Businessmirror june 09, 2016

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By Joel R. San Juan

NO TIME TO RELAx

Sports BusinessMirror

Thompson wants to play in Olympics

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| Thursday, June 9, 2016 mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao Asst. Editor: Joel Orellana

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The champions know exactly how fast a series can change, having just pulled off a mathematically improbable comeback from 3-1 down against Oklahoma City in the Western Conference finals.

And even with the odds now stacked high against Cleveland in these National Basketball Association Finals, the Warriors say they cannot fall into the trap of thinking this series, which resumes with Game Three on Wednesday night, is already over.

LEVELAND—Not even Zika worries will deter Klay Thompson from playing in the Olympics if asked.

The Golden State guard, while he and other potential Olympians in these National Basketball Association (NBA) Finals acknowledged having some concerns about the Zika virus, made clear on Tuesday he would accept any invitation that comes his way to represent USA Basketball at the Olympics in Rio de Janeiro.

“It would be an honor to play for Team USA,” Thompson said. “I’d love to go to Brazil.”

His insistence that he wants to play came one day after his Warriors teammate Stephen Curry announced he won’t, citing needs to rest and heal as his primary reasons.

The Cleveland-Golden State finals matchup is loaded with Olympic prospects. Curry won’t be going, but as many as seven other players in the series may still represent the US this summer—and there’s likely international Olympians like Australian teammates Andrew Bogut and Matthew Dellavedova, plus Nigeria’s Festus Ezeli.

Warriors forward Draymond Green was downright emphatic about his hope to be there.

“Hell, yeah,” Green said, when asked if he wants to play, dragging his words out for theatrics.

Golden State’s Harrison Barnes also said he wants to go, and 2012 gold medalist Andre Iguodala also hopes to play—but indicated he isn’t sure to make the cut.

“I’m on the list,” Iguodala said, “but I think I’m the No. 14 pick.”

There are 12 slots on the US roster.

Cleveland star and three-time Olympian LeBron James hasn’t decided about playing in Rio yet, part of the reason USA Basketball is working on two different roster scenarios in advance of the anticipated team announcement later this month. Kevin Love remains a possibility, and Kyrie Irving said he will decide after the finals.

Irving said the Cavs are in a tough series with the Warriors, “so I haven’t really thought about it.”

What many are thinking about, however, is Zika and its risks.

Zika is a mosquito-borne virus and although there have been outbreaks across other countries, Brazil has been hit hard. Zika is known to cause severe birth defects, part of the reason NBC Today show anchor Savannah Guthrie—who is pregnant—said on Tuesday she will not accompany the network’s team to Brazil for the Olympics.

US cyclist Tejay van Garderen has already cited Zika concerns as his reasons for dropping out from Olympic consideration, and the World Health Organization is putting together an emergency committee to study the virus and examine risks of the games behind held in Brazil.

Bogut can’t stand getting shots, so him already getting several as precautions for visiting Brazil shows how much he wants to represent Australia.

“Just being bitten by a mosquito and then come down with something is a pretty scary prospect,” Bogut said. “I’ve had my yellow fever shot already, which is a battle in itself. And then you’ve got malaria and you’ve got Zika. So being able to get that from an insect is pretty scary stuff.”

He then half-seriously detailed a precaution option.

“Might have to buy a hazmat outfit to arrive,” he said.

Curry said Zika fears didn’t factor into his decision. He wants to use the time off this summer to prepare for next season, the rigors of two years capped by NBA Finals appearances taking a toll.

“As his coach, I’m pleased,” Warriors Coach Steve Kerr said. “He needs rest.... He weighed all the dynamics and realized that a summer of rest would be the best thing for him long term. And I think that’s the wise choice.”

But Thompson said he thinks a couple weeks off between the finals and Olympic preparations will be enough for him.

“The best thing about Team USA, no one’s logging heavy minutes,” Thompson said.

Thompson acknowledged Zika worries him somewhat—”mosquitoes love me,” he quipped—but not enough to deter him from wanting to play.

“It’s no joking matter,” Thompson said. “It’s a little concerning. But at the same time, you’ve just got to take the precautionary steps to avoid it.” AP

STEPHEN CURRY and the Warriors shoot for a 3-0 series lead. AP

NO TIME

FADING INTEREST? N

EW YORK—The second straight National Basketball Association (NBA) Finals matchup between Golden State and Cleveland got off to a promising start for ABC, but the network has to be hoping the series becomes more competitive in a hurry.

The first two games averaged 18.3 million viewers, the Nielsen company said on Tuesday. Except for last year’s two-game average of 18.5 million, it’s the best start for the NBA Finals for viewers since the 2001 series between Philadelphia and Los Angeles.

But the trend line isn’t good: while the first game had 19.2 million viewers, Sunday night’s blowout win for the Warriors dropped to 17.5 million, Nielsen said. It was the opposite last year, where an overtime second game outdrew the series opener.

Unless Cleveland can get back into it when the series heads east on Wednesday, viewership interest will likely continue to fade.

The Simon Cowell effect was worth half-a-million viewers to NBC’s America’s Got Talent. The series’ summer

premiere, with Cowell as a new judge, drew nearly 11.7 million viewers last week. The season-opener with Howard Stern last year had 11.1 million viewers, Nielsen said.

NBC’s summer variety series with Maya Rudolph and Martin Short had a moderately promising debut, reaching 6.3 million viewers on its first night.

ABC won the week with an average of 6.9 million viewers in prime time. CBS had 4.9 million, NBC had 4.6 million, Fox had 2.8 million, Univision had 2.2 million, Telemundo had 1.41 million, ION Television had 1.37 million and the CW had 980,000.

TNT was the week’s most popular cable network, averaging 2.37 million viewers in prime time. Fox News Channel had 1.71 million, the Disney Channel had 1.57 million, HGTV had 1.56 million and USA had 1.55 million.

ABC’s World News Tonight nipped its rivals at NBC in the nightly news evening race for its third win in a row. ABC averaged 7.8 million viewers, NBC’s Nightly News had 7.7 million and the CBS Evening News had 6.5 million. AP

TO RELAX

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By Tim Reynolds The Associated Press

LEVELAND—Golden State has won the first two games of the National Basketball Association (NBA) Finals, both of those wins coming by double figures and with a few dominant stretches of basketball in there.

Strange as this sounds, that has the Warriors feeling a bit uneasy.

The champions know exactly how fast a series can change, having just pulled off a mathematically improbable comeback from 3-1 down against Oklahoma City (OKC) in the Western Conference finals. And even with the odds now stacked high against Cleveland in these NBA Finals, the Warriors say they cannot fall into the trap of thinking this series, which resumes with Game Three on Wednesday night, is already over.

“That’s a great analogy, one that we’ve already used,” Warriors Coach Steve Kerr said on Tuesday. “It doesn’t matter what the scores are, doesn’t matter if you win by 25 or lose by 25, it’s one game in the series. And we got blown out twice in a row in OKC, down 3-1, and we were able to come back. We know we’re playing against a great team. They’re coming home. They can change the momentum around with just one win.”

Cleveland hopes he’s right.

The Cavs might be without concussed Kevin Love for Game Three, but they are 7-0 at home in these playoffs—

winning by an average of 20.9 points.

“It’s a do-or-die game for us,” Cavaliers forward LeBron James said. “We can’t afford to go down 3-0 to any team, especially a team that’s 73-9 in the regular season and playing the type of basketball they’re playing.”

When the Warriors were on the brink of elimination against the Thunder, history suggested that they had a 3.9-percent chance to win the series—232 previous NBA teams were down 3-1 in a best-of-seven, and only nine won.

Compared to that, Cleveland’s chances look fabulous.

“We’re not in that bad of shape as they were—3-1 is worse than 2-0,” Cavaliers Coach Tyronn Lue said. “And they came back and took it one game at a time, like we have to do.”

Teams that have fallen behind 2-0 in the NBA Finals have rallied to win 9.7 percent of the time, with three of them getting it done in 31 past opportunities. The 1969 Boston Celtics, 1977 Portland Trail Blazers and 2006 Miami Heat all lost the first two games of the finals on the road before winning the title—the Celtics doing so in seven games, the Blazers and Heat getting it done in six.

“History,” Lue said, “is something that’s made to be broken.”

Despite their predicament, the Cavaliers certainly seemed confident and loose on Tuesday.

During the open portion of practice, James was laughing with teammates and tossed up the occasional underhanded 60-footer—reacting with mock disbelief when the lowpercentage shot didn’t fall. Point guard Kyrie Irving played a long

game of one-on-one with Cavs Assistant Coach James Posey, who was on that Heat team that rallied from 2-0 down in the finals against Dallas and hit a huge shot in the clinching game.

Their thinking is simple: Take care of home court on Wednesday and Friday, knot the series and see what happens in a best-of-three.

“When they go on their runs, we have to be able to withstand those punches,” Irving said. “And Game One and Game Two, we’ve done it at times. We’ve shown that we’re capable of doing it, but we’re just constantly on our heels.”

That’s what the Warriors do against everyone, not just the Cavs.

Cleveland’s biggest lead in the series so far is six points.

Golden State’s is 33. In four games this season, including the two regular-season matchups, the Warriors have held the lead for a staggering 87 percent of the time. And in last year’s finals, Golden State won twice in Cleveland—more than proving that it can handle the Cavs’ raucous home crowd.

“We know they’re going to make adjustments,” Warriors star and two-time NBA MVP Stephen Curry said. “We know they’re going to come out with a sense of urgency in the moment. But we need to have that same mentality, because for what’s at stake, if we’re able to go up 3-0, that is a great position to be in. That is the opportunity in front of us.”

And no one has ever come back in an NBA series from 3-0 down, either.

“We can’t relax,” Warriors guard Klay Thompson said. “No time to relax.”

SPORTS

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Why oil prices and power rates keep on rising Database

Cecilio T. Arillo Part Five

Rendering the public vulnerable to high electricity cost

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n

Thursday, June 9, 2016 Vol. 11 No. 243

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

SC sides with Pilipinas Shell vs BOC on ₧21.4-B tax case PHL GROWTH TO EXCEED T 6%, WB SAYS

INSIDE

KLAY THOMPSON: It would be an honor to play for Team USA. AP

A broader look at today’s business

@jrsanjuan1573

HE Supreme Court (SC) has ruled that giant oil company Pilipinas Shell Petroleum Corp. (PSPC) cannot be cited for direct contempt in connection with its bid to stop the Bureau of Customs (BOC) from collecting P21.4 billion representing unpaid taxes.

By Cai U. Ordinario

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In a 12-page decision penned by Associate Justice Mariano C. del Castillo, the Court’s Second Division junked the petition filed by the BOC seeking the reversal of the decision issued by the Court of Tax Appeals (CTA), dated June 11, 2012, which junked its motion to cite for direct contempt PSPC Vice President for Finance and Treasurer Willie J. Sarmiento and company lawyer Cipriano U. Asilo for resorting to forum shopping just to prevent the agency from collecting the amount.

The BOC sought to cite the PSPC for direct contempt after it filed with the Regional Trial Court (RTC), Fourth Judicial Region, Batangas City, Branch 3, a complaint for injunction with prayer for the ex-parte issuance of a 72-hour temporary restraining order (TRO), to enjoin the implementation of its memorandum dated February 9, 2010.

Continued on A2

‘Rice self-sufficiency is still the way to go’

By Mary Grace Padin

OWERsector reform programs rendered the public vulnerable to high electricity cost, profits motive of private power firm and loss of control over environment regulation. The end-result pointed toward significant impairment of consumer protection and transfer of corporate debts into public hands.

he incoming chief of the Department of Agriculture (DA) will not abandon the Aquino administration’s bid to become self- The volume of additional sufficient in rice and is even considering the expansion of rice that the Philippines palay-production areas to wipe needs to produce to out imports. meet local demand Incoming Agriculture Secretary Emmanuel F. Piñol announced on Wednesday that he is targeting to expand rice-production areas in the country by 1 million hectares to achieve rice self-sufficiency. “[During my Byaheng Bukid initiative] I saw a lot of places with unused lands that could have been utilized for palay production. There are also a lot of wide [rice-production] areas producing only once a year and the main problem is irrigation,” Piñol said.

He added that he has already asked regional directors of the DA to provide a list of irrigated and rain-fed areas, as well as the potential production areas in each region.

According to the incoming DA chief, the additional 1 million hectares of rice-producing areas will be able to plug the chronic shortfall in the country’s palay output.

Continued on A10

See “Rice,” A2

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PESO exchange rates n US 46.1870

@ _enren

1.8 MMT

@cuo_bm

DISTINCTIVE STYLE The Scuderia Ferrari Orologi Spring/Summer 2016 watch collection was launched on Wednesday at the Ferrari Showroom in Bonifacio Global City by Brand President Tad Uchtman. ALYSA SALEN

China plans oceanic ‘space station’ in South China Sea

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hina is speeding up efforts to design and build a manned deep-sea platform to help it hunt for minerals in the South China Sea, one that may also serve a military purpose in the disputed waters.

Such an oceanic “space station” would be located as much as 3,000 meters (9,800 feet) below the surface, according to a recent Science Ministry presentation viewed by Bloomberg. The project was mentioned in China’s current five-year economic plan released in March and ranked No. 2 on a list of the top 100 science

and technology priorities.

Authorities recently examined the implementation of the project and decided to accelerate the process, according to the presentation.

“Having this kind of long-term inhabited station has not been attempted this deep, but it is certainly possible,” said Bryan Clark, a senior fellow at the Washington-based Center for Strategic and Budgetary Assessments. “Manned submersibles have gone to those depths for almost 50 years. The challenge is operating it for months at a time.”

Continued on A4

mid lower global growth expectations, the World Bank (WB) said it remains confident that the Philippines will grow by more than 6 percent over the next three years.

In the latest update of its Global Economic Prospects (GEP) report, the World Bank maintained its growth expectations for the Philippines in the 2016 to 2018 period, despite lowering forecasts for many East Asia and the Pacific economies.

The Philippine economy is still expected to expand by 6.4 percent this year and 6.2 percent in 2017 and 2018, unchanged from the Washington-based lender’s January projections.

“Growth in the rest of the region is expected to be supported by rising investment in several large economies [Indonesia, Malaysia and Thailand], and strong consumption supported by low commodity prices [Thailand, the Philippines and Vietnam),” the report read.

Growth in the East Asia and Pacific region, which includes the Philippines, is projected to slow to an unrevised 6.3-percent rate in 2016, with China’s expansion expected to ease to 6.7 percent, as projected in January.

The Washington-based lender said the region, excluding China, is projected to post a growth of 4.8 percent in 2016, unchanged from 2015.

“This outlook assumes an orderly growth slowdown in China accompanied by steady progress on structural reforms and appropriate policy stimulus, as needed,” the World Bank said.

The World Bank said countries in the East Asia and the Pacific region, like the Philippines, still face “considerable” risk.

These include short-term risks, such as a sharper-than-expected slowdown in China and the risks posed by a significant increase in private-sector credit.

The increase in private-sector debt, particularly in emerging market and developing economies in Continued on A4

n japan 0.4303 n UK 67.1836 n HK 5.9480 n CHINA 7.0289 n singapore 34.1898 n australia 34.4416 n EU 52.4684 n SAUDI arabia 12.3155

Source: BSP (8 June 2016 )

A2 Thursday, June 9, 2016

BMReports BusinessMirror

SC sides with Pilipinas Shell vs BOC on ₧21.4-B tax case Continued from A1

The memorandum directed the personnel of the BOC in the Port of Batangas to hold the delivery of all import shipments of respondent PSPC to settle its excise-tax liabilities.

The BOC issued the memorandum only after the CTA denied PSPC’s motion for the issuance of a suspension order against the collection of taxes.

In denying the BOC’s motion for direct contempt, the CTA said that although the parties in the CTA case, on one hand, and the Batangas injunction case, on the other, are the same, the rights asserted, and the reliefs being sought for are two different matters.

It pointed out that the CTA case assails the BOC ’s letter-

Rice. . .

Continued from A1

“The shortfall that we have right now is 1.8 million metric tons [MMT]. If we expand our rice areas by another 1 million, with an average yield of 4 MT per production [8 MT per year], that’s 8 MMT of palay,” Piñol said.

At a 60-percent milling recovery rate, he said harvest from these additional areas could

decisions compelling PSPC to pay its unpaid taxes.

The CTA also opined that a decision in one case would not result in res judicata (a matter already judged) in the other case.

Thus, it ruled that the filing of the Batangas injunction case does not constitute forum shopping, and since no forum shopping exists, the CTA found no reason to cite respondents in direct contempt of court.

In upholding the CTA’s decision, the Supreme Court noted that the subject matter in the CTA case is the alleged unpaid taxes of respondent PSPC on its importation of catalytic cracked gasoline and light catalytic cracked gasoline for the years 2006 to 2008, which is sought to be collected by petitioners.

yield 4.8 MMT of rice a year.

“This is already over and beyond the shortfall of the country,” he said.

Beefing up the country’s output by nearly 5 MMT will allow the Philippines to export rice to other countries such as Africa, Piñol said.

The pace of expansion of rice-producing areas, he said, will largely depend on the cooperation of local government units.

The incoming DA chief also said the government will be partial to small-scale irrigation systems for rice production.

Since the subject matter, the cause of action, the issues raised, and the reliefs prayed for are not the same, [the] respondents are not guilty of forum shopping.

Accordingly, the CTA did not err in denying the motion to cite [the] respondents in direct contempt of court.”—Supreme Court On the other hand, the subject matter of the Batangas injunction case is the 13 importations/ shipments of respondent PSPC for the period between January and February 2010, which respondent

PSPC claims are threatened to be seized by petitioners pursuant to the memorandum dated February 9, 2010, issued by the BOC. Also, the cause of action in the CTA case is based on the let-

ter-decisions of the BOC, finding respondent PSPC liable for excise and value-added taxes; while the cause of action in the Batangas injunction case is the memorandum dated February 9, 2010, ordering the personnel of petitioner BOC in the Port of Batangas to hold the delivery of all import shipments of respondent PSPC. “Since the subject matter, the cause of action, the issues raised, and the reliefs prayed for are not the same, [the] respondents are not guilty of forum shopping. Accordingly, the CTA did not err in denying the motion to cite [the] respondents in direct contempt of court,” the SC ruled.

Concurring with the ruling were Associate Justices Arturo Brion, Jose Catral Mendoza and Bienvenido Reyes.

Instead of constructing “megadams,” which cost billions of pesos and take years to complete, the DA will prioritize the provision of smaller irrigation projects.

“We should focus on smaller irrigation projects, which will be made operational in six months to one year. We should also learn from the Vietnam-Cambodia-Thailand experience, where they use water pumps to irrigate 3 to 5 hectares of land and improve the production of upland, rain-fed areas,” Piñol said.

The incoming DA chief’s pronouncement is contrary to the statement of incoming Economic Planning Secretary Ernesto M. Pernia that the Philippines would be better off importing rice from Southeast Asian countries than implementing an “expensive” rice selfsufficiency program.

Pernia also told the BusinessMirror that the Aquino administration’s rice self-sufficiency program was a “wrong policy.”

Meanwhile, Piñol said he has already asked incoming Finance Secretary Carlos G.

Dominguez III and Budget Secretary Benjamin E. Diokno for an additional P30-billion budget to rehabilitate areas ravaged by El Niño.

“I’m proposing a P30-billion additional funding for the rehabilitation of the farming and fisheries sector so that they will be able to recover right away,” he said.

He said this supplemental project will be used to provide assistance to farmers and fishermen. Piñol said the DA will provide seed and farm inputs to El Niñoaffected farmers.

news@businessmirror.com.ph

Alvarez. . .

Continued from A12

Alvarez said the 17th Congress will not only focus on the proposal to change the form of government via Charter change or Cha-cha.

“When you revise the Constitution you have to change everything. We need to tackle everything either in a constitutional convention or constituent assembly,” Alvarez said.

Earlier, outgoing Speaker Feliciano Belmonte Jr. has urged the Duterte administration to take a holistic approach on amending the 1987 Constitution.

Belmonte also asked the next government to consider the proposed economic Cha-cha. The Speaker is the principal author of the resolution lifting the economic provision of the Constitution in the 16th Congress.

On Tuesday Belmonte said he will support Alvarez in the speakership race in the lower chamber.

China. . .

Continued from A12

While China has pledged to cut as much as 150 MMT of capacity, Japan says the country needs to do more, estimating there’s an excess of 400 MMT. Li Xinchuang, deputy secretary-general of the China Iron & Steel Association, says the country won’t waver in its capacity cuts, but he also said in April he sees exports staying high for years as local demand shrinks.

China also stepped up iron-ore imports in May to feed the steel boom. Purchases by the world’s biggest buyer rose to 86.75 MMT, the highest since December, while inbound shipments expanded 9 percent in the first five months to 412 MMT, customs data show. Higher steel production “supported buying activities for iron ore,” Di Wang, an analyst at CRU Group in Beijing, said by e-mail. Bloomberg News

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Thursday, June 9, 2016

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High-speed link with Manila needed to spur Clark use

By Recto L. Mercene

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@rectomercene

UT up a high-speed transport system that will link Clark and Manila, and an action plan by the national government on airport and aviation development that will compel airlines to cooperate.

These are the ideas behind the suggestion made by Manila International Airport Authority (Miaa) General Manager Jose Angel A. Honrado to fast-track the transfer of operations from the Ninoy Aquino International Airport (Naia) to Clark Field in Pampanga.

Honrado made the suggestion during the signing of a tripartite agreement among Miaa, Civil Aeronautics Board (CAB) and Civil Aviation Authority of the Philippines (Caap). These agencies agreed to efficiently use the available slots for domestic air carriers to lessen air congestion.

Honrado said the Naia had reached its maximum limit of 35 million passengers per year and his long-term solution to the congestion problem is to develop and use Clark International Airport.

At least 36.7 million passengers used the airport in 2015.

“Perhaps, airlines can start thinking of using Clark, there’s a big number of passengers from the North and plenty of slots and airspace and land space available there,” Honrado said.

He added that Cebu Pacific, Cebgo and Air Asia can initiate the transfer to alleviate the air-traffic congestion in Manila.

Miaa Spokesman David de Castro said Honrado made the suggestion in response to criticisms that he had stalled the plans of airlines who wanted to transfer from Manila to Clark.

“What is true is that Honrado has been very vocal with the airlines—the executives themselves—for them to utilize Clark. One benefit, of course, is Clark’s freer airspace,” de Castro said.

“Then again, airlines themselves would have their own reasons as to whether or not to transfer to Clark. It is safe to assume that market forces dictate on them regarding this issue,” he added.

The Airline Operators Council (AOC), composed of some 40 members flying out of the premier airport, had balked at the suggestion of transferring their operations to Clark without the needed infrastructure.

These include a huge cargo terminal to accommodate the estimated 500 tons of cargo that would be spewed out daily by the international carriers.

Aside from these, there must be dozens of bonded warehouses nearby, where the cargo could be delivered after it has undergone the necessary Customs inspections.

“Transferring the cargo from Clark to bonded wa rehouses in Ma ni l a aboard a train or other vehicles would be a violation of Customs regulations,” A ir port Customs Collector Edgar Z. Macabeo said.

“Any cargo that comes out of an airplane had to be fully guarded and secured on the way to the bonded warehouse to avoid any illegal activity,” Macabeo said, adding that bringing the cargoes outright from Clark to Manila is not feasible and could be unlawful.

On the other hand, Onie Nakpil said: “But most important of all, there must be a high-speed rail network to connect the Naia to Clark, which is about 90 kilometers away from the Naia.”

Nakpil is chairman of the AseanAOC. He used to manage the security services of a large Middle East carrier and has a 25-year experience in aviation.

As traffic congestion continues to be an issue against the Naia, the Center for Strategic Initiatives (CSI), a group composed of various professionals in different fields, had urged the Department of Transportation and Communications “to transfer at least half of the flights at the Naia to the Clark International Airport [CIA].”

In June 2015 CSI President Renato Diaz said based on studies, majority of those flying via Naia are not from Metro Manila, but from provinces in northern Luzon, like Pampanga, Bulacan, Tarlac, Nueva Ecija and Pangasinan.

“If half of the flights are diverted to Naia, those traversing to Metro Manila will be greatly reduced,” Diaz said.

A former two-term representative of Nueva Ecija’s First Congressional District, Diaz said having more flights at Clark would also mean more economic progress in Pampanga where CIA is located.

Diaz believes that having an alternative airport can ease the suffering of Filipino migrant workers who sacrifice separation from their families just to earn a living.

Since 2011, the Aquino administration has been eyeing Clark as the best alternative to the Naia.

T hen-Tra nspor t at ion Sec ret a r y Manuel A. Roxas II told a Senate hearing that the 440-hectare Naia, if privatized, would raise up to $2.5 billion in revenue for the government.

“And that, in effect, will pave the way for the transfer of the airport to Clark,” Roxas told the Senate Committee on Finance, adding that, “The key to the transfer is the high-speed rail because without that, it really is very inconvenient.”

The issue cropped up during the hearing when then-Senate President Juan Ponce-Enrile asked for the latest update on the government’s North Rail project with China.

A year later, however, the Chinafunded rail project that was reconfigured into a high-speed train service has gone off track.

That year, the Export-Import Bank of China, that was funding the North Luzon rail project with two loans, canceled the first tranche of $400 million and demanded immediate payment on the disbursed portion, which amounted to $185 million, including interest. The second loan of $500 million, which was signed but never used, was canceled too.

News reports said the NorthRail, China’s flagship project here, got killed in the flurry of corruption charges leveled by the Aquino administration against the Arroyo administration.

After six years in office, however, the Aquino administration was not able to prove wrongdoing by the previous administration.

In 2015, however, chances of the rail being revived got a boost when Japan granted a loan amounting to ¥241.991 bil lion (about P93.457 bil lion, or about $2 billion) to do the Tutuban to Malolos segment of the NorthRail line that is supposed to go all the way to Clark.

The Japanese proposal is different from the Chinese version.

BMReports BusinessMirror

A4 Thursday, June 9, 2016

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PLDT, Globe mulling over purchase of shares from Liberty minority owners

By Lorenz S. Marasigan

D

@lorenzmarasigan

EPENDING on who will agree to the approximately P564-million tender offer of the duopoly to the minority shareholders of Liberty Telecoms Inc., the former San Miguel Corp. subsidiary will have to be delisted from the local bourse.

Stock-exchange files show that PLDT Inc. and Globe Telecom Inc. are interested in launching a voluntary tender offer to the 12.82-percent minority in Liberty, whose parent, Vega Telecom Inc., was recently acquired by the telco giants.

“We are currently studying the possibility of undertaking a voluntary tender offer to the minority stakeholders of Liberty, which will take into consideration, among others, the business plans for Vega and its subscribers, including Liberty,” the two telcos said in separate disclosures.

The tender offer comes at the heels of the P70-billion coacquisition of San Miguel’s telco business, a deal that gave the pair access to the 700 megahertz (MHz) band, 90 percent of which was held by the food-toinfrastructure conglomerate.

Luis A. Limlingan, business development head at Regina Capital Development, said should the tender offer yield positive results in favor of the duo, Liberty will have to be delisted.

“The rule is, if a company has a public float of less than 10 percent, it has to delist. If all the minority should tender, and public ownership

will be less than 10 percent, then it has to be delisted,” he said.

Limlingan noted that the price per share should be above market.

“If you look at the 52-week low and 52-week high, which is P2 to P5.20, the median is P3.40. The price should be close to that or a bit higher,” he said.

Hence, he added that the transactioncouldreachtheP564-millionmark.

The tender offer is still in the works, officials of both PLDT and Globe said, noting that future plans after the tender offer will have to be reviewed first.

“There is no guidance from our legal department at this point. I understand that this matter still under study,” Ramon R. Isberto, the spokesman of mobile brand Smart, said via mobile reply.

Globe Spokesman Yolanda C. Crisanto, for her part, said: “The plan after the possible tender offer is still under evaluation and further study.”

On Wednesday shares of Liberty rallied by 16.39 percent to end trading at P3.55 apiece, while PLDT closed with a 4.9-percent increase to P2,140 per share, and Globe rose by 12 percent to P2,412 apiece.

Oil trades near 10-month high as falling US supplies trim glut

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il traded near the highest close in more than 10 months, as weekly US industry data showed crude stockpiles declined, trimming a glut.

Futures were little changed in New York after advancing 3.6 percent the previous two sessions to close above $50 a barrel on Tuesday for the first time since July.

Inventories fell by 3.57 million barrels last week, the American Petroleum Institute (API) was said to report. Government data on Wednesday are forecast to show supplies dropped. Repair work on a key Nigerian oil pipeline operated by Royal Dutch Shell Plc. is under way, according to a person familiar with the operations.

Oil has surged more than 90 percent from a 12-year low in February, amid unplanned disruptions and a steady slide in US output, which is under pressure from the Organization of Petroleum Exporting Countries’ policy of pumping without limits. US gasoline consumption is set to climb to a record this summer as the lowest retail prices in more than a decade encourage people to take to the roads, according to government data.

“The risk for prices remains on the upside as new highs attract more buyers who don’t want to miss the train,” Michael

Poulsen, an analyst at Global Risk Management Ltd., said by e-mail.

“Continued supply disruptions in Nigeria, as well as a draw in US crude inventories are supporting the market.”

West Texas Intermediate (WTI) for July delivery was at $50.57 a barrel on the New York Mercantile Exchange, up 21 cents, at 9:40 a.m.

London time. The contract gained 67 cents, or 1.4 percent, to $50.36 on Tuesday. Total volume traded was about 39 percent below the 100-day average.

US stockpiles

Brent for August settlement was 27 cents higher at $51.71 a barrel on the London-based ICE Futures Europe exchange. The contract rose 89 cents, or 1.8 percent, to $51.44 on Tuesday. The global benchmark traded at a premium of 56 cents to WTI for August.

Crude supplies at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, fell by 1.31 million barrels last week, the API said on Tuesday, according to people familiar with the figures. Nationwide inventories slid by 3 million barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report on Wednesday. Bloomberg News

A manifold system, used to direct oil around the facility, stands near crude-oil storage tanks stand at the Cushing storage terminal in Cushing. Photographer: Daniel Acker/Bloomberg

China plans oceanic ‘space station’ in South China Sea PHL GROWTH TO EXCEED 6%, WB SAYS continued from a1

So far, there are few public details, including a specific timeline, any blueprints or a cost estimate—or where in the waterway it might be located. Still, China, under President Xi Jinping, has asserted itself more strenuously in the South China Sea, one of the world’s busiest shipping routes.

Its claims to more than 80 percent of the waters and the creation of artificial islands covering 3,200 acres have inflamed tensions with nations, including Vietnam and the Philippines.

Shipping lane

IT has also led the US to send ships from its Seventh Fleet to ensure freedom of passage through an area that carries $5.3 trillion of global trade a year.

“The deep sea contains treasures that remain undiscovered and undeveloped, and in order to obtain these treasures, we have to control key technologies in getting into the deep sea discovering the deep sea, and developing the deep sea,” Xi said last month at a national science conference.

While China’s appetite for natural resources remains the driving force behind the project, the recent ministry presentation noted the platform would be movable, and used for military purposes. China has proposed a network of sensors, called the “Underwater Great Wall Project,” to help detect US and Russian submarines, analysts at IHS Jane’s says.

‘Important strategy’

“TO develop the ocean is an important strategy for the Chinese government,

but the deep-sea space station is not designed against any country or region,” said Xu Liping, a senior researcher for Southeast Asian affairs at the Chinese Academy of Social Sciences, a government-run institute.

“China’s project will be mainly for civil use, but we can’t rule out, it will carry some military functions,” Xu said. “Many countries in the world have been researching these kind of deep-water projects and China is just one of those nations.”

When analysts look at the South China Sea, they tend to focus on the potential for oil and gas reserves, as estimates for mineral deposits are sketchy. The US Energy Information Administration says the area has proved and probable reserves of about 11 billion barrels of oil and 190 trillion cubic feet of natural gas.

China’s estimates dwarf those. In 2012 Cnooc Ltd.’s then-chairman estimated the area holds around 125 billion barrels of oil and 500 trillion cubic feet of natural gas.

Typhoon challenge

While most of the undiscovered oil lies in coastal regions that aren’t disputed, the contested areas face geological and technological challenges, not least the depth of the waters and frequency of typhoons.

Spearheading the planning for the deepsea station is the China Shipbuilding Industry Corp., according to a statement on the web site of the science ministry. Once operational, it would host dozens of crew members who could remain under water for up to a month, the ministry’s presentation separately said.

China Shipbuilding Industry Corp. and

the ministry did not reply to faxes seeking comment.

Price tag

Planning has been under way for a decade and is central to China’s push to become a global technology superpower by 2030, according to the presentation.

Completing it would help China close a deep sea exploration gap with the US, Japan, France and Russia on underwater technology. China has already logged successes, with its Jiaolong submersible setting a world record by descending 7 kilometers in 2012.

The ministry presentation didn’t give any estimated price tag, but Bryan Clark, who formerly served as special assistant to the chief of US naval operations, said the cost could be daunting and its vulnerability to detection would make it less attractive militarily than using a submarine or an unmanned vehicle.

China spent 1.42 trillion yuan ($216 billion) on state and privately funded research and development in 2015, according to the National Statistics Bureau, while total defense spending this year is projected by the government to increase 7.6 percent to 954.4 billion yuan ($145 billion).

“The kinds of systems that make sense for deep sea are sensor and communication systems,” said Clark. “In the Cold War, the US and USSR spent much effort looking for each others’ communication cables and sensors to disrupt them in peacetime or attack them in war. We can assume those efforts would continue today and into the future.” Bloomberg News

continued from a1 the region, including the Philippines, is due to low interest rates.

“One development that bears caution is the rapid rise of private debt in several emerging and developing economies. In the wake of a borrowing boom, it is not uncommon to find nonperforming bank loans, as a share of gross loans, to quadruple,” World Bank Chief Economist and Senior Vice President Kaushik Basu said.

Upside risks, meanwhile, include the uptick in growth in advanced countries and further declines in commodity prices.

To prepare for these risks, the World Bank said countries in the region, including the Philippines, must continue efforts to introduce structural reforms.

Structural reforms would involve changing government policies and regulations to improve the efficiency of economic transactions.

The World Bank said the focus of structural reforms in East Asia and in Asia Pacific countries, like the Philippines,

should be on achieving faster and inclusive growth.

Countries in the region must also work toward “deepening” regional trade and investment. The World Bank believes the Trans-Pacific Partnership, the Asean Economic Community, and the proposed Regional Comprehensive Economic Partnership can help boost structural reform efforts.

Meanwhile, the World Bank has downgraded its 2016 global growth forecast to 2.4 percent from the 2.9 percent pace projected in January.

The Washington-based lender said this is due to sluggish growth in advanced economies, stubbornly low commodity prices, weak global trade, and diminishing capital flows.

Commodity-exporting emerging market and developing economies have struggled to adapt to lower prices for oil and other key commodities, and this accounts for half of the downward revision.

Growth in these economies is projected to advance at a meager 0.4-percent pace this year, a downward revision of 1.2-percentage points from the January outlook.

Asean

BusinessMirror

www.businessmirror.com.ph

AEC: Energy is needed for economic growth Asean-EU Perspective

HENRY J. SCHUMACHER

Editor: Max V. de Leon • Thursday, June 9, 2016 A5

Vietnam moves to clear banks’ bad debts faster

their bad debt,” said Trinh Nguyen, a senior economist at Natixis Asia Ltd. in Hong Kong. “We really have to wait and see what is the size of this.”

VAMC, which is lacking in resources, will probably need financial support from the government or organizations such as the International Monetary Fund (IMF) to address all of the bad debt in the country’s banking system, Pham said.

VAMC has received offers from about 10 banks to sell as much as 17 trillion dong of bad loans so far this year, according to Hung. The company is working with lenders to reevaluate the debt for pricing, he said.

The benchmark VN Index is poised for a second day of gains today, rising 0.5 percent, as of 10:54 a.m. in Ho Chi Minh City trading.

W

ith a combined GDP of $2.1 trillion in 2011, a wealth of natural resources and an enterprising and increasingly well-educated work force, the 10 member-states that make up the Association of Southeast Asian Nations (Asean) possess the necessary assets to become a pillar of the global structure.

The world’s most powerful economies are focusing increasingly on Asean’s excellent performance and growth potential. There is one important and critical question coming up: Can developing Asean secure the energy it needs to fuel the expected economic expansion? And will Asean shift to clean and green energy sources so that the conference of parties commitments can be fulfilled?

Energy security rests on three pillars: the adequacy and reliability of energy supply, environmental sustainability and affordable access. Failure on any of these fronts could derail economic development and the desired inclusive growth. Asean has an array of options to manage its energy appetite. But tackling issues, such as outmoded subsidies, requires political will, and green innovation requires imagination. Subsidies impose a tremendous burden on public budgets, exceeding 2 percent of GDP in Indonesia and Vietnam, and are undermining the desired level playing field as Asean integrates. In previous Energy SMART conferences organized by the European Chamber of Commerce of the Philippines (ECCP), we raised the issue that the subsidies offered by other Asean countries need to be addressed as soon as possible, as they undermine the competitiveness of the Philippines. We will have this item on our agenda for this year’s Energy SMART event again.

In the Philippines we are looking forward to a deeper public-private partnership (PPP) (in its true sense), which means that private and public stakeholders meet regularly to discuss energy issues and jointly commit to contribute to solutions: n The government should develop a sustainable-energy mix policy and feed-in tarrif implementation In order to drive investments and look sustainable feedstock, the government has to create a long-term vision on the energy mix, looking at (less) coal, a natural-gas industry and renewable-energy (RE) sources, involving geothermal, solar, wind, biomass, hydro, etc. We need a road map; and the refiling the Downstream Natural Gas Industry Bill. n Energy efficiency needs to become a national obligation, as 20 percent of energy consumption can be saved in lighting, cooling and with changing to high-efficient motors. ECCP’s cooperation with Philippine Economic Zone Authority is a best-practice case. We need the refiling of the Energy Efficiency and Conservation Bill. n The approval process for generating new plants should be streamlined Approximately 162 permits and signatures are required before a power plant can be built; this means, in the Philippines it takes five years to get a plant on stream, compared to three years in other countries. n A comprehensive review of the energy service provision in remote and off-grid areas is needed.

That will entail Portfolio Standards (RE minimum-capacity requirement; to be technically simulated) and minigrid implementing rules and regulations. n Waste to energy needs to be taken seriously to solve problems in many communities with communal waste and generate power at the same time.

The Supreme Court has cleared the way by ruling that the emission values are important, not the process.

Let’s all agree that we can address energy issues effectively in a PPP. We firmly believe that a National Energy Council (like the National Competitiveness Council) should be formed now so that the energy stakeholders can meet regularly and transparently to secure energy at affordable prices.

We have submitted an Executive Order draft, which—unfortunately—has not been signed yet.

Indonesia to lower 2016 growth target to 5.1%

T

he Indonesian parliament is set to revise down this year’s economic growth target amid slowing domestic consumption and signs a shortfall in tax revenue will sap public spending.

Ahmadi Noor Supit, head of the house’s finance commission, set the forecast at 5.1 percent, compared with 5.3 percent in the current state budget, after a debate that extended late into Tuesday evening.

That was the middle ground between Finance Minister Bambang Brodjonegoro’s 5.2-percent proposal, the central bank’s 5.1 percent and lawmakers who called for 5 percent. GDP increased 4.79 percent last year, the least since 2009.

“Considering issues on exports, slowing consumption and private investment that hasn’t accelerated enough, we need to correct the growth assumption,” Brodjonegoro said during the meeting. “Five-point-one percent

is a number that makes sense for the government.”

The revision highlights President Joko Widodo’s struggle in keeping his election pledge to boost annual expansion to 7 percent in a nation that’s taken a hit from drops in commodity prices over the last few years. Southeast Asia’s largest economy grew a less-than-expected 4.92 percent last quarter, even after the government took steps to open up more to foreign investors, cut red tape and boost spending on infrastructure.

The finance commission’s decision will need to be rubber stamped by the parliament’s fiscal agency before being approved, along with the entire 2016 budget, at a plenary meeting. The commission also agreed on assuming an average rupiah exchange rate of 13,500 a dollar this year and an inflation rate of 4 percent, Supit said. The currency has averaged 13,435 so far in 2016. Bloomberg News

Spurring growth

V

VIEW of Vietnam’s capital

ietnam is accelerating the cleanup of its financial system to help boost lending in an economy threatened by a crippling drought and lower oil revenue.

The Vietnam Asset Management Co. (VAMC), set up to buy the bad debt of banks, will make its first cash purchase of nonperforming loans this year, Nguyen Quoc Hung, chairman of the agency, said in an interview on Tuesday in Hanoi. The purchase “will help lay out steps to quicken the bad debtresolution process.”

VAMC currently issues special bonds in return for the bad debt, which banks may use as collateral to secure funding from the central bank. Paying cash to clear the debt will give banks funds to speed

up lending. “This is a major step,” said Alan Pham, chief economist at VinaCapital Group Ltd. in Ho Chi Minh City. “The net effect is to resolve the bad debt, instead of moving it around. Once you pay the market price and you pay in cash, the debt is extinguished.”

Banking cleanup

Vietnam has done much to clean up its banking industry since 2012, when a lending spree and weak controls led to a surge in bad debts, the arrest of bank executives and a plunge in stocks. Nonperforming

Thai seeks 10-airline pact to add routes, counter low-cost group

T

hai Airways International Pcl. is seeking an alliance with as many as 10 other Asian carriers in order to add destinations and counter a similar move grouping together several of its low-cost rivals.

A series of bilateral accords could unite airlines from across the region to boost connectivity in India and China and smaller markets, such as Myanmar and Vietnam, Charamporn Jotikasthira, Thai’s president, said in an interview. The company lacks the cash to expand its network via acquisitions, he said.

The plan signals a move away from simply siphoning more connecting traffic through Bangkok as envisaged in Thai’s two-year turnaround strategy, Jotikasthira said, and comes after the formation last month of the Value Alliance coalition of eight budget carriers spanning Japan to Australia.

“Demand has been changing,” the executive said in Dublin. “All the requests on air traffic control into Thailand has been point-to-point to secondary cities. The model that we’ve been preaching in the past is going to be different.”

Malaysia moves

While leading Asian operators such as Singapore Airlines Ltd. and Cathay Pacific Ltd. remain global players,

other flag carriers have reached the same conclusion as Thai. Malaysia Airlines Bhd. is more advanced with moves to turn Kuala Lumpur into a regional hub and says it will order new planes to ply underserved short-haul routes in the next few months.

The Value grouping, while set to be the world’s biggest alliance of low-cost airlines, may not trouble Thai unduly, since it brings together smaller players including Singapore’s Scoot and Cebu Pacific Air of the Philippines that have a combined fleet about the same size as local low-cost No. 1 AirAsia Bhd. Any Asian pact involving Thai must complement its role in the Star Alliance, Jotikasthira said, adding that he wants to expand relationships with existing partners, including Star leader Deutsche Lufthansa AG, after Thailand escaped possible blacklisting in a European Union safety review last December.

Thai, which plans to remain a fullservice carrier, is also open to interlining and code-sharing “with anyone, any range,” the executive said last week at the International Air Transport Association’s annual gathering.

Jotikasthira said that Thai is on track to boost profit margins after struggling to match the aircraft load factors of some competitors, averaging about 5 percent fewer passengers per flight. Bloomberg News

$1.3B

The amount of bad loans that Vietnam seeks to resolve this year

loans stood at 17 percent at the time. The government created VAMC in 2013 to remove the bad debt from lenders.

The state agency also plans to resolve about 30 trillion dong ($1.3 billion) of bad loans this year by selling debt and collateral, Hung said.

VAMC has recouped about 8 trillion dong so far this year, he said.

“This is going to help banks that need liquidity and to offload

Banks have crimped lending to businesses because of bad debt, a situation the government wants to reverse as it seeks to spur economic growth to 6.7 percent this year. The economy expanded 5.5 percent in the first quarter, the slowest pace since June 2014.

The central bank is aiming to curb nonperforming loans to below 3 percent of total lending. Governor Le Minh Hung in April allowed VAMC to buy and sell bad debt at market prices, according to its web site.

The World Bank said in a report in April that progress has been slow in consolidating the banking industry. The government’s target of reducing the number of commercial banks to as little as 15 by 2017, from 34 currently, remains “challenging,” it said.

IMF Managing Director Christine Lagarde said in a March interview that the banking system needs to be made “stronger, better and more capitalized with less stressed assets” so that lenders can help spur the economy. Bloomberg News

IMF urges Thailand rate cuts central bank says not needed

T

he International Monetary Fund (IMF) called on policymakers in Thailand to cut interest rates in the face of a sluggish economy and low inflation, an approach that the central bank says isn’t necessary.

Thailand needs expansionary fiscal and monetary policies to help spur an economy that’s set to grow at a slower pace than most other nations in Southeast Asia, the Washington-based lender said in an e-mailed report on Wednesday.

“There is scope for further monetary easing,” the IMF said. A negative output gap, falling consumer prices and downside risks“warrant additional monetary accommodation,” it said.

The Bank of Thailand has kept its benchmark interest rate unchanged for eight consecutive meetings as it bets rising government spending will spur an economic recovery. Policymakers said at last month’s meeting that easing would provide limited support to the economy because the slowdown was partly due to “global and domestic structural problems.”

Consumer prices rose in April for the first time in more than a year. Low inflation is mainly due to the decline in oil costs, but sluggish demand is also putting downward pressure on prices, the IMF said. The inflation rate, which was 0.5 percent in May, will probably undershoot the central bank’s target of

1 percent to 4 percent, the lender said.

“Without further easing, inflation is expected to remain below target for several years,” the IMF said. “Tighter macroprudential policies can safeguard financial stability in a low interest-rate environment.”

Prime Minister Prayuth Chan-Ocha, who took power in a May 2014 military coup, has issued a series of economic stimulus measures valued at more than 645 billion baht ($18 billion) since September last year to help shore up local demand. The Thai economy has been hit by falling exports—which contracted 1.4 percent in the first quarter—while tourism has been a bright spot, with arrivals climbing 15.5 percent in the first quarter.

The economy is forecast by the IMF to expand 3 percent in 2016 and 3.2 percent next year. While Thailand remains resilient to shocks—helped by its flexible currency and high international reserves -- the political environment and structural factors may undermine its prospects, the IMF said.

“Political uncertainty has undermined policy planning and implementation, while polarization casts a shadow over the transition to civilian rule,” it said. “Long-term prospects are also weighed down by structural bottlenecks, including rapid population aging, relatively low education quality and skill sets, and overdue structural transformation.” Bloomberg News

TheBroa

Business

A6 Thursday, June 9, 2016

Insurance sector: C I

By David Cagahastian, Jovee Marie N. dela Cruz , Rea Cu & Dennis D. Estopace

T was his birthday when the insurance commissioner needed the service of a health maintenance organization (HMO): he totaled his car.

Miraculously, both Insurance Commission (IC) chief Emmanuel F. Dooc and the driver of the vehicle involved in the crash— an accident, he said—walked away with minor injuries from the crash site along the highway to Quezon. It was at a hospital in Alaminos that Dooc learned his HMO is not a member of the Association of HMOs of the Philippines Inc. (Ahmopi), an industry group composed of 14 companies.

While the revelation failed to dampen his day’s goal—a feeding program for students of an elementary school in Paracale, Camarines Norte, Dooc set his sights on how services by HMOs could become more robust.

It “ helped ” that the accident occurred a month after HMOs were transferred from the Department of Health to the IC’s pur v iew v ia Executive Order 192 of President Aquino. Nearly five years into his term as insurance commissioner, Dooc said more changes are coming under his watch.

HMOs

FOR one, the Insurance Commission is preparing to assume the supervision and regulation of HMOs. However, a new law that will make the regulations permanent is needed so it could not be changed on the mere whim of the regulator.

The passage of a law on the regulation of the HMO industry will not only make the rules more predictable, according to Dooc. Doing so will also be able to preserve the policies that work toward the ultimate goal of offering this service, which is to lower the costs of health services.

“I am certain that we need a law on HMOs, because the problem, if we just base the regulations on my issuances, there are aspects which can always be challenged, and it can always be revoked by my successor,” Dooc said during the BusinessMirror Coffee Club with editors and reporters this week.

Dooc, who will continue to head the IC until December 2019, said the proposed law on HMOs would have to be drafted again by the commission with consultations from the industry since the old version proposed since the 13th Congress appears to be unpalatable to some lawmakers.

Balancing of interests

IN its regulation of HMOs, the IC seeks to balance the interests of stakeholders—the HMOs, the hospitals, the doctors and the policyholders—toward the ultimate goal of lowering the costs of health services and helping the public maintain their health and prepare for possible medical emergencies, Dooc said.

According to the health department’s research on the costs of treatment and medical procedures, 60 percent to 70 percent of medical expenses still come from a Filipino household’s own savings, instead of being covered by health insurance.

38M The number of Filipinos with insurance coverage

An article that appeared in a 2011 journal, titled Health Systems in Transition, said HMOs, or private-health insurers, accounted less than 7 percent of total health spending by the government.

The Department of Health, which is the former regulator of HMOs, advocates the involvement of the private sector in ensuring public health through the services offered by HMOs.Dooc said there are many issues in the regulation of the HMO industry, which have to be resolved toward providing the public with better and cheaper health services.

“For instance, some of the hospitals have an accreditation system such that if an HMO policyholder comes to an unaccredited hospital, then he would not be provided any service,” Dooc said. He explained there are some hospitals that require fund deposits the HMO must maintain so that when a policyholder goes to that hospital, he or she can be provided health services.

“If the deposit is not enough it has to be replenished up to the sufficient amount,” Dooc said. “These things I have to look into.”

Current issues

DIVISION chief Dionesio Dimpas, the point person in the transition of regulation of HMOs from the DOH to the IC, cited some of the issues confronting the HMO industry to ensure the sustainability of HMOs in providing better and cheaper medical services.

The most contentious issues appear to be the giving of advance cash deposits by the HMOs to its partner-hospitals to cover cost of health services given to policyholders of that particular HMO. On the part of the doctors, the most contentious issue is the rates that HMOs should give to its partner-doctors.

T he differences of opinion over these t wo issues among the few HMOs operating in the Ph i l ippi nes h ave appa rent ly c au s e d s o me H MO s t o b o lt the A hmopi. T he IC, however, wou ld like that a l l HMOs become A hmopi members so that the negotiations regarding the rates and consultations regarding policies are facilitated bet ween the gover nment representing the public and A hmopi representing the private sector.

“The advantage of becoming a member of Ahmopi is that the HMOs, which are members, can use their membership as leverage in negotiating the rates to be given to the doctors, because Ahmopi would like to give lower rates to the doctors,” Dimpas said in a phone interview with the BusinessMirror.

A lso, A hmopi ’s position is

This June 8 photo shows a woman passing by a billboard displayed in a building of an insurance provider in Makati City. Nonie G. Reyes

that hospitals not require a deposit to provide the HMO service, he added. Dooc, who has an ophthalmologist as a son, said some doctors are complaining they only receive P250 as fee for e ver y consu lt at ion f rom an HMO member. He admitted such amount as low.

“But HMOs counter that if the fee is increased, then the contributions of its policyholders would also have to increase,” he said.

Alfonso R. Sahagun Sr., president and COO of Fortune Medicare Inc., told the BusinessMirror, its sister company, the circular is welcome. “ That is good for the industry,” Sahagun said. “Mawawala ’yung mga f ly-by-night HMOs and also better assurance cardholder [that] HMOs [can provide their] availments.”

Proposed regulations

AS part of the continuing process to transfer the regulation of HMOs from the DOH to the IC, Dooc has already issued a draft circular that outlines the regulations which will protect the interests of all stakeholders.

“I issued a draft, but some in the industry and some companies have asked for further time to comment,” Dooc said. “The guidelines will cover issues like solvency and capitalization requirements, and some aspects in administration like claims handling.” The IC chief said he is hopeful the IC would release the circular, a draft of which was issued in March, by July.

The proposed circular concerns the minimum capitalization, financial capacity and other requirements of HMOs. Dooc said the circular is stringent on

new HMOs that would be required to have a paid-up capital of P100 million. All existing domestic HMOs must have a minimum paid-up capital of at least P10 million. Dooc added that all the existing HMOs that have va lid licenses either from the IC or from the DOH have adequate net wor th to meet their obligations to their polic yholders.

The P100-million capital requirement applies to HMOs that stopped operating for at least a year and are branch offices of foreign entities.

Figures from the IC indicate that among the members of Ahmopi, the highest capitalized HMO has a paidup capital of P351 million and total assets worth P1.6 billion. Of the total membership of Ahmopi, seven have a total net worth amounting to more than P100 million. The draft circular also protects the

HMOs by mandating that lifeinsu ra nce compa nies ca n no longer offer HMO products to their clients, but should create a subsidiary solely for the purpose of providing HMO services.

This is needed to level the playing field for the HMOs because premiums collected by life-insurance companies are taxed at only 2 percent while contributions to HMOs are taxed at a higher rate of 12-percent value-added tax (VAT).

Pending bills

SEVER AL measures have been f i l e d i n t h e 16 t h C o n g r e s s seeking to protect all Filipinos t hrough insu ra nce coverage.

There were at least 117 bills and resolutions requiring life and nonlife insurance for 102 million Filipinos filed in the recently adjourned Congress.

aderLook

sMirror

www.businessmirror.com.ph | Thursday, June 9, 2016

A7

Changes are coming strengthen the Philippine Crop Insurance System by expanding its program coverage and increasing its funding source.

“The agricultural sector in the Philippines is highly vulnerable to the unpredictability of nature, which throughout the year brings about droughts and typhoons, leaving damages to crops, lives and properties of farmers and fishermen,” said Yap, Secretary of Agriculture under the administration of President Gloria Macapagal-Arroyo.

“Considering that a significant portion of the population depends on agricultural activities, the need to protect the welfare and interests of local farmers and fishermen must be addressed,” he added.

T he bil l aims to sustain the i n s u r a n c e c o v e r a g e ’s f u n d i ng requ i rement s by requ i r ing the Philippine A musement and Gaming Cor p. (Pagcor) to ear mark 0.5 percent of its net ear nings to the program.

Dooc explained the crop insurance is provided by state-funded Philippine Crop Insurance Co. (PCIC) that subsidizes a premium up to 65 percent. However, he laments the PCIC’s finances.

“Luging-lugi; every year [they ask for a] budget.”

Dooc said the PCIC cannot compete with private insurers who can afford to provide coverage of as much as 65 percent.

The PCIC, he added, can only afford to cover between 5 percent to 10 percent of the risks related to crop production.

Dooc said he has proposed to one insurer that holds government money from coconut levy to develop a crop insurance. He has yet to hear from the insurer on the fate of that proposal.

New taxes

Among these is House Bill 72, introduced by Rep. Anthony del Rosario of Davao del Norte. Del Rosario’s bill wants the Philippine Charity Sweepstakes Office (PCSO) to earmark its entire charity fund for universal health care.

“The bill warrants a just and equitable distribution of this government’s money grounded on the needs of people,” del Rosario said. The bill proposes that the charity fund be earmarked for the National Health Insurance Program (NHIP) administered by the Philippine Health Insurance Corp. (PhilHealth) to ensure the achievement of universal health insurance coverage in line with t he A qu i no ad m i n i st rat ion’s health agenda.

“It is putting the money into where it is most needed and useful,” he said.

Currently, 55 percent of PCSO’s

income is allotted to the payment of lotto prizes. Thirty percent of the income goes to charity and social programs and 15 percent for PCSO’s operating expenses and capital expenditure.

Rail user’s protection

ANOTHER bill is HB 42 by Partylist Reps. Mariano U. Piamonte Jr. and Julieta R. Cortuna. The bill seeks to require accident and life-insurance coverage for railway transit passengers.

“With this huge figure of public-transportation users, which continues to rise because of the unceasing ascent of prices in diesel and gasoline, it is appropriate that the commuters, by way of assistance and protection when fortuitous events do occur while they are inside the premises of a particular public transportation,” the lawmakers said.

Device insurance

REP. Eric L. Olivarez of Parañaque filed House Bill (HB) 4303 mandating mobile-phone network-service providers to offer insurance for mobile phones.

“This act shall cover the mechanical breakdown, loss and theft, including snatching, robbery and any other act of unlawful taking, of all kinds of mobile phones, including tablets, iPads and any other device capable of making and receiving calls and text messages,” Olivarez said.

He added that a person who purchases a mobile device from any carrier must be informed and offered of the mobile-phone insurance policy.

Stronger GSIS

TO protect government employees, Rep. Rufus B. Rodriguez of Cagayan de Oro filed HB 1223

to strengthen the Government Service Insurance System (GSIS).

The bill seeks to give government employees who retired from public service the option to enjoy the benefits of their retirement either under Republic Act (RA) 1616, or the GSIS law.

Under R A 1616, a government retiree is entitled to gratuity, payable by the last employer, ba s e d on t he tot a l c re d ible ser vice converted into gratuity months, multiplied by the highest compensation received and refund of retirement premiums consisting of personal contributions of the employee, plus interest and government share without interest, payable by the GSIS.

Crop insurance

MEANWHILE, in HB 418, Rep. Arthur C. Yap of Bohol seeks to

ANOTHER source of change in the insurance industry could come from the tax structure.

In Congress, there is HB 3225 filed by Rep. Karlo B. Nograles of Davao City that seeks to rationalize the taxes imposed on the nonlifeinsurance industry.

Prior to the enactment of RA 10001, or An Act Reducing on L ife Insurance Policies, Nograles said the percentage tax on premiums for both life and nonlife-insurance coverage was five percent.

However, R A 10001 reduced the tax rate for life-insurance premiums to 2 percent.

Under Nograles’s proposed bill, “there shall be collected from every person, company or cor porations doing insurance business of any sort in the Philippine a tax of 2 percent of the total premium collected.”

This strikes a positive chord in Dooc. “As demonstrated by life, you lower the taxes from 5 percent to 2 percent in premium tax—look at the expansion of the industry.”

Dooc explained “the tax base expanded to an extent that even if the rate is lower it made up for the loss in rate.”

“Kung 5 percent ka, e kinikita mo naman is P1 million, eto 2 percent, but you get P100 million, bigger pa din ’yung 2 percent.”

Dooc based his views on a study conducted by a tax expert from the University of Asia & Pacific. That study, he said, revealed that for every 1-percent reduction in premium, there is a corresponding growth in the sales of the insurance policies.

There is a positive correlation that the lower the taxes the bigger the sales, he added.

Mergers and consolidation

ACCORDING to Dooc, the changes in the regulation of HMOs and insurers would lead to a consolidation of the industry.

“I want to create a climate within the industry where players are enjoying a level playing field,” Dooc said. “[This is why] we are very meticulous and strict in implementing capitalization and its minimum requirement.”

Dooc said the number of players in the sector went down from 130 more or less to 94.

“Mababawasan pa ’yan,” he added. Dooc said he sees the same among HMOs. However, he cautions insurance companies dealing or selling HMO products to have a spin-off corporation.

This would make a lot of business sense, he said, because a life insurance company pays only 2-percent premium, while HMOs pay 12-percent VAT. “Ano naman ilalaban mo premium to premium?”

Dooc said he is issuing such statement because of EO 192.

“Now that I am the regulator, bakit naman hindi ko sila poprotektahan.” Dooc said because of the capital and net worth build up requirements “that we are strictly implementing, we can see more consolidation and mergers.”

He cited for example the life and nonlife net-worth requirement will go up to P550 million, which is more than double the cur rent existing requirement at P250 mil lion.

“And we only have less than seven months to go, because that should have been implemented by the end of this year. So I am looking at consolidation.”

However, he advises companies that are already compliant with the P250-million net-worth requirement to defer mergers, but further build up net worth until it reaches P550 million.

Because the next jump is very difficult to handle: from P550 million, it will go up to P900 million in 2019.

That year would be the best to merge, according to Dooc, because companies that merge by this time would have a net worth totaling P1.1 billion.

“Lagpas ka na agad sa next build up na P900 million. And yet, malapit ka na sa maximum na P1.3 billion.”

Exuding optimism

N O T W I T H S TA N DI N G t h e s e changes, Dooc is very optimistic of the future of the country’s insurance industry.

He cited for example in the nonlife segment, the net premium last year was P36 billion.

Before it only played around P25 billion to P30 billion, “ but last year medyo sumipa tayo at saka ’yung net income nila malaki, kasi we were spared from a big calamity.”

“Hopefully this year, kung ma spare pa tayo, maganda-ganda ang net income ng nonlife.”

Likewise, the industry’s penetration rate is P29 million because of microinsurance. Including the regular insurance that would be around 38 million Filipinos who are insured, Dooc said. He explained that is roughly 37 percent of the country’s total 102 million people. Dooc said the rate is far higher than the target 20-percent penetration rate by the year 2020.

“Wala pang 2020 pero nasa 37 percent na tayo, so we are now aiming for 50 percent in five years.” Dooc said this is achievable, especially since changes are coming.

A8

The World BusinessMirror

Thursday, June 9, 2016

World Bank downgrades its forecast for global economy

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ASHINGTON—The World Bank is reducing its forecast for the global economy this year—again.

The world’s largest multilateral creditor institution predicted on Tuesday that the world economy will expand 2.4 percent this year, down from the 2.9 percent it expected in January and unchanged from a tepid 2015.

“The global economy is fragile,” said World Bank economist Ayhan Kose, who helped produce the forecast. “Growth is weak.”

In the years since the world began recovering from the 2008 financial crisis, the World Bank and the International Monetary Fund have repeatedly proved too optimistic about the world economy and have had to downgrade their previous forecasts.

T h e Wo r l d B a n k ’s l a t e s t 2016 forecast is more pessimistic than the IMF ’s outlook for 3.2-percent global growth this year, a projection made in April.

China’s trade contracts in May for another month

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EIJING — C hina’s e xports and imports contracted again in May in a sign of weak global and domestic demand.

Ex por ts fel l 4.1 percent from a year earlier to $181.1 billion compared with April’s 1.8 percent decline, customs data showed on Wednesday.

Imports shrank 0.4 percent to $131.1 bi l l ion , a n i m provement over the previous month’s 10.9 percent fall.

Trade weakness could complicate Beijing’s efforts to pull t he world ’s second-l a rgest economy out of a slump. Weak exports could require more economic stimulus, setting back efforts to reduce reliance on trade and investment to drive growth.

“China’s export growth is likely to remain subdued going forward,” Julian EvansPritchard of Capital Economics said in a report. “While we don’t anticipate much more of a slowdown in global growth given that the worst is probably over for many emerging markets, we don’t foresee a significant pick-up either.”

China’s global trade surplus widened to $50 billion, from April’s $45.6 billion.

The surplus with the European Union, China’s biggest trading partner, was $10 billion. Its surplus with the United States was $21.1 billion.

Chinese economic growth fell to 6.9 percent in the first quarter, its weakest performance since the 2008 global crisis. The International Monetary Fund is forecasting fullyear growth for 2016 could decline to 6.5 percent.

The ruling Communist Party is in the midst of a marathon effort to redirect the economy toward self-sustaining growth and away from reliance on trade and investment. But those plans rely on keeping up exports that support millions of jobs. AP

3.2% The outlook on global growth for 2016 by the International Monetary Fund

Since then, it’s become clearer that low commodity prices continue to vex many developing countries whose economies depend on exports of those commodities. And advanced economies are still struggling to gain momentum as they contend with aging workforces and lackluster productivity growth.

The World Bank expects the US economy to grow 1.9 percent

this year, down from 2.4 percent in 2015. The downgrade for the United States reflects a weak first quarter: Growth from January through March reached a negligible 0.8-percent annual rate.

US manufacturers have been especially hurt by a strong dollar, which has made their goods more expensive overseas.

The bank expects developing and emerging market economies as a group to grow 3.5 percent this year, down from the 4.1 percent it forecast in January and barely changed from last year’s 3.4 percent. World Bank economists are drawing a distinction between emerging market countries that export commodities and those that import them.

The exporters, crushed by tumbling prices of oil and other commodities, collectively grew just 0.2 percent last year and are expected to expand 0.4 percent in 2016. The importers, which benefit from lower raw materials prices, are still growing at healthy rates—5.9 percent last year and a predicted 5.8 percent this year.

Latin America has been particularly hard hit. The World Bank

predicts that the region’s economy will shrink 1.3 percent this year after sliding 0.7 percent in 2015.

Brazil, mired in political scandal, is expected to suffer a 4 percent economic contraction in 2016 after shrinking 3.8 percent last year.

The 19 countries that use the euro—the eurozone—will grow 1.6 percent, the same as last year, the World Bank says. Eurozone growth has been constrained by the weakness of European banks, which are still saddled with bad debt and aren’t making many new loans.

Japan will expand 0.5 percent, a bit slower than last year, the World Bank predicts. Prime Minister Shinzo Abe’s aggressive plans to rejuvenate growth—partly through the Bank of Japan’s easymoney policies—have had only mixed results so far. The World Bank left its forecast for China’s economic growth unchanged at 6.7 percent. The Chinese economy, the world’s second-biggest, has been decelerating for six years, as Beijing has sought to move away from dependence on investment in factories and real estate toward slower, but steadier, growth built on consumer spending. AP

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Maritime unions protest change in Alaska oil tanker escort contract

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NCHORAGE, Alaska—Two maritime unions with 250 Alaska jobs at stake have begun a campaign to stop the operator of the trans-Alaska pipeline from switching to a nonunion company for escorting oil tankers safely out of Prince William Sound, where the Exxon Valdez spilled 11 million gallons of crude oil in 1989.

Alyeska Pipeline Service Co. is proposing to drop Florida-based Crowley Maritime Services, which has provided tugs for tanker escorts and spill response services in Prince William Sound for 25 years. Alyeska Spokesman Michelle Egan said on Tuesday the company is in final negotiations for a new contract with Louisiana-based Edison Chouest, for the contract.

Crowley has decades of experience operating in harsh Alaska conditions, said Alan Cote, president of the Inlandboatmen’s Union, at a press conference. Alyeska is trading safety and Alaska jobs for questionable costs savings, he said.

“One spill, one major incident, all that costs savings means nothing,” Cote said.

New equipment

THE IBU, representing engineers and deck hands, and the International Organization of Masters, Mates & Pilots, representing captains and mates, are launching television ads encouraging the public to contact Alyeska.

They’re aiming for 5,000 signatures on a petition to retain Crowley. They contended Alaska jobs will be lost to nonresidents.

CaptainTim Saffle, regional representative for the masters’ union, said some of his union’s members have 30 years of experience in the sound.

“They’ve seen it all,” Saffle said. “They’ve

seen the extreme weather, extreme conditions that happen here constantly. We don’t want to lose that.”

Crowley’s contract is scheduled to expire in June 2018. “It’s our process to bid those kinds of contracts to see if we can get some competition, and also the best value,” Egan said. Both financial and technical components are considered, she said.

“Edison Chouest brings a lot of expertise and one of the things we’re excited about is the new equipment they will be bringing,”she said.

Faulty assumptions

ONCE Edison Chouest is on the job, Egan said, it will be closely monitored to make sure it meets requirements of the spill plan.

The unions’ claims that Alaska resident workers will be replaced by nonresidents is based on faulty assumptions, she said. Not all Crowley employees are Alaskans, she said.

“It’s a bit of a stretch to say all those jobs will go out of Alaska,” she said.

Edison Chouest will be expected to meet an Alyeska requirement for major contractors of 20 percent Alaska Native hire, she said.

Edison Chouest has had a presence in Alaska before. The company has participated in Alaska politics, with employees and family members donating thousands to the campaigns of US Rep. Don Young, Republican-Alaska.

Spill prevention

THE company built and operated the Aiviq, a 360-foot vessel built to tow a Royal Dutch Shell PLC drilling barge, the Kulluk, for Arctic offshore drilling in the Beaufort Sea. In December 2012, as the vessels attempted a crossing of the Gulf of Alaska, the Kulluk broke free. AP

Venezuelans pick through trash for food to eat or sell

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ARACAS, Venezuela—Until recently, Julio Noguera worked at a bakery. But he now spends his evenings searching through the garbage for food.

“I come here looking for food because if I didn’t, I’d starve to death,” Noguera said as he sorted through a pile of moldy potatoes. “With things like they are, no one helps anyone and no one gives away meals.”

A c ross tow n, u nemployed people converge every dusk at a trash heap on a downtown Caracas sidewalk to pick through rotten fruit and vegetables tossed out by nearby shops. They are frequently joined by small business owners, college students and pensioners—people who consider themselves middle class even though their living standards have long ago been pulverized by triple-digit inflation, food shortages and a collapsing currency.

Venezuela’s poverty had eased during the administration of the late President Hugo Chavez. But a study by three leading Caracas universities found that 76 percent of Venezuelans are now under the poverty line, compared with 52 percent in 2014.

Fruits, vegetables

STAPLES such as corn flour and cooking oil are subsidized, costing pennies at the strongest of two official exchange rates. But fruit and vegetables have become an unaffordable luxury for many Venezuelan families.

“We’re seeing terrible sacrifices across many sections of society,” said Carlos Aponte, a sociology professor at the Central University of Venezuela. “A few years ago, Venezuela didn’t have the kind of extreme poverty that would drive people to eat garbage.”

While some search through the garbage piles for food they can eat, many more are drawn by the opportunity to fetch a few bolivar bills by rescuing and reselling bruised produce.

Lines everywhere

ON a recent evening , Nog uera ma naged to ret r ieve a dozen pot atoes. “I’m a trained baker, but right now there’s no work anywhere here. So I make do with this,” he said.

In this May 31 photo, Pedro Hernandez (left) and his friend Luis Daza, pick up tomatoes from the trash area of the Coche public market in Caracas, Venezuela. At Coche, even once middle class Venezuelans made desperate by the country’s economic collapse have taken to sifting through the trash to resell or feed themselves on discarded fruits and vegetables. AP

The trash pickers aren’t just people who’ve lost their jobs.

Jhosriana Capote, a vocational student, comes to the trash heap to supplement her pantry. She recently completed an internship with a Coca-Cola subsidiary.

“I used to be able to find food, but not anymore. Everything is lines,” she said after an evening picking through the refuse.

Dumpster diving isn’t a new phenomenon in Venezuela, but it is a

growing one. Venezuela was once the richest nation in South America, but a fall in oil prices combined with other economic problems has sparked desperation.

Economic war

NEARLY half of Venezuelans say they can no longer afford to eat three meals a day, according to a recent poll by the local firm Venebarometro. The poll surveyed 1,200 adults at their homes the

first week in April and had a margin of error of plus or minus of about 2 percentage points.

The government blames the political opposition, accusing it of waging an “economic war” to stir unrest and oust President Nicolas Maduro from power. The administration has launched an aggressive program to build urban farms in an effort to address food shortages.

One recent night, two young girls found some cilantro, lemons and

remains of a cabbage in the garbage.

Their mother, Monica Espinosa, said the scavenging helps them get by since her husband walked out on the family. Espinosa said she still owns two apartments, but makes ends meet by cooking sauces from the vegetables she finds and selling them to stores, earning about $6 a week.

“I’m a single mother with two children, and this is helping me get by,” she said. AP

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Number of IS cases in US has not dropped off— FBI director

A9

briefs China says 4 killed in crash of marine surveillance plane

BEIJING—China’s State Oceanic Administration said four officers were killed when a marine surveillance plane crashed into a mountain along the country’s east coast. The accident occurred on Tuesday during a routine mission to monitor conditions in Zhejiang province whose coastline is dotted with hundreds of islands, the administration said in a statement on its web site. The type of plane was not identified, although the China Marine Surveillance agency operates aircraft, including helicopters and the Chinesemade Harbin Y-12 turboprop. AP

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ROOKLYN CENTER, Minnesotta—The director of the Federal Bureau of Investigation (FBI) said on Tuesday the Islamic State (IS) group is currently the main threat facing the United States, both in its efforts to recruit fighters to join its members overseas and to have others carry out violence in America.

Director James Comey said the IS group poses a third potential threat: a “terrorist diaspora” that he said will eventually flow out of Syria and Iraq, and end up in Western Europe, where members will have easy access to the US “There’s three prongs to this ISIL [Islamic State of Iraq and the Levant] threat,” Comey said.

“The recruitment to travel, the recruitment to violence in place, and then what you saw a preview of in Brussels and in Paris—hardened fighters coming out, looking to kill people.”

He said officials are “ laserfocused on that.”

Comey took quest ions f rom repor ters on Tuesd ay in t he F BI ’s M i n ne ap ol i s of f ice a s pa r t of a t wo - d ay v isit to t he reg ion t hat inc luded meet ings w it h commu nit y leaders a nd loca l l aw enforcement. Comey responded to quest ions about the heroin epidemic, shootings involv ing of f icers and sur vei ll a nce issues, but t he bu l k of h is comments were about t he IS g roup.

Last week three Minnesota men who were accused of plotting to join the IS group were convicted of conspiring to commit murder overseas—which carries a potential life sentence—as well as conspiracy to provide material support to a foreign terrorist organization and other charges.

The defendants—Guled A li Omar, 21; Abdirahman Yasin Daud, 22; and Mohamed Abdihamid Farah, 22—were among a group of friends who prosecutors say recruited and inspired each other to travel to Syria. A total of 10 men were charged in the conspiracy; six pleaded guilty and a seventh is at large, believed to be fighting in Syria.

Comey said the FBI is continuing to focus on the Islamic State group, and there are close to 1,000 open cases nationwide involving people at various stages of recruitment. He said the group’s slick videos and propaganda can resonate with people of all ages, but seem to draw in people under 30 who are “unmoored” in some way.

He said he hopes the FBI’s work, including the convictions in Minneapolis, will send a message that “there will be severe consequences for people who go down that path.” Comey added that the number of active IS-related cases hasn’t decreased, but the number of people seeking to travel to Syria has dropped since the end of last summer—going from about six to 10 attempted travelers each month to about one or two.

He said he can’t pinpoint the reasons for the trend, but it’s possible people are traveling to other Islamic State outposts, have been deterred by the outcomes of other criminal cases, or have been stopped by families and community members.

Another—and more disturbing—possibility is that some are staying in the US and looking to carry out violence here, Comey said.

“It’s good news the traveler numbers have come down,” he said. “I don’t know exactly what to make of it yet.” Comey was in Williston, North Dakota, on Monday to open a new FBI office that will focus on crime in the Bakken region, which has spiked with the oil boom. The FBI’s Minneapolis division covers Minnesota, North Dakota and South Dakota. AP

Thursday, June 9, 2016

Correspondent, longtime journalism teacher dies

MIAMI—John Virtue, a Canadian-born foreign correspondent and longtime journalism teacher throughout Latin America under a Florida International University program, has died. He was 81. University officials confirmed that he died of bladder cancer at a Miami Beach hospital last Friday. Virtue, known to friends as Jack, was born in Nelson, British Columbia. His career as Latin American correspondent at United Press International took off during a 1-month stint in Havana in 1964, when he covered a press conference by Cuban President Fidel Castro. AP

Turkish owner unites Godiva, McVitie’s in London company A presidential guard stands in front of the logo for the Eighth National Forum for Security and Justice in Mexico City on June 7. Mexican President Enrique Pena Nieto spoke at the forum on the same day the international program Open Society Justice Initiative released a report saying the Mexican government has committed crimes against humanity in its war against drug cartels. AP

Rights groups report crimes against humanity in Mexico

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EXICO CITY—The Mexican government has committed crimes against humanity in its war against drug cartels, humanrights groups said on Tuesday in pressing the government to take action.

The report released by the New York-based Open Society Justice Initiative is an extensive analysis of the toll of acts against humanity, which it defined as murder, torture and disappearances. It said some of its Mexican partner organizations had already contacted the International Criminal Court in The Hague, urging it to pursue cases.

The report also singled out the Zetas cartel, one of Mexico’s most violent gangs, for the seriousness of their crimes.

It called on Mexican authorities to further pursue cases in which atrocities committed by law enforcement and military personnel have not been fully investigated.

The government responded to the report late Tuesday with a joint statement that included the Army, Navy and Attorney General ’s office.

150k The estimated total people killed in Mexico from December 2006 to end of 2015 according to New York-based Open Society Justice Initiative

The statement outlined the efforts of President Enrique Peña Nieto’s administration to implement a new justice system by June 18, as well as legislative initiatives against torture and disappearances. “It is important to emphasize that in Mexico the immense majority of violent crimes have

been committed by criminal organizations,” it said. “The protective role of the armed forces has been continuously recognized by the people.”

The Justice Initiative worked with five Mexican human-rights groups on a three-year investigation and found that from December 2006, when the government declared war on the cartels through the end of 2015, more than 150,000 people were killed in Mexico and thousands have disappeared. The most recent case that garnered international attention was the disappearance of 43 students in the southern state of Guerrero in September 2014.

Researchers also found that nine years after the Mexican government first deployed armed forces to combat, civilians have continued to suffer the most. These crimes are being carried out not only by the cartels, but also by federal and state security forces who are supposed to be protecting civilians.

“The Zetas have carried out a policy of territorial control through violence, which was used to gain the profits from other cr imina l organizations,” said James Goldston, executive director of the Open Society Justice Initiative, at a press conference.

“They have attacked any person

inside that territory, including migrants, who have nothing to do with a cartel. The Zetas qualify as an organization that can commit crimes against humanity, because they have a hierarchy, territorial control, and have the capacity to carry out an organized attack to civil populations, as they did in the past.”

In case there was any doubt about the Zetas’s power or brutality, state prosecutors in the northern border state of Coahuila said in a statement on Tuesday that they had arrest warrants for five people for the disappearances of seven people between December 2009 and January 2012 in Piedras Negras. In the case, Zetas in the prison allegedly had people brought to them from outside, killed them within its walls and then disposed of their remains or ashes in a nearby river.

Authors of the report said they want such crimes prosecuted to the full extent of the law in Mexico, regardless of the perpetrators.

“No one can deny that atrocities have been committed in Mexico,” said Jose Antonio Guevara, executive director of the Mexican Commission for the Defense and Promotion of Human Rights, one of the groups that assisted in the investigation.

Iran bars US congressmen opposed to nuclear deal

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EHR AN, Iran—Iran said on Tuesday it would not grant visas to three US congressmen opposed to the nuclear deal, calling their request to monitor the accord a “publicity stunt.”

T he three Republican lawmakers—Reps. Frank LoBiondo of New Jersey, Mike Pompeo of Kansas and Lee Zeldin of New York—all voted against the deal and are part of a GOP backlash against the pact negotiated by Democratic President Barack

Obama’s administration. T he accord limited Iran’s ability to enrich uranium in exchange for the lifting of crippling economic sanctions. Iran’s Foreign Ministry said in a letter it refused the request over “the completely inappropriate way you have demanded to visit Iran and interfere in what is of no relevance to [your] official functions.’“ “Despite what you seem to presume, [members] of the US Congress do not get to dictate

the policies of other countries,” the letter read. The congressmen asked in February to observe Iran’s parliamentary elections, see “American hostages” and visit three nuclear facilities. Iran’s semi-official Isna news agency also said they wanted to discuss Iran’s brief detention of 10 US Navy sailors in January.

LoBiondo said it was “deeply disappointing, though not surprising” that Iran denied “our legitimate request with insults and

deflections.” Pompeo said he still wanted Iran to grant him a visa, even though the country continues to “act as a rogue and hostile nation.” Zeldin, meanwhile, said Iran’s response “spits in the face of the freedom-loving world.”

“While Obama and [Secretary of State John] Kerry prop up the wrong regime, one opportunity after another is being missed to replace these Iranian thugs with true leaders and peaceful actors,” Zeldin said. AP

LONDON—Turkey’s Yildiz Holding says it is uniting its chocolate and biscuit brands—including Godiva Chocolatier and United Biscuits—into a new London-based company. The new company, Pladis, will have revenue of $5.2 billion and operations in 120 countries across Europe, the Middle East, Africa, Asia and the Americas. It will employ 26,000 people. Company CEO Cem Karakas said the product formulas will be unchanged. The goal is to eventually take the new company public, a move that won’t be affected by whether Britain leaves the European Union in a June 23 referendum. AP

Bank-robbery suspect locks himself out of car

WILMINGTON, Delaware—Police in Delaware say they have arrested a suspect in a bank robbery after he locked himself out of his getaway car.

State Police said in a news release that 21-year-old Joseph Rosado of Wilmington entered an Artisan Bank in Wilmington brandishing a handgun on Monday afternoon. Rosado demanded cash from two tellers, who gave him an undisclosed amount. Troopers say Rosado left the bank and ran to a car, but had locked himself out. He ran away but was quickly caught by a New Castle County Police officer. AP

Star of reality show ‘Wicked Tuna’ to be sentenced for fraud

BURLINGTON, Vermont —A man featured on the reality television show “Wicked Tuna” is scheduled to be sentenced in Vermont on charges he received government disability benefits while he was fishing on the show. Paul Hebert of Gloucester, Massachusetts, is due in federal court in Burlington on Wednesday. He pleaded guilty earlier this year to charges of Social Security and Medicaid fraud. As part of a plea deal with prosecutors, Hebert agreed to pay more than $53,600 in restitution. AP

Father sentenced to life for selling daughters to child pornographer

GREENEVILLE, Tennessee—A Tennessee man who sold his three daughters to a man who raped them and used them in child pornography has been sentenced to life in prison.

US District Judge J. Ronnie Greer called it one of the most horrible crimes he had ever seen when he sentenced the 63-year-old father on Monday, according to a statement from the office of acting US Atty.

Nancy Harr. According to court records, both parents were involved with the abuse and exploitation of the children and were indicted in 2013. The girls were ages 12, 14 and 16 when police discovered what happened to them, federal prosecutors said in a statement. AP

A10 Thursday, June 9, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Telco telenovela ends with a twist

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ike most TV shows that Filipinos love to follow, the Philippine telco telenovela ended with a twist that jolted millions of Internet users, who were rooting for the entry of a third player in a sector loathed for services like hell and undeserving of the stratospheric fees the players collect.

Buckets of virtual tears flooded the whole archipelago after San Miguel Corp. (SMC), in partnership with Australian firm Telstra, abandoned its bid to enter the market and sold its coveted 700-megahertz spectrum to the duopoly of Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom.

It was truly a sad day for millions of Internet users who hoped that SMC, which got 90 percent of the priced 700-Mhz band, would give them faster Internet service at a better price. Consumers believed that a third telco player offering better service would attract unsatisfied customers of the two existing giants. As such, SMC was seen strongly competing in a profitable and growing market. However, SMC was seemingly unprepared to hurdle the stumbling blocks. For starters, the duopoly opposed the frequency allocation. They wanted a share of SMC’s coveted spectrum and threatened to get what they wanted through the courts and by lobbying the president. Seeing only uncertainty and delays ahead, SMC retreated.

As a result of the acquisition of SMC’s telecoms business, PLDT and Globe gained access to valuable radio frequency spectrum that they can use to support the rollout of a better wireless broadband network. With these additional frequency resources, the two operators will be able to deliver faster, more reliable and affordable Internet connectivity throughout the country. Before this deal, we were looking at the prospect of these frequencies being a subject of dispute for years. Both PLDT and Globe had earlier filed applications for an allocation of the 700 Mhz, and both companies had signaled they would follow up these applications vigorously.

One positive aspect of the telenovela twist is the fact that PLDT and Globe will be able to quickly use their newly acquired frequencies to serve their respective subscriber base. They already have large networks in place and will be able to integrate the additional frequencies more quickly into their systems. This means better services for Internet users nationwide.

The transaction also mandates PLDT and Globe to return to the government several frequency bands allocated to SMC. These include parts of the 700 Mhz, 850 Mhz, 2,500 Mhz and 3,500 Mhz bands. Together with frequency still held by the government, these returned frequencies could be assigned to a new telecom player. In other words, the deal keeps the door open to competition.

On Monday PLDT and Globe simultaneously launched their respective cell sites with the technology to operate cellular services using the 700-Mhz spectrum, promising customers better mobile Internet services in the coming months. Experts say the 700-Mhz band can provide better signals inside buildings. This is useful in urban areas, where people often use their mobile devices to access the Internet in their homes and offices. Here’s hoping the duopoly will finally be able to offer faster Internet access to all Filipinos who needed this kind of service yesterday.

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OUTSIDE THE BOX

arely am I inclined to speak about the basics of stock-market investing. One hour on the Internet will give you all the basic information that you need. And half of that information is not applicable to the Philippine stock market.

By definition, an investment means devoting time, money and/ or effort to an endeavor with the expectation of a particular result. Get a shovel, dig a big enough hole and you might have a five-star swimming pool. On the other hand, you might wind up with just a big ugly hole in the ground, depending on how good your hole-digging skills are.

The stock market is a game of skill that pays off when you win the game.

It is similar to the International Dota2 Championships tournament.

That is an online computer game and

the winning team collected $6.6 million last year. But Dota is harder to win than buying stocks.

Someone is going to tell me that they made a great investment when they bought the public offering of D&L Industries in December 2012 at P2.25 and the price went to P11.50.

Congratulations on your profit, but exactly what did you devote in time and effort? What actually happened was that you made a successful “stock market wager” on a company that the Lao family built from the ground up in 1963 and on their

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ADDRESS: 3rd Floor, Eternal Plans Building, Ortiz Street, Iloilo City CONTACT NOs.: (033) 337-2698/ 508-8102/ 0922-811-3995 n DWQA -92dot3 HOME RADIO LEGAZPI E-MAIL ADDRESS: homeradiolegazpi@ yahoo.com ADDRESS: 4th Floor, Fortune Building, Rizal Street, Brgy. Pigcale, Legazpi City CONTACT NOs.: (052) 480-4858/ 820-6880/ 0922-811-3992 n DWQJ -95dot1 HOME RADIO NAGA E-MAIL ADDRESS: homenaga@yahoo.com ADDRESS: Eternal Garden Compound, Balatas Road, Naga City CONTACT NOs.: (054) 473-3818/ 811-2951/ 0922-811-3993

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continuing superior management and operations expertise.

Other people “wagered” on the management expertise of San Miguel Corp. when the share price was P180 and did not do so well.

Most skill-based activities fall into one of two categories. It is easy to do and hard to get good at. That describes the game of golf. Then again, a skill can be hard to get into and easy to get good at. Scuba diving requires much training with the equipment to avoid drowning or being eaten by sharks. But once you learn it, you are basically a pro.

The stock market is like cooking; easy to do and hard to get good at. But it is not rocket science and neither is cooking. There are only a few basic flavor ingredients with which you can cook almost any cuisine, depending on how you put them together.

Aboitiz Equity Ventures is up 35 percent in the past three months at P78. When it broke above long-term resistance at P60, that was the buying signal. DoubleDragon properties

did that in 2015, from P25 to P40 and then again up to P60.

On the sell side, D&L could not break above P11.50 and went down to P7.50 late in 2015. When the price went back above P8, it was a buy. We will see P11.50 again soon. Early in 2015, Jollibee had problems at P240 and then fell to P180. A buy signal came again at P200. Price movement reflects money flow and that is all you need to follow.

If you know that vinegar, soy sauce and garlic make the sauce for adobo, that is all you need to know to cook the best pork adobo in the Philippines. You only need to practice just like in the stock market. You do not need to know why those combined flavors taste so wonderful. Likewise, you do not need to know why money is flowing in or out of a particular issue. Just go with it.

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

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

Why oil prices and power rates keep on rising

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos

Online Editor Social Media Editor

Chairman of the Board & Ombudsman President VP-Finance VP-Corporate Affairs VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Look where the money is flowing

Cecilio T. Arillo

database Continued from A1

T

he Freedom from Debt Coalition (FDC) said requiring the implementation of a power-sector reform program as a condition for loan disbursements illustrated the way the Asian Development Bank (ADB) and other international financial institutions believed in a one-size-fits-all model, applicable to countries everywhere.

Power-sector reform programs were being advanced by those institutions, believing these changes to be panacea for improving technical, financial and managerial performance of power utilities.

These reforms in the power sector were enforced regardless of differences in the economic level of countries, the level of development of their power sectors, the number of people connected to the grid and the roots of the crisis faced by various public or state-owned utilities.

Indonesia and the Philippines have different stages of power-sector development, different models of electricity market structure and different conditions in terms of energy sources. Yet, said the FDC, the models and phases for power reform imposed by the ADB and the World Bank on the two countries were almost the same.

Many times in the past the ADB had also intervened in the internal process of reforms that countries are supposed to enjoy as sovereign states. It had gone beyond its role as loan provider, intervening to shape the substance of laws,

government policies and programs.

According to FDC, the ADB practically drafted the electricity reform bills of Bangladesh and the Philippines and, in 1998, worked with the World Bank to draw up the Power Sector Restructuring Policy of Indonesia.

Both institutions were also involved in drafting the Indonesia Electricity Bill.

The ADB itself facilitated the very process of passing the bill into law, which explicitly declared that the second disbursement of the power-sector restructuring loan of $200 million, plus the additional cofinancing from Japan Bank for International Cooperation of $200 million, would not be released without the law in place.

From the time the Electric Power Industry Reform Act (Epira) was drafted for the Philippine government, the ADB exercised undue influence to the country. FDC said some lawmakers exposed the scandalous payoff incidence in the privatization of NPC. The ADB’s overarching goal to reduce poverty came under serious question

due to the flawed process in reforms and the lack of genuine participation in the public sector. The ADB argued that the reforms in the power sector would help government cut subsidies for electricity which, in turn, would channel funds saved to other priority expenditure, such as health and education.

The idea for encouraging privatesector participation in IPP programs through build-operate-transfer (BOT)/ BOOT, along with the implementation of the reform, had put private profit before public interest, FDC claimed. Private investors would always want to limit their losses and to cover most of their business risks, and they would always insist on government guarantees for their revenues. The case of BOT private infrastructure clearly demonstrated the nature of the ADB’s strategies and the lack of accountability in terms of longer-term development goals, such as debt and risk management. The World Bank itself admitted that guarantees could potentially create major budgetary shortfalls and dire consequences for future generations (Wyatt, 2002).

In the case of the Philippines, NPC admitted paying about P60 million a month to the Department of Finance to guarantee IPP projects starting in the 1990s. The Epira law asserted that with privatization, competition and lower costs of energy would materialize. The Epira should have achieved two objectives—(1) reduce power costs and (2) assure power supply. It was supposed to create market-oriented competition and, thus, deregulation to lower power rates.

This premise hinged on the belief of the International Monetary Fund, World Bank and the ADB that imposing structural reforms to developing countries would free up government resources that could be utilized to pay past loans

to these agencies.

Compliance to the policy of lending agencies was a condition for the release of new loans, as can be proven in the Congress passage of Republic Act 9136, the stimulus for the ADB and the Japan Export-Import Bank, an export credit agency, to release a total of $950 million in loans and guarantees. This huge release of loans triggered a series of borrowings by the Arroyo administration, hence, making it the biggest debtor in her time.

The World Bank is currently estimating the quantitative dimension of contingent liabilities. Some estimates of the government’s contingent liabilities run to about P3.1 trillion as of endMarch 2002, representing maximum exposures under obligations, such as (a) liabilities of public pension institutions; (b) direct guarantees on loans to government-owned and -controlled corporations (GOCCs) and GFIs; (c) guarantees on risks under BOT contracts; and (d) deposit insurance.

Outstanding public-sector debt (national government and debts of GOCCs) as of 2010 was more than P5 trillion. The Philippines’s external debt to GDP ratio was second only to Indonesia at 69.1 and 75.8, respectively, in 2002. But as of the second quarter of 2003, the Philippines’s external debt to GDP ratio increased to 71 and Indonesia decreased to 69.6.

The Philippines is now the highest in the region.

By comparison, Marcos debt in 1986 was $28.206 billion or P575.12 billion ($=P20.39, 1986 forex). Marcos’s accumulated budget in 20 years was P486.2 billion; the peso devaluated 24 times between 1981 ($=P7.90, forex) and 2004 ($=P55.55).

To be continued

Opinion BusinessMirror

opinion@businessmirror.com.ph

Mining as engine of economic growth Val A. Villanueva

Businesswise

N

o sooner had President-elect Rodrigo R. Duterte stated that irresponsible mining must go that the Chamber of Mines of the Philippines (COMP) declared its full support to rid the country of reckless miners.

Citing mainly his dismay at “big mining companies,” which he said are “spoiling the land and destroying Mindanao,” Duterte warned that they had to shape up or face expulsion. He, however, clarified he was not against mining per se, and was for responsible mining that advocates the most rigorous of environmental criteria.

He got full backing from the COMP, which has also been advocating for a “full stop against illegal and irresponsible mining in the country, which poses a threat to the community and the environment.”

“This has always been COMP’s position, as we continue to find ways to strengthen our programs in social development and management to include indigenous peoples [IPs] and environmental enhancement,” the chamber said in a statement.

“We commit to work hand in hand with the incoming administration to help address concerns in our industry so that we may promote true inclusive growth around the country,” it added.

The country has the world’s second-largest gold reserves. The queue of foreign investors who wish to tap its vast mineral reserves is getting longer, with each one eager to extract gold and other precious metals that lie beneath the ground.

At the moment, mining contributes a miniscule percentage to the Philippine economy. Access to the $1.4-trillion mining sector, which is rich also in copper and nickel, has been elusive, mired since the 1980s in irrelevant local laws, environmental battles and land-rights issues.

For several years now, environmentalists, politicians and media have made it trendy to oppose all forms of mining. Ironically, mining exists because people consume products that are made from by-products of mining. Mining is literally the bedrock of civilization. That the industry’s critical future impacts on mankind’s quality of life shouldn’t be debated at all.

Almost everything that people use—household appliances, computers, farm implements, transport vehicles, mobile phones, beauty and hygiene items, medicines, fertilizers, etc.—is a mineral product or relies upon minerals and metals for production and distribution. In order to maintain the lifestyle and security that a modern society enjoys, the mining industry must continue on a course of healthy production and exploration into the future.

In the Philippines the mining industry has been rocked by strong negative criticisms in recent years. Unwanted fears, real or perceived, have created for the industry an image of an environmental despoiler. Forgotten is the fact that mining has been, is and will continue to be a significant contributor to the country’s economic growth. But because mining companies have such a huge impact on local economies, they feel an even larger responsibility to help sustain a high quality of life in their host communities. Modern mining that is conducted responsibly will undoubtedly provide

a more efficient and sustainable future for both the industry and the country.

Mining has gone a long way toward this end.

In many parts of the world, the mining industry has proven to be a partner of communities in environmental protection and social development.

Some call it sustainable mining in which, among other things, the mining company is tasked to redevelop the area and ensure that communities thrive long after the company has extracted the minerals it needs. According to a study made by the Mining Association of British Columbia, “Mining represents the highest value use to which a hectare of land can be utilized.”

Antimining groups are forcing their own agenda down the throats of IPs who have been wanting of progress and development to alleviate their sorry plight. For this, I blame the government’s lack of political will to enforce the law. How can a provincial ordinance banning mining be superior to the Republic Act that allows responsible mining? In Mindoro there is a moratorium on mining, but not illegal logging, the kaingin system (or the slash-and-burn agricultural technique) and negligent solid-waste disposal. In January of this year, for instance, the DENR intercepted a truck full of illegal logs.

Antimining groups just can’t accept the cold fact that the world can’t do without mining, and that responsible mining is the main driver of economic growth in most developed nations. All the conveniences that we enjoy today are all because of how we have harnessed minerals extracted from the soil: when you ride a bike (iron and aluminum); when you brush your teeth (limestone and fluorite); when you use a computer (gold and some other 34 metals); when you build a house (cement, gypsum, iron); when you cook a meal (iron, aluminum, nickel and steel); when you go rollerblading (limestone); when you wear makeup (mica); when you ride a car (iron, aluminum, chrome, molybdenum, copper and many others); when you set the table (silver, nickel, steel); when you play golf (tungsten, aluminum); when you plug in for power (coal and copper), or charge your mobile phone (nickel, cobalt and lithium); when you get a chest x-ray (uranium), or when a priest drinks wine from the chalice (bronze, copper, silver). While I have yet to see a priest scoop up wine with his hands during Holy Mass, some members of the clergy who claim to be environmentally concerned have been vociferous in their opposition of mining.

Antimining groups and individuals who want all mining activities to cease must first stop using all the by-products of mining and the benefits it provides. That is the only time they will make sense.

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

Bossy or bitchy Siegfred Bueno Mison, Esq.

THE PATRIOT

A

feisty person is generally regarded as aggressive and combative, one who does not back down from a fight. Audacity, on the other hand, means “boldness or daring, especially with confident or arrogant disregard for personal safety, conventional thought or other restrictions.” One of the best-selling books of US President Barrack Obama, entitled Audacity of Hope, speaks of how individual Americans can and should dare to do things differently and change how government systems are being run in America.

When one exhibits both feistiness and audacity, this person may be referred to as “bossy” or if the person happens to be female, as a “bitch.” The latter is clearly a pejorative term and in the interest of polite language, I will sometimes use the term bossy instead of bitchy. I once asked a lawyer-friend if being called bossy is a good or bad thing? “Of course,” was his quick reply, “it has to be a bad thing.” He quickly added, however, that desperate times sometimes necessitate a

bossy attitude. He pointed out that successful generals during the World War II (i.e., George Patton of the United States and Erwin Rommel of Germany) could not have won the battles that they did without their bossy audacity, and that boxers, wrestlers and mixed-martial arts fighters need to be feisty in the ring throughout the fight. When your back is against the wall, he said being feisty is a positive thing.

My paternal ancestors came from

Thursday, June 9, 2016 A11

Divine clemency in the forgiveness of sins of happiness. Those can be glad who trust in the Lord, those just and upright of heart.

Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

T

O be forgiven of sin and cleansed of guilt is to be blessed with the joy of salvation (Psalm 32:1-2, 5, 7, 11). The sinful woman demonstrated her contrition publicly and Jesus publicly assured her of the forgiveness of her sins (Luke 7:36-8:3).

I confessed my sins and you took away my guilt Psalm 32 is a maskil, an insight-sharing, wisdom text that teaches what one needs to do to welcome God’s blessing. Blessed and happy is one whose transgressions are forgiven, whose sin is buried and remembered no more, and whom the Lord does not hold guilty. The opening double beatitude (“blessed” -pinagpala) stands out in the context of the three most used Hebrew words for the evil that human beings do: “transgression” (pescha) as infidelity to the covenant with God; “sin” (hatah) as failure or missing the mark; and “guilt” (awon) as perversion or rottenness. It is God in His clemency who absolves (nasa) the transgressions, and covers (kasa) and puts sins or failures out of sight,

and passes no judgment (hashab) on the iniquity of a person. And one so treated by God is truly blessed and happy.

The psalmist knows it is not cheap grace. In his own experience of sin and of forgiveness, repentance is necessary: he acknowledged his sin, he did not cover up his guilt and he confessed his faults. And God took away the guilt of his sin. He turned to the Lord in his time of trouble, and the Lord was his shelter, filling him with the joy of His merciful and saving care and making him really blessed. His personal experience and reflection on repentance and divine clemency is an example for others to imitate. The concluding exhortation to rejoice in the Lord makes the ending like the beginning—on the note

Your sins are forgiven

IN the gospel account, it must have been some special celebration that those eating were reclining. The woman known as a sinner and clearly contrite of heart in response to Jesus’ earlier call to repentance, dared to approach Jesus and bathe with her tears and wipe with her hair and kiss His feet in a public show of repentance. This was to the scandal of the host who thought that Jesus could not be a prophet, because He does not seem to be aware that she is a sinner touching Him. Jesus demonstrated that He knows not only that the woman is a sinner, but also the thought of His host. He contrasted the attitudes of the woman with those of the host, pointing to the woman’s great love of which the host has so little.

The woman may have owed a great debt, but her repentance manifests it has been forgiven, as her actions reveal the degree of her gratitude. Jesus did not reject the repentant sinner and assured her of salvation. She has shown great love; her many sins have been forgiven.

“Who is this who even forgives

Tax incentives of Filipino inventions

Are you aware that the medical incubator was invented by a Filipino?

Her name is Fe del Mundo. The medical incubator has saved countless of premature infants all around the world. Erythromycin was invented

by Dr. Abelardo Aguilar. This medicine has continuously saved millions of lives who are allergic to penicillin.

The video phone, which is the precursor of the smart phones that we have today, was invented by Gregorio Zara. Many types of computer microchips were invented by Diosdado Banatao. Without his invention, you would be looking at your computer filled with ones and zeroes and not the artistic graphics that you see today. Dr. Rodolfo Aquino invented nine specific breeds of rice for the International Rice Research Insti-

tute. His discoveries helped prevent famine in many parts of Asia, because these rice breeds can adapt to diverse climate and soil conditions.

Many Filipino inventors have no financial capacity to commercially produce their inventions. In line with this, the government provides incentives to inventors. One incentive is found in Section 6 of Republic Act (RA) 7459, on Inventors and Invention Incentives Act of the Philippines, which states that any income derived from the commercialization of technologies and inventions are exempt from all kinds of taxes, during the first 10 years from date of first sale, without any qualification.

The Commissioner of Internal Revenue, unfortunately, has issued many rulings interpreting this

incentive as limited to income derived by the inventor from the sale made personally by him. In other words, the inventor of the incubator should commercially produce and sell these incubators by himself. He cannot create a sole proprietorship because it will have a different company name. He cannot create a corporation to massively produce his inventions and commercialize them in a large scale, nor partner with someone who has the capacity to fund the commercialization of the invention. For many years, this has dampened the resolve of the inventors, because they are being deprived of the incentives that are clearly given to them by law.

Worse, the country does not benefit from new Filipino inventions because the cost of commercialization is defined by the commissioner as a burden that the inventor must solely bear. If the commercialization of the invention is done through another vehicle, a sole proprietorship, partnership, or corporation, the tax-exemption incentive is lost.

After a long wait, the Court of Tax Appeals (CTA) recently released a landmark decision where it ruled that what RA 7459 exempts is the income derived from the sale of the invention. Thus, any income derived by an entity or a person from the sale of the patented Filipino products shall be exempt from the payment of income tax. The court emphasized that the

China sometime in the early 1900s. Just like most Chinese immigrants who migrated to the Philippines at that time, they struggled with language and cultural differences. My father, Salvador, and his siblings struggled financially when they were young, but all of them turned out to be professionals through hard work, discipline and a healthy dose of feistiness, audacity and bossiness (FAB). But this article is about one Chinese immigrant whose FAB made her a success story worth sharing. She started with nothing, as her parents were poor.

She and her siblings were orphaned at a very young age. She waited on tables, sold various merchandise and even fetched water for a fee for her neighbors. She and her siblings also ventured into all kinds of revenue-generating activities, such as selling rice cakes and translating comic books from English to Waray.

Throughout these trying times, she persevered. She eventually became a lawyer but she is famous for starting a business empire, which includes aquaculture, electronics, real estate and housing.

Fate brought her to my father’s office sometime in 1988 when my father was the commissioner of the Bureau of

Customs. During one meeting attended by several brokers, importers and customs officials, she left a lasting impression on my father when she bravely asked a question nobody dared to ask him: “Why are things so slow in Customs?”

Being a newbie in the bureau, my father, nonetheless, gamely responded to her query as best as he could. Yet, she still persisted and asked my father a series of similarly bold questions until she was satisfied with the information she got.

Her bravado, however, left the other participants aghast. As she later narrated to me, my father as chairman of that group eventually appointed her to be the vicechairman to preside over future meetings. In the end, these meetings allowed Customs officials and private stakeholders to exchange ideas and suggestions to improve the services of the bureau. Some of these reforms are reportedly still in place in the Customs today. This feisty lady is known in the business world as Elena Lim. I am proud to call her Ninang.

When government decided to embark on the People’s Car Program in the late 1980s, she literally fought the bureaucrats at the Board of Investments to give the Filipinos the opportunity to

buy a KIA Pride as an alternative to the more expensive Japanese cars. Roadblock after roadblock did not discourage her. She even took the chance of discussing the matter to then-President Corazon C. Aquino in a chance encounter onboard an airplane. Denied many times, she argued passionately in many fora, including congressional hearings, until she “won” and got what she wanted, not for her business, but for the Filipino people. While some consumers still opted to buy from Japanese carmakers who lowered vehicle prices by P50,000, the real winner was the public.

Elena Lim and her FAB nature secured the victory for the consuming public!

Together with her husband Joseph, Ninang Elena raised and “trained” four children—Susan, David, Jason and Vincent. Ninang Elena’s brood have, in one way or another, exhibited the FAB attitude in their business dealings as they continue to run the company that my Ninang Elena started with limited finances, but with dogged perseverance coupled with integrity.

Elena Lim has written books on leadership, integrity, management and entrepreneurship, the latest of which was I Am

Atty. Irwin C. Nidea Jr.

Tax law for business

F

ilipinos are arguably the most creative and innovative people in the world. Despite very limited resources and support from the government, Filipino ingenuity always finds a way to excel.

The Filipinos’ diverse and, sometimes, harsh experiences give them a fresh and unique perspective to fill in the needs of their fellowmen through inventions and technologies that can change lives and even the world. Most of these inventions are part of our everyday lives.

sins?” Jesus clarified that her faith is the basis of her love, as demonstrated by her contrition. She came having heard of Jesus’ compassion to sinners; her repentance preceded her forgiveness and, as in the parable, she loves much because she has been forgiven much.

Alálaong bagá, our justification is not something we earn from God, but what God freely gives us. Our moral life and fidelity to God is not the cause of our communion with God, but its result. We live lives of goodness not to persuade God to love us, but because God has already loved us and shown us clemency through Jesus Christ. Our reconciliation to God is granted us through faith in Christ. We are forgiven because we are loved, not because we love first.

Repentance precedes forgiveness, but even repentance is a gift from God. We cannot repay divine mercy, but our gratitude can be expressed through joyous service to others as did the several women mentioned last in the gospel. Forgiven and reconciled, we can be reconcilers and forgiving to others.

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

law exempts any income on the sale of the Filipino invention, regardless of how and who sold the same.

In order to develop an invention into a technology, one must have the financial capability to do so, as this requires a large amount of capital.

Thus, the inventor may opt to establish a corporation, which will enable him to obtain the required capital to develop such technology.

The intent of the law is to “promote, encourage, develop and accelerate commercialization of technologies developed by local researchers or adapted locally from foreign sources, including inventions.” Since the intention of the law is now justified by the recent CTA decision, hopefully, the new breeds of Filipino inventors will be encouraged to fully utilize their potential. Any income they derive from the commercialization of their invention, by any vehicle, is exempt from income tax.

What I Am (Politically Incorrect). I think the book shows how being FAB can be a good thing. In her many endeavors, she never accepted “no” for an answer. She simply does not quit. So, is a woman with FAB like my Ninang Elena a bad person?

Nah, our country needs people like her, especially when government employees fail to provide the service they swore to provide to the public. For me, I would rather be called bossy or bitchy, if only to fix the rotten system in the bureaucracy and get rid of “bad guys” in the government, rather than accept the status quo.

To a certain extent, I think the “bossiness” of President-elect Rodrigo R. Duterte has shocked and awed millions of Filipinos who have been calling for major change, that is, honest to goodness correction of serious flaws in government processes and drastic removal of persistent evils in society. Time will tell how President Duterte and his troopers will accomplish this. But we should help in our own little way. Everything is achievable if we care to dare. If my Ninang Elena, who consistently cared for our society and dared to do things differently, is considered bossy or bitchy, then let’s all be like her for our country!

The author is a partner of Du-Baladad and Associates Law Offices (BDB Law), a member-firm of World Tax Services.

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at irwin.c.nideajr@ bdblaw.com.ph or call 403-2001 local 330.

2nd Front Page BusinessMirror

A12 Thursday, June 9, 2016

Alvarez vows to push regular Ledac meeting

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By Jovee Marie N. dela Cruz

@joveemarie

resumptive House Speaker and Partido Demokratiko PilipinoLakas ng Bayan (PDP-Laban) Rep. Pantaleon D. Alvarez of Davao del Norte on Wednesday said he would ask President-elect Rodrigo R. Duterte to regularly convene the LegislativeExecutive Development Advisory Council (Ledac) to effectively convey to the 17th Congress the next administration’s economic and legislative agenda.

Alvarez said the council is mandated to determine and recommend socioeconomic development goals and to integrate legislative agenda with the national development plan.

“As soon as President Duterte takes over and calls for the first Cabinet meeting, we will request that Ledac be convened,” Alvarez

told the BusinessMirror.

“We still don’t have economic agenda for the 17th Congress. I am waiting for guidance from the Executive branch. I want to wait for the Ledac meeting to identify our priorities,” he added.

Alvarez, who reportedly has the votes to become the next

When you revise the Constitution, you have to change everything.”—Alvarez

Speaker of the House of Representatives, earlier vowed to push for a regular Ledac meeting in the 17th Congress.

Alvarez said Ledac is needed for a smooth and early passage of the priority measures of the next ad ministrat ion, add ing , “ We also need them [Ledac meetings] for a smooth relationship between the Legislative and Executive [branches of the government].”

Alvarez has said the House, under his leadership, will prioritize a number of measures—changing the country’s form of government from republican to federalism, the revival of the death penalty and amendments to the Juvenile Justice Welfare Act, or the so-called Pangilinan law.

During the Aquino administration, only two Ledac meetings were

convened. Republic Act 7640, or the Ledac law, states the council should meet at the least on a quarterly basis.

Lawmakers and members of the Executive branch draw up a list of priority measures in Congress during the Ledac meetings. The council is chaired by the president.

Also participating in the Ledac meetings are the vice president, the Senate president, the House speaker, seven Cabinet members, three senators, three House members and one representative each from the local governments, the youth and the private sector.

Cha-cha

Meanwhile, Alvarez said he is open to suggestions of lifting the economic provisions of the 1987 Constitution in the 17th Congress.

See “Alvarez,” A2

www.businessmirror.com.ph

CHINA STEEL EXPORTS RISE, DEFYING JAPAN, U.S. CALLS FOR CURBS S

teel exports by China, which produces half the world’s supply, increased in May after a surge in domestic prices boosted output, defying calls from competitors for the nation to rein in shipments and curb excess capacity.

The country shipped 9.42 million metric tons (MMT) overseas, 3.7 percent more than April and 2.3 percent higher than a year earlier, according to customs data on Wednesday. Exports expanded 6.4 percent to a record 46.3 MMT in the first five months of the year.

Sales soared after output advanced to a daily all-time high in April in response to a jump of as much as 56 percent in prices.

“Chinese exports will stay elevated because of higher production and also thanks to expanding demand for building materials in places, such as Southeast Asia and Africa,” Wei Yingsong, an analyst at Mysteel Research, said by phone from Shanghai after the data were released.

A credit-fueled property boom and government stimulus-lifted demand in China earlier this year,

sparking a speculative frenzy that drove up steel rebar futures and boosted mills’ profitability to the highest since 2009. A government clampdown on speculation cooled the market in May, prompting the biggest loss since trading in rebar futures started in 2009.

The record expor ts have prompted protests from countries whose mills are suffering from the global glut. Japanese Prime Minister Shinzo Abe said in May that China wasn’t doing enough to tackle oversupply and that government support was distorting markets. US Treasury Secretary Jacob J. Lew said this week that China hasn’t yet implemented policies to deal with excess capacity.

Shipments are running at a higher level than last year when they jumped 20 percent to 112 MMT, more than production in Japan, the second-biggest supplier. That’s spurred protests from Europe to the US and hikes in import tariffs, as well as forcing Tata Steel Ltd. to put its UK operations up for sale.

See “China,” A2