

competitive advantage and reap superior rewards by selectively adopting these technologies.”

The report added that jobs related in the agriculture sectors, which amount to six million, take the largest share of “automatable” work in the Philippines. The retail (with 3.4 million jobs) and manufacturing (with 2.4 million jobs) sectors with large numbers of automatable work are also included.

Pinoy inventions

RESEARCHES on robotics and inventions of robots by students, professionals and enthusiasts also take an innovative and relevant space in the robotics sector in the Philippines.

These Filipino-invented robots

include farmer robots and a bombdisposal robot both created in 2013, a massaging robot designed for the elderly in 2012, and a gasleak detector robot made in 2010, among many others.

As the country adapts to the rapid development of robotics and automation today, the fears of policy makers and workers that these technologies would increase unemployment may not seem to be the case.

“The effects [of robots replacing humans] are not that alarming as claimed by some critics,” University of Santo Tomas Electronics Engineering (UST-EE) Chairman Angelo R. dela Cruz told the BusinessMirror. “People always adapt to changes.”

Dela Cruz said in an e-mail

interview the situation may turn out positively in terms of economic growth since industries would have a predictable output on both quantity and quality.

Bigger scale

ON a bigger scale, the drive of robotics and automation being added into the industries comes from humans’ “nature to invent new tools to make life easier”, according to an engineering expert.

Laurence A. Gan Lim, chairman of the Mechanical Engineering department at the De La Salle University (DLSU), said that with the nature of humans, the use of robots would only increase.

“This [use of robots] is something that cannot be stopped un-

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cared? less it is possible to tell or order everyone in the world to stop improving technology or reject new technology,” he told the BusinessMirror in an online interview.

The requirement to provide high-quality products and services with high-skilled workers at the same time is also one.

“Innovation is part of economic growth, especially in the Philippines,” dela Cruz said. “As the complexity of computers increases, machine[s] can now provide better output quality and quantity than traditional methods.”

Benefits, snags

GLOBALLY, robots have been touted as another advantageous technology.

The IDC foresees 35 percent of leading organizations in logistics, health, utilities and resources will explore the utilization of robots by 2019.

IDC has identified 10 major robotics trends that will present opportunities to information technology (IT) leaders in the near future.

These include robot as a service or RaaS, implementation of chief robotics officer, evolving competitive landscape in robotics, robotics talent crunch, execution of robotics-specific regulations, software-defined robots, collaborative robots, intelligent RoboNet, robotics growth outside factory industries and robotics for e-commerce.

“Robotics will continue to

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Valeriy Kachaev | Dreamstime

ots

www.businessmirror.com.ph | Thursday, August 3, 2017

accelerate innovation, and we encourage end-user companies to embrace and assess how robotics can sharpen their company’s competitive edge,” Jing Bing Zhang, research director of Worldwide Robotics and Asia Pacific Manufacturing InsightsIDC Asia-Pacific, was quoted in a statement as saying.

The Asia-Pacific region is the fastest growing robotics market led by China, Korea and Japan, and will account for more than two-thirds of worldwide robotics spending throughout 2016 to 2020, reaching over 70 percent by 2020, IDC said.

“Manufacturing continues to dominate Asia-Pacific spending in robotics, with discrete and process manufacturing accounting for 33 percent and 28 percent, respectively in 2016. This is followed by resources, consumer and healthcare industries in terms of overall robotics spending.”

Robots work on a 24/7 basis and produce consistent high-quality outputs. However, their automated operations have their own share of drawbacks, from being priced at highly expensive costs to displacing manual and repetitive labor workers.

“Machines cannot fabricate emotions, creativity and imagination, [and] sensory perception is very difficult to be replicated by a machine,” dela Cruz said.

Good thing

REY Untal of the Information Technology and Business Process Association of the Philippines (IBPAP) said the addition of robots to the work force could only mean good things.

“The robots, AI [artificial intelligence] and automation can handle the repetitive processes faster and even more efficiently so this leaves our work force to handle the more complex tasks in the workflow,” the IBPAP president told the BusinessMirror. “[The robots can] potentially lead the Philippine IT-BPM industry to move up the value chain with high-value jobs, and effectively higher revenue per capita in fields such as software development, animation and health information services.”

For IDC Philippines, robotics is driving the “current wave” of industry transformation and upgrade, which leads to opportunities on operational agility and customer experience both for developed and emerging countries.

“With robotics, companies in the Philippines stand to gain on several fronts, on automated flexibility, especially for manufacturing, and allowing for reduced lot sizes and increased product customization,” IDC Philippines Business Operations Head Jubert Alberto told the BusinessMirror in an online interview.

Alberto said industrial robots, commercial-service robots, and consumer-service robots are being deployed in sectors of electronics, health care, retail, hospitality, logistics, agriculture, utility and, for some countries, the government sector.

The Asia-Pacific region takes the fastest growth in the robotics market, with China, Korea and Japan as the leading countries that will account for more than two-thirds of worldwide robotics spending until 2020, Alberto said.

“The Philippines is not that big yet on spending, but we have been seeing spending from manufacturing, resources, consumer and health-care industries,” he said.

Skills improvement

AS the integration and utilization of robots in many industries have brought a mix of benefits and risks, workers claim their skills are primarily challenged from the continuous demand in the robotics sector after threats of their possible unemployment are thrown in the shade.

“Workers should focus on developing higher-level abilities, [and] this will require tremendous support from the government.

Education will only become more relevant,” Gan Lim said.

Dela Cruz, on the other hand, also suggested workers to immerse themselves to jobs that are more complex, which require critical and infinite decisions.

Changes in the job market happen as frequent as they are, but reconciling curriculum (education) against jobs skills would always be

challenging for workers and industry players in any sector, according to Untal.

“Skills improvement [of workers] is essential, [and] this is important for any individual to stay competitive on the global market regardless of what sector he or she is in,” Untal added.

For Arjay B. Panes, 29, who works in a business-process outsourcing (BPO) company in Pasay City, employees should value their jobs and develop more their capabilities in work so options would be available for them once they get displaced by robots in the work force.

Machines’ time

ACCORDING to Rodolfo A. Salalima, head of the Department of Information and Communications Technology (DICT), there’s nothing to fear with the rise of robotics.

“[On machines replacing all people and people being left unemployed] my take here is no, and all people will not lose their employment [to robots],” he said during the launch of the government’s three turnkey information and communication technology (ICT) projects in May.

He emphasized, however, the importance of machines, especially their capability to multiply the fruits of labor. And when labor is multiplied, there is growth that is capable of innovation and creating employment for the people, Salalima said.

He, nonetheless, acknowledged the advancement of robotics and AI in the country.

Jobs that require workers in performing “value assessment” cannot just be shortly replaced by robots, Salalima explained.

These jobs exhibit people’s passion and compassion at the same time, he added.

“While our future lies in the robots and AI, the world will be safe for as long as the high-based machines are good maker to people, who will direct machines to do what is good and not what is criminal.”

Nonetheless, Salalima remains smug that not all people will lose their jobs to robots or machineries even in “machines’ time”.

Opportunities, gains

ACCORDING to Guevara, there is only one threat posed by robotics.

“If you couple the opportunity [of] the robotics, the AI with training, it’s not a threat, [instead] it’s an opportunity,” she said. “We have the work force that can do it [robotics]. There is just no opportunity because companies need to invest [on robots].”

The transition from human workforce to machines and robots is inevitable, but the question of when this change would happen remains, Dela Cruz said.

He added that there would be a gradual transition of machines replacing workforce that requires lesser decision making and not too critical in nature.

According to Untal, robots taking over the workforce in industries would still depend on the technology readiness of a certain region and ability to manage effectively.

“One challenge that we will need to face together is how to take advantage of our already excellent talent pool and invest more heavily in their [workers’] education, and upskilling to meet the demand of technologies,” he explained. “We just need to be aware of what new jobs will be created and how we can ready our workforce to take on these jobs.”

The loss of jobs and business opportunities as the adoption of robotics continues to take place in Philippine industries may remain to be concerning, however, the advantages of robotics outweigh the present concerns, at least for Alberto.

“Both in the short term and long run, the companies need to start assessing or examining how robotics can be applied to their operations and be able to exploit the opportunities it brings to their businesses,” he said.

At the end of it all, Guevara said humans still control these robots as people are capable of programming and making these machines perform many things.

Indeed, the future may not be as grim as the Terminator film paints robotics. Nonetheless, having a Sarah Connor in our sleeves is better than having no one at all. n

A8

Banking&Finance BusinessMirror

Thursday, August 3, 2017 • Editor: Jun B. Vallecera

news@businessmirror.com.ph

More Filipinos buying life insurance

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HE number of people buying life insurance in the first three months this year increased nearly 68 percent to 7.4 million, from some 4.4 million a year ago, according to the Insurance Commission (IC).

But premium production for the period fell nearly 2 percent, as well, indicating that as more Filipinos seek contingent protection against the various risks to life and limb the benefit derived from such contracts have diminished over the same time frame.

The IC released data on Wednesday, showing premium sales in the life sector falling 1.87 percent to P436.5 million in the initial three months this year, from P444.8 million last year.

It gets dire from here as the number

of Filipinos covered by so-called microinsurance, which pays as little as P5,000 in benefits, in fact fell in the first six months this year to only 26.6 million Filipinos, from 28.4 million, based on data obtained from the IC. According to Insurance Commissioner Dennis B. Funa, so-called mutual benefit associations (MBAs) reported the highest number of individuals covered by microinsurance.

“Taking up 64.1 percent of the market share in terms of number of indi-

viduals covered, the MBA sector covered 17.1 million members and dependents, which translated to a total of P850.5 million in terms of premium production,” Funa said.

CARD MBA Inc. dominated the MBA sector, with total share of 75.46 percent and 77.01 percent in terms of the number of lives insured and premium production, respectively.

In terms of the number of lives insured, Pag-asa ng Pinoy MBA Inc. came in second, followed by TSPI Mutual Benefits Association Inc., Alalay sa Kaunlaran (Aski) Benefit Association Inc. and ARDCI Mutual Benefit Association Inc. As to the total contributions made, Tulay sa Pag-unlad Mutual Benefit Association Inc. came in second, followed by Pagasa ng Pinoy MBA Inc., Aski Benefit Association Inc. and Simbag sa Emerhensiya Asin Dagdag Pasegurohan MBAI. The IC further said the life-insurance sector covered 7.4 million individuals with total premium production of P436.5 million in the first half this year.

“The life-insurance sector posted a 67.90-percent increase in terms of number of insured lives, from 4.4 million during the first quarter of 2016 to 7.4 million of the same period this year. However, the life-insurance sector posted a slight decrease in terms of premium production,” he added.

The total premium production of the life-insurance sector declined by 1.87 percent to 436.5 million as of end-March 2017, from P444.8 million during the comparable period last year.

The top 5 life-insurance companies in terms of number of covered lives include: CLIMBS Life and General Insurance Cooperative; Pioneer Life Inc.; The Philippine American Life and General Insurance Co., United Coconut Planters Life Assurance Corp.; and Country Bankers Life Insurance Corp.

In terms of premium production, CLIMBS Life and General Insurance Cooperative Inc., likewise, ranked the highest followed by: Pioneer Life Inc.; Country Bankers Life Insurance Corp.; United Co-

Housing agency corners bulk of subsidies T T

conut Planters Life Assurance Corp.; and The Philippine American Life and General Insurance Co. Also, the nonlife-insurance sector reported a 53.03-percent year-on-year decline in the number of lives covered, to 2.2 million this year from 4.6 million. Still, the sector posted an increase of 47.12 percent in terms of premium production amounting to P156.3 million, from P106.2 million in the first quarter of 2016.

Pioneer Insurance and Surety Corp. ranked the highest in the nonlife-insurance sector in terms of number of lives covered, followed by Bankers Assurance Corp., Western Guaranty Corp., People’s General Insurance Corp. and CARD Pioneer Microinsurance Inc. On the other hand, CARD Pioneer Microinsurance Inc., took the top spot among the nonlife-insurance sector in terms of premium production, followed by Mercantile Insurance Co. Inc.; Pioneer Insurance and Surety Corp.; Western Guaranty Corp.; and Bankers Assurance Corp. Rea Cu

Union of International Associations

HE national government reported subsidies amounting to P58.219 billion in the first half of the year, representing a jump by 59 percent, from P36.597 billion in the comparable period last year, data from the Bureau of the Treasury (BTr) showed.

According to the BTr, the government disbursed a total P58.219 billion, with bulk of the subsidy going to the National Housing Authority (NHA).

For the month of June this year, the government disbursed a total of P32.306 billion, or 101.2 percent higher than the year ago of P16.050 billion.

Broken down, major nonfinancial gover nment cor porations were pro v ided w ith P17.721 billion in June, while gover nment-ow ned and -cont rol le d cor p or at ion s (G O CC s) h a d P14.585 billion.

The NHA was given subsidies for the month totaling P12 billion.

The Philippine Health Insurance Corp. came in second with subsidies amounting to P9.261 billion, the National Irrigation Administration came in third with P5.721 billion and the Manila International Airport Authority (MIA A) was given P3.610 billion.

Government agencies that did not

make the billion-peso subsidy threshold include the Bases Conversion and Development Authority, which was allotted P559 million; the Sugar Regulatory Administration with P261 million; the Philippine Children’s Medical Center with P206 million; the National Livelihood Development Corp. with P202 million; the Subic Bay Metropolitan Authority with P136 million; and the Cultural Cen-

ter of the Philippines with P121 million; among others.

In first half, major nonfinancial-government corporations were allotted a total of P38.245 billion, which expanded by 50.8 percent from only P25.361 billion in 2016. The GOCCs were given total subsidies worth P19.641 billion, or 87.3 percent more than in 2016 when this amounted to P10.486 billion.

Case clippings

By Justice S J Ranada Jr. TRADEMARKS–likely to deceive or confuse To fall under Section 123.1 of Republic Act 8293, and be regarded as likely to deceive or cause confusion upon the purchasing public, on prospective mark meet two minimum conditions. 1) The prospective mark nearly resembles or be similar to an earlier mark; 2) The prospective mark must pertain to goods or services that are either identical, similar or related to the goods or represented by the earlier mark.

Mang Inasal v. IFP 19 Jun 2017

GR 221717 Velasco, J

Banks, trusts remain skittish on long-exposure securities

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A N K S a nd t r u s t e nt it ie s on Wednesday showed renewed interest in the short-dated funds of the Bangko Sentral ng Pilipinas (BSP) but did not display the same enthusiasm for its longer-dated deposit window.

Latest auction results of the Central Bank’s term deposit facility (TDF) show the short-term window posting an oversubscription even as the long-term TDF showed an undersubscription and its rate going the other way on Wednesday.

For the seven–day TDF, in particular, the total amount tendered by banks and trust entities hit P52.58 billion, covering 131 percent of the P40 billion offered this week.

On the other hand, the total amount tendered on the 28-day TDF hit P122.27 billion, covering 87.33 percent of the P140 billion offered for the week.

The rates on the two facilities both posted increases, with the shorter-tenor TDF averaging higher to 3.3345 percent, from only 3.308 percent a week earlier.

The 28-day rate similarly averaged higher to 3.4949 percent from 3.4929 percent in the previous week.

Last week both windows reported undersubscriptions, indicating the banks channeling a greater portion of their loans and investments in the government sector.

This, according to Deputy Governor

India’s central bank cuts key lending rate to 6%

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N DI A’ S c e nt r a l b a n k on Wednesday cut its key interest rate by a quarter of a percentage point, raising hopes of lower borrowing costs for households as inflation ebbs.

The announcement by the Reserve Bank of India reduced to 6 percent its repo rate, the interest rate the central bank charges on lending to commercial banks.

India’s inflation rate declined to a record low of 1.54 percent in June, while the annual rate of growth in factory output fell to 1.7 percent in May from 8 percent in the same month a year earlier.

Most industrial groups had been pushing for an interest-rate cut to help boost the economy by

lowering the cost of borrowing.

Central bank Governor Urjit Patel, who heads a six-member monetary-policy committee, told journalists that the cut in borrowing rates was expected to invigorate investments and provide a push to the prime minister’s key scheme to provide housing.

The decision followed the government’s shock decision in November to withdraw from circulation the country’s highest-value currency bill and a nationwide tax overhaul launched last month.

The central bank is working with the government to resolve stressed corporate borrowings and recapita lize state-ow ned banks, Patel said.

for the Monetary Stability Sector Diwa C. Guinigundo, was within Central Bank’s expectations.

“This is, after all, expected by the BSP because we want excess funds of the banks to be channeled to financing productive economic activities, including infrastructures,” the BSP official said, quickly adding that the BSP will “continue to assess” the various features of the interest rate corridor, including the volume of its weekly auction.

The BSP kept the volume of offers unchanged at P40 billion for the seven-day TDF and P140 billion for the 28-day TDF. These have been in place since May this year. Bianca Cuaresma

HE Union of International Associations (UIA) has been in existence for 110 years but I only found out about it a few years ago when it requested our organization, the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), to be listed in its directory of international associations around the world.

The Brussels-based UIA is a research institute and documentation center founded in 1907 by Henri La Fontaine, a Nobel Peace Prize laureate and Paul Otlet, the founding father of information science. UIA is not-for-profit, apolitical, independent and non-governmental organization (NGO) and has been a pioneer in the research, monitoring and provision of information on international organizations, international associations and their global challenges.

One of UIA’s enduring services to the association world is its yearbook of international organizations with detailed information on over 37,000 active and 32,000 dormant international organizations from 300 countries and territories, including intergovernmental and international NG. It also lists over 20,000 associations and other membership organizations worldwide. Available both in print and online versions, the printed version that consists of seven sets of thick, hardbound volumes find its way to libraries in the US and other countries.

ADFIAP is honored to be admitted as a member in active status with the UIA two years ago. This led to an invitation in September last year to be a speaker on association governance and management at UIA’s Associations Roundtable Asia Pacific in Busan, South Korea, attended by over 100 delegates from 80 organizations in 20 countries.

This learning and networking program that UIA runs annually in the region is a must-attend event for association professionals, aiming to further their knowledge and contacts. This year the Asia-Pacific Roundtable will be in Chiang Mai, Thailand, on September 21 and 22.

I had the fortunate opportunity to

Association World Octavio Peralta visit the UIA Brussels headquarters recently after attending an ADFIAP coorganized sustainable finance conference in Karlsruhe, Germany. There, I met with the UIA management and brainstormed on potential cooperation and was later hosted to meet some of its member-association executives whom I am now in contact with for possible collaborative projects.

The reason I am featuring UIA in this column is because of its unique work and advocacy for and in behalf of the global association community in terms of information and educational value. Associations here in the Philippines can learn from the various resources that UIA has produced over the years and know that opportunities and challenges of associations around the world are similar in many aspects. Associations here can also understand that one of the keys to success is that of knowing what’s out there in terms of content, experience and partnership possibilities. After all, associations need not reinvent the wheel, so to speak, to achieve their purpose and further their mission.

The column contributor, Octavio “Bobby” Peralta, is concurrently the secretarygeneral of the Association of Development Financing Institutions in Asia and the Pacific and the CEO and founder of the Philippine Council of Associations and Association Executives (PCAAE). PCAAE is holding the Associations Summit 5 (AS5) on November 22 and 23 at the Philippine International Convention Center (PICC) which is expected to draw over 200 association professionals here and abroad.

The two-day event is supported by ADFIAP, the Tourism Promotions Board, and the PICC. E-mail inquiries@adfiap.org for more details on AS5.

California health premium seen rising 12.5 percent

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ONTHLY premiums for California health-insurance plans sold under the Affordable Care Act will rise by an average of 12.5 percent next year, the second consecutive year of double-digit rate increases, officials said on Tuesday.

A major insurance company will stop offering plans in most of California, but the state will avoid the massive market upheaval that has left some states with just one insurer or none at all to serve the individual market.

Covered California’s announcement on 2018 pricing comes at a time of extreme uncertainty about the future of the US health-care system.

A Republican plan to unwind key pieces of the Affordable Care Act failed in the US Senate last week, but President Donald J. Trump has repeatedly urged lawmakers to keep working on it. Trump has threatened to end payments that

insurance companies receive to keep down outof-pocket costs for lower-income consumers.

Premiums for consumers on silver-tier plans, the most popular, could spike even more if those subsidies are taken away, officials said.

The average 12.5-percent increase is down just slightly from last year, when premiums rose by more than 13 percent. Consumers could lower their increase to about 3 percent if they switch to the lowest-priced plans, officials said, though that could require them to change doctors. Insurance plans for next year will be available for purchase in California between November 1 and Jan 31.

Covered California sells health plans to about 1.4 million people who don’t get coverage from an employer or from the two large government-funded programs, Medicare and Medi-Cal. The exchange is a central piece of

Obama’s health-insurance overhaul, allowing people to compare policies and collect a subsidy if they qualify based on income.

Covered California customers who get federal tax credits to lower their monthly premiums will be shielded from all or part of the higher costs because their subsidies will rise in tandem. But the higher prices will be felt by the more than 1 million Californians who have unsubsidized coverage in the individual market, most of whom don’t get their plans through Covered California.

Trump maintains that Obama’s health law is imploding and must be fixed, pointing to rising costs and declining choices in the individual insurance market. A handful of rural counties around the nation have been left without any insurers offering plans through Affordable Care Act marketplaces, and many others have just one option. AP

news@businessmirror.com.ph

AseanThursday BusinessMirror

Mysterious spending slump spurs flight from Indonesia stocks

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s Indonesians keep their wallets in their pockets, foreigners are pulling money from a stock market dominated by consumer companies.

Consumer-goods companies’ second-quarter net income has dropped 31 percent year-on-year, while motorcycle sales, a key barometer in a nation where there’s almost one scooter for every three people, fell 29 percent in June from May. Foreign funds responded by selling a net $798 million of local shares last month, even as they kept buying into most other Asian markets.

No one is quite sure why spending has slowed so much, although a rise in religious tension, a decline in private investment and the timing of the Eid’l Fitr holidays have been cited as reasons. Whether or not the downturn persists will be crucial for a market where many of the biggest companies—such as auto retailer PT Astra International and noodle maker PT Indofood CBP Sukses Makmur —are reliant on domestic demand.

“Weaker-than-expected consumer spending was a key reason for the foreign selloff,” said Bharat Joshi, who helps manage $3.5 billion as the head of Indonesian investments at Aberdeen Asset Management Plc. in Jakarta. “A rise in valuations hasn’t been supported by earnings growth.”

The selloff took place after the Jakarta Composite Index rose 18 percent from late December to a record high on July 3. Even though the gauge has declined 1.8 percent since then, its 12-month price-to-earnings ratio is still around 6 percent above the five-year average. The JCI was little changed as of 9:50 a.m. in Jakarta on Wednesday.

Indofood CBP had its first-ever year-on-year drop in sales last quarter, with CEO Anthoni Salim saying last week he remained cautious about the outlook for the rest of the year.

A central bank consumer confidence gauge dropped the most in June since mid-2015.

The slowdown has fed through to the share prices of some of the big consumer-focused companies: PT Matahari Department Store has fallen 24 percent this quarter; Chicken processor PT Charoen Pokphand Indonesia dropped 12 percent; Tobacco company PT Hanjaya Mandala Sampoerna, which has the third biggest weighting on the JCI, lost 12 percent; Astra International declined 12 percent; and Indofood fell 6 percent PT Bank OCBC NISP President Director Parwati Surjaudaja said she thought politics had played a

$798M

Asean wants talks on sea pact with China soonest

The value of Indonesian stock-market shares that were sold by foreign funds in July

part in the spending slowdown.

Hundreds of thousands of Muslims took to the streets of Jakarta to protest against the incumbent ethnic Chinese, Christian governor, prior to the city’s election in April. Basuki Tjahaja Purnama, an ally of President Joko Widodo, lost the vote and was subsequently jailed on blasphemy charges.

Further correction

“I think politics is one of the key issues,” Surjaudaja said. “People start getting reminded of the nightmare of 1998, that things can happen,” she said, referring to ethnic riots before the downfall of the dictator Suharto.

India’s Godrej Consumer Products Ltd., which generates around a seventh of its revenue from Indonesia, had a 26-percent decline in net income from the nation in the three months through June from the previous quarter. Rising food and electricity prices and the timing of Eid’l Fitr holidays, which meant there were 10 percent less trading days during the period, contributed to the weak result, CEO Vivek Gambhir said on a conference call Monday.

Not everyone thinks the spending slowdown has driven the outflows. Indonesia’s capital markets have taken a bit longer to stabilize following the conclusion of the tax amnesty earlier this year, said Alan Richardson, investment manager at Samsung Asset Management in Hong Kong. “It’s more deferred transmission than a long-term problem, so the future still looks promising.”

Jeffrosenberg Tan, head of strategy at PT Sinarmas Sekuritas in Jakarta, said the spending downturn had been caused by a decline in private investment over the past four years and the failure of a commodityprice rebound to trickle down to the rest of the economy.

“There will be a further correction in the market until investors can see consumer spending has started to bottom out,” he said. This would create a buying opportunity as demand will rebound eventually, he said. Bloomberg News

Court acquits Thai ex-PMs

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Editor: Max V. de Leon • Thursday, August 3, 2017 A9

wo former Thai prime ministers have been cleared of abusing their power in a case involving the quelling of an antigovernment protest in 2008.

The court in Bangkok acquitted Somchai Wongsawat, his thendeputy Chavalit Yongchaiyudh and two former police officials on Tuesday. A judge said the court could not conclude the injuries protesters suffered were from police weapons and grenades.

The defendants had Thailand’s former Deputy Prime Minister Chavalit Yongchaiyudh been accused of au- (left) arrives at a courthouse in Bangkok, Thailand, on Wednesday thorizing police to use to hear the verdict on criminal charges against him and his former force against protest- boss, Prime Minister Somchai Wongsawat, for the deadly dispersal ers who had blockaded of antigovernment protesters blocking Parliament in 2008. AP the National Assembly building. A pitched battle erupted, injuring several hundred people and causing two deaths.

Somchai is the brother-in-law of Thaksin Shinawatra, the popular prime minister deposed by a 2006 coup. Thaksin’s supporters see the various criminal cases against his allies as attempts to erase his influence from Thai political life. AP

In this July 27 photo, a man and a child look at a picture showing the Fiery Cross Reef in the Spratly islands, in the disputed South China Sea, on display at the military museum in Beijing. AP

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outheast Asia’s top diplomats will seek talks “as soon as possible” on a proposed nonaggression pact with China aimed at preventing clashes in the South China Sea and will likely hold back on criticism of China’s aggressive acts in the disputed waters in a weekend summit.

An initial draft of a joint communiqué to be issued by the Asean foreign ministers, which was seen by

The Associated Press on Wednesday, says they would ask senior diplomats to immediately initiate talks on the

so-called code of conduct in the disputed sea after their governments agreed on a framework of the accord with China in May. The Asean ministers will ask their senior diplomats “to begin earnest discussions on a substantive and effective code of conduct on the basis of the framework as soon as possible,” according to the draft communiqué.

The long-seething disputes in the South China Sea, alarm over North Korea’s missile tests and the rise of Islamic radicalism in the region amid a deadly siege by Islamic State group-linked militants in the southern Philippines are expected to grab the spotlight in the meetings of Asean foreign ministers and their

Asian and Western counterparts in Manila starting on Saturday.

Robespierre Bolivar, the spokesman of the Department of Foreign Affairs, described the initial progress after yearslong efforts by Southeast Asian countries to negotiate a code of conduct with China “as a very big step”.

Critics have said the framework only serves as a brief outline of previously agreed principles and failed to mention concerns over China’s newly built islands and an arbitration ruling last year that invalidated Beijing’s historic basis for its claims to virtually all of the South China Sea. Beijing has refused to recognize the ruling based on a 1982 maritime treaty.

The draft communiqué, still to be expanded with inputs from other Asean member-states, doesn’t mention concern and alarm over China’s artificial islands, which have reportedly been installed with a missile defense system. Those concerns have appeared in previous Asean joint statements.

A carefully crafted and subtle line on the dangers lurking in the dispute appears in the draft statement. “We reaffirmed the importance of enhancing mutual trust and confidence, exercising self-restraint ...and avoiding unilateral actions in disputed features that may further complicate the situation,” it said.

President Duterte, who is the Asean chairman this year, moved swiftly after taking office last year to revive his country’s once-frosty ties with China while taking an antagonistic attitude toward its US ally.

Duterte set aside the Philippines’s arbitration victory over China but promised to take it up with Chinese leaders before the end of his six-year term. His move has eased tensions but has been criticized as squandering an opportunity to promote the rule of law in the sea. AP

Defector looks to break Najib’s grip on Borneo and Malaysia

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f anyone can break Prime Minister Najib Razak’s stranglehold on Sabah, the Borneo state that holds the key to power in Malaysia, it should be Shafie Apdal.

Shafie’s roots in Sabah run deep.

He is the nephew of a former chief minister, and rose from the local branch of Najib’s United Malays National Organisation (UMNO) to become the first national vice president from the state. When Najib dumped him from the Cabinet in 2015, amid a dispute over a troubled state fund, Shafie, 59, set up his own party based in Sabah.

“There is no path to victory for the Malaysian opposition that doesn’t go through Sabah,’’ Rosman Abin, youth chief for Shafie’s new party Warisan, said before a recent party event in the state. “We can’t win without a strong showing here.’’

Yet, to help the opposition wrest control of Malaysia from UMNO after six decades of rule, Shafie needs to avoid the problems that have dogged the grouping for decades: public bickering and a tendency to compete against each other. If Sabah’s opposition blocs and parties fail to agree which seats each will contest, Najib’s coalition is all but assured of victory in an election that could come this year.

“Of course, BN [Barisan National] will retain power in Sabah, it’s almost a given” due to divisions in opposition parties, said Oh Ei Sun, a Sabah native who is principal adviser to the Pacific Research Center in Malaysia, referring to the UMNO-led Barisan Nasional coalition. “Everyone wants to be boss, everyone wants to be the chief minister.”

Located more than 1,400 kilometers (870 miles) across the South China Sea from peninsular Malaysia, Sabah sits on the northern tip

125,000

The number of undocumented workers sent home

by Malaysia from January 1 to July 25 of Borneo between Indonesia, the Philippines and Brunei Darussalam.

Malaysia’s second-largest state by size, the rain-forested former sultanate accounts for more than a quarter of the country’s crude-oil reserves.

Sabah and neighboring Sarawak are known in Malaysia as “fixed deposits” for Barisan Nasional. They have long supported the establishment, accounting for about a third of the coalition’s seats at the last general election.

Still, BN retained power in 2013 by its slimmest margin ever, and would have lost if not for the Borneo states. And in about half its seats in Sabah, the winning candidate only got around 50 percent or less of the vote.

Speaking by phone, Shafie said his party is “looking into” cooperating with Pakatan Harapan, the main national opposition alliance.

Warisan now has two members of parliament. It’s not decided how many seats it would contest, and the party does not disclose the size of its membership.

“Whatever it takes to make sure that BN can be defeated—that is crucial for us,” Shafie said. “There must be a formal compromise, but not at the expense of neglecting the rights of fellow Sabahans.”

Najib’s party is used to defectors

A photo of Malaysian Prime Minister Najib Razak hangs on a wall in an office in Kuala Lumpur. BLOOMBERG

jumping ship: Pakatan Harapan is headed by jailed former UMNO Deputy President Anwar Ibrahim and its chairman is Mahathir Mohamad, Malaysia’s longest-serving prime minister who led the party for decades.

“Shafie is actually a non-threat because he’s a loner,” Tengku Adnan Tengku Mansor, secretary-general of BN, said by phone in late June. He said Sabah will stick with Barisan Nasional as it’s “the only coalition in the country which is multiracial, multireligion, multiethnic and multicultural.”

Surveys suggest the state’s 3.8 million people aren’t all that happy with UMNO. A Merdeka Center for Opinion Research poll of 905 registered Sabah voters published in May found just over half were dissatisfied with the state government. But the Merdeka Center added it would be hard for opposition parties to win the state—turns out voters are also unimpressed—with their performance.

Grievances in Sabah include

illegal immigration, concerns about autonomy and resentment over a 6-percent goods-and-services tax that has boosted prices. Inflation nationwide is set to quicken to as much as 4 percent this year, from 2.1 percent in 2016.

The price increases will help the opposition, according to Jannie Lasimbang, a potential candidate in Sabah with the Democratic Action Party, the biggest by parliamentary seats in Pakatan Harapan. “It might finally be our turn,’’ she said while touring a food market in Sabah.

Still, one spoiler might be Yong Teck Lee, another BN defector who was Sabah’s chief minister from 1996 to 1998.

Yong has used populist rhetoric to rally support to his Sabah Progressive Party, amid concerns the central government isn’t giving the state its fair share of oil and gas royalties. He has hit out at Najib for failing to curb illegal immigration, mainly from strife-torn areas of the southern Philippines and nearby Indonesia.

Bloomberg News

A10 Thursday, August 3, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Defending the PHL outsourcing industry

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he Philippines started attracting business-process outsourcing (BPO) companies more than two decades ago. With our cost-competitive work force and infrastructure, a positive business environment that supports 24/7 operations, large pool of English-speaking, college-educated workers, effective government incentives and a service-focused culture, the country managed to become a preferred investment destination for global BPO firms. Since then, the BPO industry’s growth has been unstoppable.

Lately, however, industry analysts warned that the country’s outsourcing empire is facing mounting risks. They said China is rising quickly as a competitor. With the government’s intention to cut incentives, it is important to look back and see how our BPO industry managed to attain rapid growth.

Before the Philippines became a global player, Indian outsourcing reigned supreme. However, with our English proficiency, accent neutrality, comparable costs and government backing, our BPO industry gained significant ground at India’s expense.

Last year the industry generated $23 billion in revenues and provided direct employment to 1.15 million Filipinos. Amid the jitters caused by US President Donald J. Trump’s “America First” policy, particularly his avowed intention to bring BPO jobs back to America, major American players didn’t blink and stayed on our shores. Analysts said they do not expect a large number of BPO jobs to leave the Philippines given the significant wage differential between the two countries. In a recent report, Glassdoor, a jobs and recruiting site based in the US, said the hourly wage for a call-center agent in the Philippines is around $2, while the hourly wage of a call-center agent in the US is at $10.50.

The BPO industry is expected to remain as the country’s biggest source of private jobs. And we can’t overemphasize the industry’s importance for the country’s dollar supply, especially now that pundits are saying the Philippines might slip into a current-account deficit this year—the first in 15 years. Thus, the risks of a slowdown in our BPO industry, coupled with faltering remittances and higher trade deficits, may exacerbate the weakness in the peso, which is being dubbed Asia’s worst-performing currency this year.

We have to defend our BPO industry by putting our act together. As the head of the Philippine association of outsourcing companies said, other countries know how big this business-process outsourcing pie is globally, and they want to increase their share. Government support would help ensure the health of our BPO industry. Instead of setting up infrastructure and operational roadblocks, the government must provide support for expansion, training and technological upgrade.

In a recent report, advisory firm Tholons warned that our reign as top BPO destination is now under threat, with China ranked ahead of the Philippines in terms of competitiveness. This should serve as a wake-up call for us. We have to remember that the countries that compete with us in this industry are enhancing all the parameters that make them competitive—talent, infrastructure and incentives.

Bloomberg recently reported: “In recent years, China has built state-of-theart technology parks and funded universities to offer courses specifically on outsourcing. China is targeting $100 billion of outsourcing revenue by 2020, focusing on digital, high-technology services, according to a plan by the Ministry of Commerce.” This, indeed, is an alarming report, which should jolt us to our senses. We need to defend our BPO industry from emerging global competitors. We do not want to wake up one day to discover that a neighboring country is eating all our BPO pie.

Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua

Stock prices predicting the future John Mangun

OUTSIDE THE BOX

T

he newspaper headlines since March 1st have gone something like this. “DBS raises red flag over PHL current account deficit.” “Philippine peso outlook keeps getting grimmer.”

“Analyst Chicken Little says ‘The sky is falling’ in PHL.”

OK, I made up the last one.

Against that news, the Philippine Stock Exchange Composite Index (PSEi) posted gains of 1.38 percent (March), 4.78 percent (April), 2.30 percent (May), went flat (0.08 percent) in June and finished July up 2.23 percent. The total gain was 10 percent.

More specifically, the Property Index lost 6 percent between the beginning of January and the end of March. But from then on until the end of July, that index has gained 20 percent. Since the start of March the Holding Companies are up 8.5 percent, with the Financial shares gaining 10 percent.

Yet, from August to the end of December 2016, the PSEi dropped 15 percent. And now, we are virtually back where we started from July 31, 2016.

There has always been a discussion whether or not stock-price movements are predictive in any way of future economic conditions.

Is the stock market a leading indicator of the economy? There have been many studies on this topic going back at least 50 years. Having read the summaries of at least two dozens, the financial and economic experts have come to the definite conclusion of “yes, no, maybe and sometimes”.

A major problem is defining

‘Our peso is healthy’–BSP chief

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what exactly the market is supposed to predict. A recent study showed that stocks “predicted” four of the last seven US recessions. The same study concluded: “Stock prices began to rise in all cases before the beginning of an economic expansion.” So what is that—“No, maybe or sometimes?”

Collective wisdom as expressed through betting real money on an outcome—like last year’s UK vote to leave the European Union—has a high degree of accuracy outside of statistical chance. The largest amount of money was bet on “Remain”. The vote was “Leave” by a 52 percent to 48 percent majority. What the analysts missed was that, while the largest amount of money was on Remain, the most amounts of individual bets were with Leave.

Perhaps, the decline in local stock prices during the last five months of 2016 was “predicting” the caution and concern we found in the headlines mentioned above.

In 1981 I spent a month in the local university library reading the newspaper. Not the current paper, but of the months leading up to the 1929 stock-market crash, looking for clues of what was to happen. There

Val A. Villanueva

Businesswise

S

ometime in March of this year, Bloomberg and other financial analysts branded the Philippine peso as Asia’s worstperforming currency, practically saying that it has gone from better to worse.

Just fairly recently, they chorused that the outlook of our peso “just keeps getting grimmer”.

Most of them zeroed in on the Philippines’s current-account position, which is their benchmark if a country is susceptible to either external or internal financial shock, or both.

A country’s current-account position reflects its strength in weathering financial storm. Is it robust enough to absorb the headwinds?

In effect, current account is a coarse assessment of a country’s fiscal vulnerability.

In a vibrant economy, banks have the confidence to lend more money. But what if the economy decelerates and people start defaulting on their loans? Such a scenario would have cascading ramifications

that could shake a country’s fiscal position.

The ISIS-inspired siege of Marawi City and Saudi Arabia’s blockade of Qatar are seen by analysts as the two most critical events that are weighing down the Philippine currency.

“Marawi is more important now that the current account has fallen to zero,” Nizam Idris, head of strategy for fixed income and currencies at Macquarie Bank Ltd. in Singapore, was quoted as saying. “When you have uncertainties, the lack of a current-account buffer will definitely impact your currency more than it used to in the past,” he added.

Qatar, on the other hand, employs some 250,000 overseas Filipino workers (OFWs). It would be worrisome if their remittances slow down.

OFW remittances from Qatar account for nearly a 10th of the nation’s GDP. The country halted the placement of workers to Qatar for a week in June, soon after Saudi Arabia and other states cut off diplomatic and economic ties with the Gulf nation.

Joey Cuyegkeng of ING Groep NV Manila pointed out that what happens next bears watching, “considering that 4 percent of remittances came from Qatar last year”, even as he revised his year-end peso forecast this month to 51.3 per dollar from around 49.

The country’s deteriorating peripheral position intensifies its dependence on foreign financing and magnifies the weakness for the currency as the war in Marawi puts another burden of political risk.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo says that the current-account deficit may widen to $1.6 billion in 2018, from an estimated $600-million shortfall this year, and that “the falling peso has made a Central Bank plan to cut lenders’ reserve requirements more challenging”.

Idris pegs the peso at 52 per dollar by year-end, 2.8 percent punier than the August 1 level, at 50.4.

Other analysts are much doubtful, with the median end-2017 estimate dipping 1.2 percent in July to 50.8.

weren’t any. Nothing seemed to predict the beginning of the greatest economic event of the 20th century.

US economic growth contracted by 8.5 percent (1930), 6.4 percent (1931) and 12.9 percent (1932).

After the October 1929 stockmarket crash, stories like this were prominent in the newspapers.

“Wife of a Long Island stock broker shoots herself in the heart.” “Two men jump out of a window at the Ritz Hotel.” “Vice president of Earl Radio Corporation jumps to his death from the window of a Manhattan hotel.”

Maybe we are looking in the wrong direction. Maybe some factor could predict stock-market crashes.

During the previous two years, and noticeably in the summer of 1929 when the bull market was raging, the New York City suicide rate was higher than in the previous four years. In October and November of 1929 the number of suicides was “disappointingly” lower.

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

The Philippine currency has dropped 1.6 percent this year, the worst performance among emerging markets after Argentina’s peso.

Is there something that we should be worried about? At what threshold in the peso-dollar exchange rate should the BSP intervene?

BSP Governor Nestor A. Espenilla Jr. in a Viber message to BusinessWise says that there’s no such threshold: “We don’t target a specific exchange rate. We focus more on managing excessive market volatility.”

He maintains that the Philippine peso is healthy: “The exchange rate now is basically aligned with market fundamentals. It’s the nature of a market-oriented exchange rate to show daily volatility. And people should be guided accordingly in their decisions.” The BSP chief says that those with real needs, such as for imports or foreign-exchange payments, should consider hedging.

“Currency speculation is a risky business and should be left to professionals. We should be more worried if the exchange rate is artificially misaligned with market fundamentals, especially if it persists. That may then encourage risky behavior like unhedged foreign-currency borrowing.”

For comments and suggestions, e-mail me at mvala.v@gmail.com

opinion@businessmirror.com.ph

Opinion

CARP: Quo Vadis?

Transfigured for us

BusinessMirror

Dr. Rene E. Ofreneo

Msgr. Sabino A. Vengco Jr.

LABOREM EXERCENS

Alálaong Bagá

I

N 1972 Ferdinand E. Marcos issued Presidential Decree (PD) 27, abolishing all forms of share tenancy and providing for land transfer in the rice and corn areas. On June 10, 1988, PD 27 became part of a bigger agrarian-reform program—the Comprehensive Agrarian Reform Program (CARP)—that covers all cropping areas. President Corazon C. Aquino, who hailed from a landed family, pushed for the CARP law because of the pressures from peasant and civil-society groups, which supported the Edsa People’s Revolt of 1986.

In 2018 the CARP will turn 30.

And yet, the full implementation of the CARP is still very much a work in progress.

How much land remains to be distributed? Department of Agrarian Reform (DAR) statistics are awfully unreliable. This is obviously the reason why DAR Secretary Rafael V. Mariano has ordered an inventory. However, one year after his nomination, Mariano still has to bare the results of the inventory.

What is clear is that as of June 2009 there was a huge backlog of 1.5 million hectares still to be distributed. This is the figure used by the reform-conscious bishops and farmer-Civil Society Organizations groups in pushing for the extension of the CARP law for an additional five years. However, the land acquisition and distribution (LAD) program kept moving at a snail’s pace.

Thus, by 2013, almost a million hectares targeted to be distributed remained undistributed. With the CARP extension law elapsing in 2014, the smart solution of then DAR Secretary Gil de los Reyes was to issue notices of coverage (NOCs) for the remaining targets.

What is the status now of the lands given the NOCs? There are no clear answers. A study by Mary Anne Manahan of the Focus on Global South research institute gave 600,000 as the total hectarage still to be distributed as of January 2016; in addition, she wrote that there were petitions for the coverage of 100,000 hectares more.

As to the distribution of lands under the Duterte administration, data are scant. The number of hectares distributed in the first year of the administration is placed at five digits.

Nevertheless, Mariano has a number of agrarian reform-policy initiatives.

He sought a moratorium on land-use conversion. However, this was immediately opposed by other members of the Duterte Cabinet, principally by the economic cluster members. Moreover, some economic advisers of the government have been floating the idea of “Charter change”, not to establish a federal government but to allow foreigners to own land in a freer land market. This is fiercely opposed by farmer and labor groups aligned with Mariano, a nominee of the National Democratic Front.

The DAR has also been conducting a review of the agribusiness venture agreements (AVAs), leaseback agreements and “corporative schemes” that corporations have been using to enable them to manage the CARP lands for large-scale commercial farming purposes. This is common in the banana-plantation sector of Mindanao.

However, the results of the DAR review have not been published, although some agribusiness firms, such as Marsman, are reacting to the efforts of DAR to modify the AVAs. There are also stories on how new

sets of agrarian reform beneficiaries (ARBs) are being installed by the DAR in plantations already subjected to past CARP installation involving different sets of ARBs. These efforts tend to pit the new ARBs versus the old ARBs as what seems to have happened in the case of Lapanday. This has given rise to accusations by some agrarian-reform advocates that the DAR is being “selective” in CARP implementation and in the selection of ARB partners.

In the case of Hacienda Luisita, the DAR managed to identify 500 more hectares, on top of the 4,500 hectares distributed by de los Reyes, for distribution to ARBs. Mariano also noted the subversion of land reform by the arriendo system, a system where ARBs simply rent out their respective farms to arrenderos, who consolidate the lands of the small farmers and transform them into bigger corporate sugar farms. As such, the land-to-the-tiller principle is defeated.

The reality, however, is that the majority of the Hacienda Luisita farm workers who qualify as ARBs based on the decision of the Supreme Court rejecting the stock-distribution plan of the Cojuangco family as CARP compliance are already aging, meaning they are in their 70s and 80s. This is not surprising because the Hacienda Luisita case consumed half a century of litigation. Ironically, the workers of the arrenderos, those who work in the field, are mostly poor sacadas imported from impoverished areas in the Visayas and Luzon. They are not treated as ARBs. Clearly, the CARP needs some cleansing. The CARP as a reform program needs to be reformed. In particular, the design and implementation of the CARP need a more thorough reassessment. As it is, the overwhelming focus of past and present DAR implementors is on how to complete the LAD process. The CARP “transformation” goals outlined by the Constitution—specifically, the transformation of ARBs into modern and empowered farm producers and the transformation of CARP areas into modern and progressive farm communities—are somehow forgotten. In many cases, CARP implementation is reduced to a State-managed real-estate transaction, not a reform program to deliver social justice and create conditions for the progressive advancement of the farming community as a whole. This is the reason the CARP is sometimes blamed by some economists as having succeeded in creating another class of rural poor—the landed poor.

Clearly, the challenge to policy-makers is not only how to complete the LAD process but also, and more important, how to bring back the reform spirit in a program that is meant to liberate the countryside from oppression, backwardness, inequality and insecurity.

M

idway in the Ordinary Time of our liturgical calendar, we are invited to meditate on the transfiguration of Jesus (Matthew 17:1-9). The Feast of the Transfiguration of the Lord gives a glimpse of the divine in Jesus Christ to boost our faith in Him and encourage us to listen to Him as we struggle with the challenges of life in his company.

Going up the mountain Jesus leads his close friends up a high mountain to have access to the inner truth about Him. The high mountain symbolizes ascent to God, and, up there, the disciples are given an experience of the divinity of Jesus shining through His humanity. He is transfigured in His outer appearance, becoming radiant with the inner reality of His communion with the heavenly Father. Everything about Him becomes transparent to His divine glory, calling for the cosmic imagery of His face shining like the sun and His clothes dazzling white.

T his t heophany, or God ’s

self-revelation, is given a distinct accent when Moses and Elijah are suddenly seen conversing with Jesus.

These representatives of the law and the prophets, respectively, standing for the entire religious tradition of ancient Israel, were persons who experienced too God’s presence on the high mountain and found there both illumination and inspiration.

More than that, their visible communion with Jesus confirms His authority and the legitimacy of His teaching. Jesus is in continuity with the law and the prophets; together, the three in a huddle are portrayed to the disciples as leading agents of

Bloomberg View

M

any economists genuinely want to make their field more scientific—grounded in empirical evidence rather than in theory or, worse, ideology. Yet, a recent article by four prominent academics demonstrates the extent to which ideology remains a problem.

My Bloomberg View colleague Justin Fox has highlighted the motivated reasoning in the article, penned by a team of conservative economists including R. Glenn Hubbard of Columbia Business School and John Taylor of the Hoover Institution at Stanford University. They

argue that the current economic stagnation has nothing to do with a hangover from the financial crisis, and that policies, such as lower taxes and cuts in social spending, would markedly boost growth. They say this follows from objective analysis of data on past crises and recoveries.

As Fox notes, the analysis actually rests on a conveniently biased selection of data. It includes among past financial crises several moderate downturns that most economists don’t think of as crises, and rather bizarrely counts the grinding decade of the Great Depression as a “rapid recovery” from the recession of 1929.

Worse, the article projects a completely unjustified sense of certainty.

God’s purposes in history. Peter, addressing Jesus as Lord and ready to carry out His commands, has a proposal about staying longer up there on the mountain so that the three can continue their conversation.

Coming down the mountain

But heaven has another plan. The descending bright cloud makes contact with those who have been led up the mountain. The voice repeats the words said at the Jordan River, “This is my beloved son with whom I am well pleased.” But there is a crucial command: “Listen to him.” It is not for the disciples just to witness the three key players of salvation history in conversation; Jesus is more than a lawgiver and a prophet. He is the Beloved Son. Listening to Him, to His words, is vital.

The disciples’ initial reaction to the voice is to fall prostrate to the ground in fear, the creature’s fear before God’s transcendence. Jesus gives them another response to God, who speaks to them: “Get up and do not be afraid.”

This is the command they must listen to; the immanent presence of God in Jesus lifts them up in the mission of love. Moses and Elijah are gone; only Jesus is there to teach them what they must know and do, beyond fear and

President Corazon C. Aquino’s PCGG Cecilio T. Arillo

database Part Two

The PCGG lost its important case

T

HE Presidential Commission on Good Government (PCGG) embarrassingly lost its most important criminal case in the US under the Racketeer Influenced and Corrupt Organization Act (Rico) against the Marcoses in New York when it failed to present three vital state witnesses who would have linked Mrs. Imelda Marcos to the alleged crime.

Many people do not know that the Rico case arose from the purchase of four New York buildings and the Samuels collection of arts and paintings.

These buildings, at 40 Wall Street, at 57th Street and 5th Avenue, at 6th Avenue and 34th Street and at 200 Madison Avenue, were acquired by the Marcoses between 1981 and 1983 for $187 million or P3.533 billion based on the average exchange rate of $1 to P19 during that time.

Businesswoman Gliceria Tantoco, a friend of Mrs. Marcos, bought the Samuels collection for $4.95 million.

Tantoco and brothers Joseph and Ralph Bernstein were the three vital state witnesses who were given immunity from criminal and civil prosecution in exchange for their testimonies in court against the Marcoses.

According to former PCGG Chairman and Senate President Jovito Salonga, the Bernsteins were the administrators of the four buildings, and they dealt directly with Tantoco, Rolando Gapud and the Marcoses themselves.

Surprisingly, they were not presented on the witness stand. Only the 300,000 documents received as evidence and the 95 witnesses, who testified and described alleged unscrupulous activities, were presented during the trial.

Not only that, the Aquino administration miserably lost the buildings without recovering a single centavo of the P3.533 billion when the banks foreclosed the properties after it failed to remedy the mortgage obligations, which had accumulated during the trial of the Marcoses.

A Marcos crony, noted for his propensity in the use of guns, money and women during the martial-law years, had threatened to kidnap the grandchildren of Tantoco, thus preventing her from testifying against the Marcoses.

The crony had successfully infiltrated Aquino’s Cabinet by planting a woman who seduced one of its trusted Cabinet members.

The woman, married but separated, eventually became the Cabinet man’s mistress. With the help of this man, the group’s tentacles spread to

Economists are cheating their profession

By Mark Buchanan

Thursday, August 3, 2017 A11

“Economic theory and historical experience,” it boldly asserts, “indicate economic policies are the primary cause of both the productivity slowdown and the poorly performing labor market.” This willfully misrepresents current thinking. Economists hold diverse views on the roots of the recent malaise and remain divided and uncertain about the fundamental causes of growth.

The authors have every right to express their views and opinions in forceful terms. But when professional economists write as experts and claim theory as a basis for their views, they also have a duty to present that theory—and other economists’ thoughts about it—honestly.

Their failure to do so is “unprofessional”, as University of California at Berkeley economist Brad DeLong rightly put it. It doesn’t reflect the honest, evidence-based approach that most economists aim for.

The question, then, is what, if anything, the profession will do about it.

Does it have standards? If so, can it enforce them?

Just like regulators, economists can be captured by powerful corporations and individuals, as University of Chicago economist Luis Zingales has argued. Conservatives in particular have been successful in subverting research for their own ends, especially through the creation of think tanks and by funding

According to former PCGG Chairman and Senate President Jovito Salonga, the Bernsteins were the administrators of the four buildings, and they dealt directly with Tantoco, Rolando Gapud and the Marcoses themselves. Surprisingly, they were not presented on the witness stand.

into life in love. And the first lesson they receive from Jesus, listening to him as commanded, is, “Tell no one about the vision until the Son of Man has been raised from the dead.”

The predictions of Jesus about His upcoming passion, death and resurrection, that they have found hard to fathom and to swallow, they are now enjoined to listen to.

Alalaong baga, the privilege of witnessing the radiant transfiguration of Jesus was in order to confirm Him as the one to whom they must listen. They must balk no more at His words regarding His suffering and death. Seeing His glory, they can now persevere with Him on His path, the path that is down from the mountain and out on the plains. Up on the mountain, Jesus revealed to His disciples the divine origins of the path of suffering. It is not easy to go down that way, requiring continual intentional effort, but having an inside track on Jesus enables us in faith to “rise without fear” and be carried onward by His word as we “listen to Him”.

Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on dwIZ 882, or by audio streaming on www.dwiz882.com.

the courts, to the PCGG and to the Office of the President.

When Aquino created the PCGG, she did not also clarify its objective as to whether it was to operate under the rule of law (Constitutional) or under the rule of men (revolutionary).

At that point, she was unaware that the highly sophisticated legal and financial system used to obscure the so-called ill-gotten wealth would require the use of a writ of confiscation rather than a writ of sequestration. In fact, a law on confiscation was readily available. Surprisingly, it was not used.

In a writ of confiscation or seizure, as explained by former Assistant Solicitor General Cesario del Rosario, the burden of proof is on the owner or possessor of goods or assets (as is done in smuggling cases), while, in a writ of sequestration, the government must not only preserve the assets but it must also present proof before a competent court that they were indeed illegally possessed or acquired.

As a result, the recovery of stolen wealth, instead of orderly, became a frenzied search for the spoils by some greedy and incompetent PCGG officials and volunteers who inordinately used the power of the Edsa Revolution to conduct raids without due regard to the rule of law.

These volunteers, known initially as fiscal agents, numbered more than 1,350. They were issued

mission orders to prevent concealment, destruction and dissipation of sequestered and surrendered assets.

And since they were not trained and were not covered by mandatory government rules and regulations on auditing, accounting and custody of state assets, many of them became themselves the ill-getters.

To deter these wrongdoers, the PCGG came up with its own rules and regulations, but these safeguards were repeatedly violated.

For example, on April 11, 1986, the PCGG promulgated a very strict and specific rule that writs of sequestration can only be issued on the signature of at least two commissioners. The PCGG was ran by a chairman and four commissioners.

Documents gathered by this writer disclosed that between April 15, 1986, and June 20, 1986, 131 out of 148 (88 percent) writs of sequestration were issued on the signature of just one commissioner in clear violation of the PCGG’s own rule.

The documents showed that of the 131 writs, 63 were issued by Commissioner Ramon Diaz, 56 by Commissioner Mary Concepcion Bautista, 10

by Commissioner Raul Daza and one

by Commissioner Pedro Yap. As a consequence, the Sandiganbayan, on many occasions, declared that where the writ of sequestration was signed by one commissioner only, the same was void and deemed automatically lifted.

In fact, this was what happened in the case of the International Copra Export Corporation, Dio Island Resort and the multibillion-peso companies sequestered by the PCGG from former Ambassador Roberto Benedicto and 17 of his close associates, to name only a few.

To be continued

economists adept at disguising ideological arguments in objective academic language. Concerted efforts date back at least to the 1980s. In her recent—and controversial— book, Democracy in Chains, historian Nancy MacLean offers billionaire industrialist Charles Koch’s backing of libertarian economist James Buchanan as an example.

How can the profession combat such capture? Zingales has suggested public shaming, following the example of media efforts, such as the film Inside Job, which exposed a number of prominent academics for pushing the benefits of modern finance while hiding considerable income from major Wall Street firms.

Among the economists scrutinized was Columbia’s Hubbard.

Shaming seems appropriate. After all, public trust is a resource from which all economists benefit. If they want to preserve it, they should draw guidance from Nobel Prize winner Elinor Ostrom. She showed that successful management of such resources typically requires an effective means to maintain group standards and values—for example, by punishing and deterring self-serving behavior among individuals within the group.

Economists who present their opinions as fact, or who misrepresent the consensus, are cheating at the expense of the entire profession.

They shouldn’t get away with it.

2nd Front Page BusinessMirror

A12 Thursday, August 3, 2017

www.businessmirror.com.ph

Hotel-restaurant group pushes more food tourism initiatives

By Ma. Stella F. Arnaldo

T

@akosistellaBM Special to the BusinessMirror

HE Hotel and Restaurant Association of the Philippines (HRAP) has asked the Department of Tourism (DOT) to further push “food tourism” as a major promotion effort to attract more foreign tourists to the country.

The group, led by its president Eugene Yap, paid a courtesy call on Tuesday on DOT officials, led by Tourism Secretary Wanda Corazon T. Teo and Undersecretary for Tourism Development Planning Benito C. Bengzon Jr., at the DOT office in Makati City.

In an inter v iew, c hef and

restaurateur Raoul Roberto Goco told the BusinessMirrror that while there are many reasons to go to a destination or province in the Philippines, such as beaches or scuba diving, etc., the local delicacies there also need to be played up by the DOT. He pointed out that other

GOCO: “For example, you go to Vigan because of Calle Crisologo, the heritage homes and churches, but also, the tourists need to be made aware that it is also famous for its longganisa [native sausage], empanada [meat pie], and you can bring home their bagnet [deepfried pork slabs]. So even a month or two after, when you take out the bagnet from your freezer, reheat it and take a bite, you will remember your trip to Vigan.”

foreign tourists make trips specif ica l ly to Japan, T ha i land, Vietnam, etc., “ just to eat food.

How can we make it that way for the Philippines?”

Goco, an HRAP board director for the restaurant division, said he proposed that the DOT “recognize” food delicacies and native alcoholic beverages served in many local destinations, to help bring in the food tourists.

“For example, you go to Vigan because of Calle Crisologo, the heritage homes and churches, but also, the tourists need to

be made aware that it is also famous for its longganisa [native sausage], empanada [meat pie], and you can bring home their bagnet [deep-fried pork slabs].

So even a month or two after, when you take out the bagnet from your freezer, reheat it and take a bite, you will remember your trip to Vigan.”

Goco, likewise, urged the DOT to help protect the local food purveyors and delicacies in the country’s many destinations from large food companies. “I’m not against Jollibee or McDonald’s, but what

I’m saying is, in many destinations there used to be thriving eateries where good local food and drink are ser ved to visitors. But these days, look at the tourists, they go to these huge fast-food joints. We need to p rot e c t ou r l o c a l d e l i c a c ie s and drink.”

A gl a r ing e x a mple of t his is Boracay Island, whose local government had earlier banned fast-food chains from opening shop. Boracay nons have said this allowed locals and small food entrepreneurs to set up their own homegrown restaurants on the island, creating a thriving food community and businesses for residents. Recently, however, large company food chains have been allowed to open on Boracay, such that there are now two Jollibee restaurants there, along with a Starbucks o ut l e t a n d t w o Mc D o n a l d ’s

‘Duterte rocking political order’

GRAB, UBER VEHICLES OPERATING IN METRO MANILA HIT 118,398

By Jovee Marie N. dela Cruz @joveemarie

U

ber and Grab Philippines on Wednesday admitted before the House of Representatives that there are a total of 118,398 cars plying the streets of Metro Manila, which these two transportation network vehicle services (TNVS) providers did not disclose earlier.

During a hearing of the House Committee on Transportation, Uber Philippines Government Relations and Public Policy Head Yves Gonzalez told lawmakers that there are 66,000 Uber cars that made one trip a year.

However, Gonzalez said only 2,500 have provisional authority from the Land Transportation Franchising and Regulatory Board (LTFRB), and there are 1,000

pending applications for extension. For his part, Grab Philippines chief Brian Cu said there are 52,398 Grab cars in the National Capital Region.

But Cu also admitted that only 3,000 to 4,000 have provisional authority from franchising board.

In the same hearing, LTFRB Chairman Martin Delgra III said he was “surprised” to learn the real number of vehicles as these two TNVS claimed that they only have 28,000 vehicles each. “During the July hearing, they have about 28,000 more or less each. And today, they’re saying twice or more than twice as many. That’s why we say we are shocked. These are the data we’ve been trying to get since last year, because we need to understand precisely the issue of accountability,” Delgra said.

See “Grab, Uber,” A2

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‘Yes! Yes! Yo! Topacio!!!’ Aliw Broadcasting Corp. (ABC) officially launches the radio program Yes! Yes! Yo! Topacio!!!, hosted by top-notch lawyer Ferdinand Topacio and Dr. Che Lejano. Signing the memorandum of agreement at the DWIZ office in Pasig City are (seated, from left) ABC EVP Eladio Aligora, Chairman and President D. Edgard A. Cabangon, hosts Topacio and Lejano and ABC VP and General Manager D. Adrian Cabangon. The said program airs over DWIZ from 10 to 11 a.m., Monday to Friday. RUDY ESPERAS

WESM doing wonders for power sector

audits of the system and procedures of the market operations.

“We had initial coordination with the DOE, ERC [Energy Regulatory Commission] and the National Grid Corp. of the Philippines to ensure the seamless deployment of the enhanced market design and operations. We will be holding several information drives for our WESM members and relevant stakeholders to engage them in this market milestone,” Ocampo said.

The amended WESM rules will be used for the development of the new information-technology (IT) infrastructure, and improvements in design will be, in effect, contingent on the approval of the market manuals by the DOE and pricing-related methodologies by the ERC. PEMC now readies itself for the rollout of activities geared toward the deployment of new market infrastructure.

It has also streamlined processes

in the approval of market membership. Processing time of market membership upon completion of requirements has been reduced from 15 days to five days.

PEMC has also complied with its task in changing the market rules to reflect the preferential dispatch status for emerging renewable-energy (RE) resources, as mandated by the Renewable Energy Act of 2008.

It reported registered capacity of preferential dispatch resources in the WESM totaling 1,356.6 megawatts (MW).

Preference in the dispatch of emerging RE resources has been implemented with solar, wind and run-of-river hydro resources classified as must-dispatch generating units, while feed-in tariff-entitled biomass are considered priority dispatch generating units.

WESM Mindanao

With a surplus of about 1,000 MW of power-generation capacity in the

restaurants, among others.

The HR AP also proposed the return of the “long weekends” that were in vogue during the administration of former President Gloria Macapagal-Arroyo, to boost domestic tourism. Under this practice, holidays that fell on weekdays, were moved to weekends to give the public three-day weekends that allowed them to go on short breaks. The practice was scrapped by President Benigno S. Aquino III. “Secretary Teo seemed amenable to this suggestion,” said Goco, “and said she would recommend it to the President.”

He added the HRAP is helping the DOT by suggesting more ways to boost food tourism in the country. “What we have is Madrid Fusión Manila, but what else? We need to focus on local food, too.”

Goco is executive chef of Cyma Greek Taverna Co.

southernmost grid, the time for Mindanao to have a spot market is now.

“Mindanao has experienced excess generation supply starting in the first half of 2016, which increased even further with the entry of other large generation capacities in the latter part of 2016, and shall increase even further in 2017,” the DOE said.

The new power facilities contributing to Mindanao’s additional capacity include the coal plants of Therma South Inc.’s Unit 2 (150 MW) in Davao del Sur, Saranggani Energy Corp.’s 118 M W i n S a r a n g a n i , S a n Miguel Corp.’s Units 1 and 2 (150 MW each) in Davao del Sur, and FDC’s three units of 135 MW in Misamis Oriental.

The flood of new capacity is causing an oversupply of power in Mindanao, the country’s secondlargest island that suffered up to eight hours of power curtailments daily not too long ago.

Mindanao recorded 748 MW of new generation capacity in 2016, and the figure is expected to increase further by 1,260 MW until 2018.

With an oversupply of power, a power spot market in Mindanao will provide a venue for efficient scheduling, dispatch and settlement of energy withdrawal and injections in the Mindanao grid. More important, it will ensure a reliable and stable supply of electricity.

“We are pleased that WESM is finally in Mindanao. It’s a big move in Mindanao, but this is the best time to roll out a WESM in Mindanao. So consumers are in for a significant upside in Mindanao,” AC Energy Holdings Inc. President John Eric Francia commented.

Aboitiz Power Corp. President Antonio Moraza said a WESM in Mindanao would ensure that additional supply coming from new power projects would be dispatched economically.

resident Duterte is rocking the existing political order in a search for solutions for the country’s major problems, experts said in a forum organized by an international think tank.

Dr. Francisco Magno, a trustee of Stratbase ADR Institute, said the President is, perhaps, a result of a dysfunctional system that is anchored or based on inequities of the distribution of power, therefore providing him with the next proposals to proceed with the federal policy design so that the system can address the inequities of the power structure.

“We have to involve the regions and communities in See “Duterte,” A2

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“A spot market in Mindanao would benefit everyone. The sooner the WESM in Mindanao is implemented, the better. There are a lot of new power plants coming in. The new capacity must be dispatched economically.”

Joseph Nocos, Alsons Power Group vice president for business development, said a WESM in Mindanao would optimize the utilization of various generating assets, thus, ensuring system stability.

The Mindanao Development Authority (MinDA) urged electric cooperatives’ (EC) distribution utilities to take advantage of the excess power supply.

“It is now all about achieving a balanced mix of their sources.

Electric cooperatives and distribution utilities must now take advantage of the abundant supply and cheap hydro power but, at the same time, utilizing their coalpower supply contracts,” MinDA Deputy Executive Director Romeo Montenegro said.

“Power distributors must balance reliability, sustainability and, most important, affordability of power,” he added.

The MinDA official said the oversupply must also be balanced, as some ECs have overcontracted.

He encourages ECs to properly plan their demand forecast to better manage their supply.

PEMC poi nte d out t h at a WESM in Mindanao will address the supply concern and clamor from the generation sector in setting up a mechanism that will foster transparency and rationale pricing of electricity in the region. “This will be proven beneficial, as this will obviate additional costs in setting up a separate infrastructure for Mindanao,” Ocampo added.

Over the course of many years, PEMC’s reliable performance as the administrator of the country’s sole electricity spot market has steered the power industry into greater efficiency and transparency.