TCR Volume 2 Issue No 34 by The CenSEI Report

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Volume 2 - Number 34 • September 17-30, 2012

NATION

Strategic Analysis and Research by the

Center for Strategy, Enterprise & Intelligence If a Cabinet member who snubs my hearing is presented for confirmation this Wednesday, I will attend the confirmation hearing to cast a veto ~ Senator Miriam Defensor-Santiago, threatening Cabinet members who snubbed her hearing on resigned interior undersecretary Rico Puno

If you summon my alter ego, surely he has the right to know what he will be asked, so he can prepare and not go there and say, ‘I don’t know’ ~ President Benigno Aquino III responding to Senator Santiago’s threat (translated from Filipino).

3 Cracking Down on the Cyber-Crooks

With the signing of the Cybercrime Law in mid-September, it looks to be a good first step in the war on Internet fraud. Now throw the book at the crook • The soaring cost of online fraud: With losses at computer speed, they add up fast • How not to get e-robbed: Do’s and don’ts of transaction safely online

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11 Balancing the Powers of Asia

From Asean’s ministerial meeting in Jakarta to the Apec summit in Vladivostok, America and China are wooing the nations of Asia. Whose side will the region take?

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19 If You Build It, They Will Come

For tourist arrivals to reach the heights of our Asian neighbors, what we need is not more fun, but more infrastructure in the Philippines • How tourism drives growth: The value of the traveler’s dollar • Trip guides in white coats: The medical tourism industry tries harder

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29 How Smartphones Can Uplift the Poor

Mobile technology is bringing economic power to communities across the globe • Phoning up prosperity: Talk and text for inclusive growth POINT & CLICK

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37 Breathing May Be Hazardous to Your Health

Diesel exhaust, gasoline fumes, isopropyl alcohol, even caffeine and carrageenan — a host of everyday things are reported or said to be cancer-causing. Let’s separate the real carcinogens from the rumormill variety

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Center for Strategy, Enterprise & Intelligence provides expertise in strategy and management, enterprise development, intelligence, Internet and media. For subscriptions, research, and advisory services, please e-mail report@censeisolutions.com or call/fax +63-2-5311182. Links to online material on public websites are current as of the week prior to the publication date, but might be removed without warning. Publishers of linked content should e-mail us or contact us by fax if they do not wish their websites to be linked to our material in the future.

When Old Is the New New One big difference between Asia and America is how each continent views tradition and innovation. For Asians born into centuries-old cultures and societies, respect for the old, whether personages, places, perspectives, principles or practices, is, well, as old as Adam. But America was born not of kingdoms and empires established for ages, but freedom- and prosperityseeking settlers fleeing precisely those artifacts of age-old civilizations. So don’t expect Americans to have unflinching reverence for tradition. This week, blasts from the past tussle with the up and coming future. In the World section, ironically, it is top gun America facing off against fast-rising China in the contest to make friends and influence nations in Asia. But it’s far from established Washington vs. brash Beijing, but the very opposite. After decades of supporting the Association of Southeast Asian Nations (Asean), China finds its neighborly ties threatened by erstwhile absent America trying to get back what the Chinese see as U.S. hegemony. Old is the new new, too, in Business’s tourism and Nation’s cyber-fraud articles. The former asks what it would take to reach the Aquino administration’s goal of 10 million tourist arrivals by 2016. The key to this new target is an old one: infrastructure. The Philippines needs more flights, airports, roads, hotel rooms and other facilities serving both favorite and upcoming destinations. As for cyber-fraud, it helps to have a new law against high-tech crimes, but to win the battle against e-robbery, we need oldfashioned law enforcement to catch the browser-armed crooks. Poverty, of course, is among the oldest scourges of humankind, up there with famine, pestilence and war. Indeed, being poor often leads to going hungry, getting sick and waging war. To address poverty’s ancient woes, Technology proposes to harness the newest of gadgetry: smartphones. As efficient vehicles for informing, instructing and inspiring underprivileged communities, mobile communications brings new hope to millions mired in generations of deprivation. Last item in our old-is-new issue is the Health & Lifestyle story on everyday things that could cause cancer. The rise in malignancy deaths, like increasing heart disease, hypertension, diabetes and other chronic ailments, has come with Asia’s new affluence. And as with many such conditions, lifestyle is a top health factor. Plainly, if a product breeds tumors, it’s best to do with less or none of it. That may sound like new advice in today’s have-it-all era, but it’s plain, old common sense. Just ask the 95-year-old during her daily tai chi at the park.

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I Was E-Robbed! The Battle Against Cyber-Crime The Philippines is fast becoming a safe haven for transnational cyberfraud rings, and the laws need to keep up By Tanya L. Mariano

STRATEGY POINTS Weak laws against cyber-crime and inadequate technical capability of local police make the Philippines an attractive base of operation for transnational cyber-fraud rings Southeast Asia will become more vulnerable to cyber-attacks because of rising incomes and growth of online banking services, predicts Kaspersky Lab Recent enactment of Cybercrime Prevention Act of 2012 augurs well for the fight against cyber-fraud

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he digital technology that enables organized crime groups to take advantage of unsuspecting victims are growing in sophistication and accessibility, and the capability of law enforcement officials and existing legal tools are not enough to stop perpetrators of cyber-fraud. On August 23, Philippine authorities raided 20 residential units across Quezon City, Marikina, Cainta, Manila, and Antipolo and rounded up 357 foreign nationals, mostly Taiwanese and Chinese mainland citizens, involved in cyber-fraud operations targeting Chinese, as reported in The Philippine Star. According to Criminal Investigation and Detection Group (CIDG) Deputy Director for Operations Keith Singian, the group was using the Internet to make calls to China and pretend to be members of the

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Wanted: Tougher cyber-crime laws

Chinese police. The cyber-criminals would then tell unsuspecting Chinese victims that their (victims’) bank accounts were being used for money laundering and other activities that fund terrorists, and instruct them to transfer their money to a “safe account.” Most of the victims agreed to transfer their funds to the bank account the suspects provided for fear of sanctions from police for non-compliance, Singian added. The suspects face charges of violating the Access Devices Regulation Act of 1998. If found guilty, the suspects can either be charged with misuse of telecommunications technology to commit fraud and imprisoned for anywhere from six to 20 years, or, as aliens, they can be deported to their home countries. As of Sept. 14, the suspects in the country’s single biggest cyber-crime bust were still in the Philippines, as President Benigno Aquino III has reportedly requested that their case be reviewed further to determine the extent of their criminal liabilities, reports GMA News. The group was originally scheduled to be deported on Sept. 12. This incident, plus the string of other cases involving foreign nationals who set up their base of operations in the Philippines, revived fears that the country is becoming a safe haven for cyber-criminals, and highlights the urgent need for tougher local anti-cybercrime laws. With the recently enacted Republic Act 10175, the Cybercrime Prevention Act of 2012, signed into law by President Benigno Aquino III on Sept. 15, as reported in the Philippines Daily Inquirer on Sept. 15, the Philippines could stand a better chance of fending off foreign cybercrime groups and making the country’s cyberspace safer for everyone. Per the Inquirer report, Republic Act 10175 criminalizes content-related offenses such as cybersex, child pornography, and libel, as well as offenses against the confidentiality, integrity, and availability

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of computer data and systems, such as illegal access, illegal interference, data interference, system interference, misuse of devices, cyber-squatting, and computer-related forgery and fraud. The law also reportedly carries penalties of imprisonment from one to six months (for unsolicited communication) to six to 12 years (cyber-sex) and fines from ₱50,000 to ₱250,000 (unsolicited communication) and ₱200,000 to ₱1,000,000 (cyber-sex).

Philippines a cyber-crime haven? In July,

the CIDG busted a South Korean cyber-crime group that was allegedly hacking local mobile service provider Globe Telecom’s International Gateway Facilities in order to reroute international calls, according to an Aug. 1 Business Mirror report. Just a week earlier, the CIDG arrested another Korean national for allegedly hacking similar facilities of another telecommunications firm, Smart Communications. The suspects were arrested in successive raids of buildings in Pasig City, Manila, Mandaluyong City, and Malate and charged with violation of the access devices law. Also in July, a joint effort by the Taiwanese Investigation Bureau and the Philippine National Bureau of Investigation caught another phone and Internet fraud ring run by a Taiwanese man out of Angeles City in Pampanga, per a July 21 Central News Agency report posted on Intellasia. The groups also targeted mostly Chinese nationals and impersonated local officials, law enforcement officers, and customer service personnel to trick the victims into giving money to the crime ring. The raid on the two mansion rented by the cyber-criminals for ₱65,000 a month yielded telecommunications equipment, scam guide books, and lists of fraud victims.

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In November last year, Philippine authorities and the Federal Bureau of Investigation arrested four Filipinos running a hacking operation that targeted customers of U.S. telecommunications company AT&T, according to a Reuters report. According to the CIDG, the suspects were being paid by a militant group based in Saudi Arabia to divert money from the scams to the group. According to Police Senior Superintendent Gilbert Sosa of the CIDG, the hackers were being funded by a group originally led by Pakistani Muhammad Zamir, a member of Jemaah Islamiah, a Southeast Asian group with ties to al Qaeda.

Weak laws, insufficiently trained police attract cyber-criminals. An Oct. 2011

Inquirer news report quoted CIDG Director Chief Superintendent Samuel Pagdilao Jr. as saying the Philippines has become a haven for “transnational organized crime syndicates involved in cyber pornography, cyber sex dens, illegal online gambling, credit card fraud and identity theft due to weak laws against cyber crimes and the poor technical know-how of law enforcers.” Pagdilao’s comments came after the October 4 arrest of a Korean national hiding out in Batangas. Shin Un-Sun, 38, was wanted for large-scale Internet fraud by Interpol and Philippine and South Korean authorities and, at the time of the arrest, was caught breaking into a corporate databank using his laptop. According to Pagdilao, the arrest revealed that “Korean cyber-crime syndicates are operating almost unhampered” in the country. He called on the Philippine National Police (PNP) for support in boosting the CIDG Cybercrime Unit’s organizational and technical capability, and asked Congress to pass the proposed cyber-crime prevention law.

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CIDG country report on cyber-crime.

Existing laws have been found to be inadequate in preventing cyber-criminals from setting up shop in the Philippines. According to the “Country Report on Cybercrime: The Philippines,” which was prepared by the CIDG’s Sosa and presented at the 140th international training course of UNAFEI (United Nations Asia and Far East Institute for the Prevention of Crime and the Treatment of Offenders) in Sept.-Oct. 2008, the country has several laws that cover cyber-offenses but none that can completely deter cyber-criminals. Republic Act 8792, also known as the Electronic Commerce Act of 2000, only covers online crimes such as the introduction of viruses, copyright violations, and hacking. Republic Act 8484, or the Access Devices Regulation Act of 1998, on the other hand, regulates the use and issuance of access devices and prohibits fraudulent acts related to such devices (access devices are defined in RA 8484 as “any card, plate, code, account number, electronic serial number, personal identification number, or other telecommunications service, equipment, or instrumental identifier, or other means of account access that can be used to obtain money, good, services, or any other thing of value or to initiate a transfer of funds, other than a transfer originated solely by paper instrument”). According to the CIDG’s country report, RA 8792 fails to address all forms of cyber-crime as enumerated in the Budapest Convention on Cybercrime of 2001, which include “offences against confidentiality, integrity and availability of computer data and systems which include illegal access, illegal interception, data interference, system interference, misuse of devices; computer-related offences which include computer-related forgery and computer-related fraud; content-related offences such as child pornography; and offences related to infringement of copyright and related rights.”

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Wanted: Tougher cyber-crime laws

The Budapest Convention, which was prepared by member States of the Council of Europe as well as Japan, South Africa, the U.S., and Canada and entered into force on July 2004, is the only binding international treaty that aims to address computerand Internet-related offenses, according to the Council of Europe website.

crime cases. According to an April press release from the PNP Public Information Office, the PNP has standardized the procedure of digital forensic examination, which refers to the recovery and investigation of evidence found in digital devices such as computers and mobile phones.

The good news is that the PNP is stepping up efforts to streamline the investigation of cyber-

“The conduct of more reliable and efficient digital forensic examination is standardized to

The cost of cyber-crime According to Symantec’s “Cybercrime Report 2011,” the total cost of cyber-crime – in terms of time lost by victims and actual amount of money stolen or spent on resolving cyberattacks – has reached $388 billion, making it bigger than the global black market for cocaine, marijuana, and heroin, and more than 100 times the annual expenditure of the United Nations Children’s Fund. The study, which surveyed people from 24 countries, also found that computer viruses or malware are still the most common and most preventable form of cyber-crime, followed closely by online scams, then phishing. For the first time, the report also found that 10% of online adults encountered cyber-crime on their mobile phones. For a brief history of cyber-crime, this presentation by American network security firm RSA looks at some of the major developments in the world of online fraud, from the earlier forms of cyber-attacks to the newer threats facing Internet users today.

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Graphic from “Cybercrime Report 2011,”

Graphic from slideshow presentation, “A Decade of Fraud and Cybercrime,” RSA

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highlight the PNP’s effort to alleviate transnational and cyber crime in every community. And more so, the system will assure the safety and security of the public in this modern day innovation,” the agency said in its press release.

Cybercrime Prevention Act of 2012. Now that President Aquino has finally signed the Cybercrime Prevention Act of 2012, transnational criminal organizations may think twice before coming to the Philippines.

In the wake of the recent arrest of 357 foreign nationals, there had been renewed calls for the enactment of the proposed Act. According to an August press release on the Philippine Senate website, Senator Edgardo Angara says, “It was fortunate that the illegal activities of the cybercriminals already fall under some of our existing laws. But there is a wide range of other cybercrimes – like hacking, identity theft, phishing, data interference and cyber prostitution – that has yet to be covered.”

Protecting yourself from cyber-fraud While users can be rendered defenseless in the face of highly sophisticated cyber-attacks, there are some things you can do to make it harder for cyber-criminals to take advantage of you. Here are some tips from the U.S. Federal Bureau of Investigation: • Turn on your firewall. A firewall helps keep hackers out of your computer. Software firewalls may be sufficient for single computers, while hardware routers usually provide firewall protection for multiple computers connected to the same network. • Keep antivirus, antispyware, and operating system up to date. Get antivirus and antispyware only from trusted sources and be careful of ads on the Internet offering downloadable antispyware programs as these may actually contain spyware or other malicious software. • Think before you download. Avoid opening e-mail attachments from suspicious sources. • Do not leave your computer on for long periods of time. Turning it off effectively cuts an attacker’s connection to your network. Kaspersky Lab also warns against responding to e-mail messages that ask for personal information as well as providing personal details through a link you received through e-mail. Also look out for spelling errors and other signs that seem to indicate that the e-mail is a phishing attempt. For instance, official e-mails from banks will never ask for your account information and will likely not contain exclamation marks or salutations such as “Greetings.”

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News & Strategy Alerts Nation He adds, “We need to give our law enforcement agencies not just the authority but also the capacity to tackle this new problem. And we need to do so fast as cybercrimes grow more sophisticated and complex along with the evolution of technology.” Angara is the main proponent of the Act, which will establish “a legal framework for the detection, investigation, apprehension, prosecution and prevention of cybercrimes.”

Rise in cyber-attacks on Southeast Asians seen. According to a January Inquirer news report,

Russian Internet security firm Kaspersky Lab warns that Southeast Asia will be among the regions most vulnerable to cyber-attacks, as criminals will be drawn to the growth in incomes and the rise in usage of online banking services in the region. In its 2012 Cyberthreat Forecast report, Kaspersky predicts, “In 2012, attacks on online banking systems will be one of the most widespread methods used to steal money from users. South-East Asia, China and East Africa are particularly at risk.” Because of the development of local e-payment and banking services and the rise in standards of living in Asia, Kaspersky expects an increase in the number of attacks on local banks via phishing and Trojan programs. As the region becomes more susceptible to attacks from cyber-criminals, it becomes all the more urgent for the Philippine government to properly implement the Cybercrime Prevention Act and prioritize the enhancement of the technical capabilities of the PNP’s Cybercrime Unit. Aside from helping prevent cyber-crimes in general, a strengthening of local Internet laws could also make the country more attractive to multinational companies looking to outsource IT-related services. Increased cooperation among Asian countries in the fight against cybercriminals would also be a step in the right direction.

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CCT expands to cover the homeless Government’s conditional cash transfer program has been expanded to include street children, homeless people, and displaced families, among others Homeless beneficiaries are harder to validate, requiring more stringent monitoring of the program by the government and the public as well The government’s centerpiece anti-poverty program has been expanded to include those who have made the streets their home. The “modified CCT” or Conditional Cash Transfer program will now cover street children including homeless families, as well as other beneficiaries like indigenous people’s migrant families, displaced families due to manmade and natural disasters, and others. With the expanded program expected to benefit 50,000 families, government, particularly the Department of Social Welfare and Development (DSWD), has sliced into its additional target of 800,000 household-beneficiaries next year. The increase in targeted beneficiaries corresponds to a hike in the 2013 proposed budget for CCT of ₱44.25 billion from ₱39.44 billion this year. There are important issues raised by the expansion of the CCT program, linked once again to the inherent difficulty of implementing and monitoring such an extensive cash

Finding shelter with the dead

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transfer program. In its 2010 annual audit report of DSWD, the Commission on Audit (COA) already called attention to discrepancies and double entries on the list of CCT beneficiaries, as well as failure to validate data, among 26 observations and recommendations. More recently, Philstar.com cited a 2011 COA audit report on the Autonomous Region of Muslim Mindanao (ARMM), finding that some beneficiaries of the program “did not meet the criteria for eligibility.” DSWD says that the COA findings have since been addressed, but this remains to be seen in the 2011 COA audit report. Interestingly, the COA website does not yet display its 2011 report on DSWD – which would have shown findings on CCT -- but does so for the department’s attached agencies, at the time of this publication. The 2011 audit report on ARMM cited above is also missing from the website. Currently, the DSWD proposed budget for 2013, along with other departments, is undergoing Congressional deliberations. Implementation issues can be expected to compound under the modified CCT. Without questioning the necessity of helping the new beneficiaries, including them into the CCT program will make implementation and monitoring of the cash transfers even more problematic. Because these beneficiaries lack permanent homes, it would be harder to validate whether listed beneficiaries are real or fictitious. Drop-outs from the program at various times of implementation may be claimed as well to throw off monitoring or validation.

beneficiaries that might make them less amenable to structured interventions. They require more handholding and careful monitoring. Although the World Bank, in a presentation of its Impact Evaluation on CCT, says that the program is “on track,” the important benefits of cash transfers – e.g increased productivity of beneficiaries -- can only be determined after many years of sustained implementation. Until then, issues such as encouraging wrong behavior -- like pawning CCT cards and laziness – will continue to be raised against the program. In sum, government should institute more stringent monitoring and validation of the modified CCT. But, with the coming elections and fears that CCT funds will be diverted for political ends, the public must carefully guard over the program’s implementation as well.

Aquino’s record satisfaction rating

There is also the issue of ensuring adherence to conditionalities. According to the DSWD, beneficiaries of the modified CCT has to observe weekly and then monthly attendance to Family Development Sessions, family counseling sessions, and attendance to schools, among others. Street children and homeless families have an entirely different situation and predisposition from “regular”

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The record public satisfaction rating of President Aquino may be attributed to the death of Sec. Jesse Robredo, the heavy monsoon rains, the impeachment of Chief Justice Corona, and the 2012 SONA The latest SWS survey should not make the Aquino administration complacent, but should challenge government to deliver genuine good governance, economic and institutional reforms President Benigno Aquino III’s public satisfaction rating reached a record high according to the latest survey of the Social Weather Stations. The August 2427 poll showed Aquino getting a net satisfaction rating

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of +67 (“very good”), 25 points up from his +42 (“good”) rating in May. The latest survey results were promptly welcomed by the Aquino administration. In an official statement, Presidential Spokesperson Edwin Lacierda said, “The consistently strong numbers affirm the President’s mandate for change; they are tangible indicators of the people’s support for the difficult yet necessary reforms the President has championed since day one.”

that Aquino and his partymates were accused of electioneering in the midst of disaster. On the other hand, Robredo’s tragic death was treated prominently in media and occasioned an outpouring of grief and support to his family and to the government as well. Corona’s impeachment, meanwhile, was also widely viewed as a victory for Aquino, who vocally supported the former chief magistrate’s ouster from office. One other significant event – which analysts may have missed, is the 2012 State of the Nation Address (SONA) of Aquino just on the third week of July. The SONA, an event widely covered by media, is an occasion for the President to take to the rostrum to emphasize his administration’s positive efforts, and none of the negative. So far, Aquino’s public satisfaction ratings have always gone up following the delivery of his national address.

Graph from “Third Quarter 2012 Social Weather Report,” Social Weather Stations

BusinessWorld’s report on the survey, on the other hand, cites analysts saying that Aquino’s “handling of recent events” could have raised his profile. Among events recalled were Local Government Secretary Jesse M. Robredo’s death, the floods caused by heavy monsoon rains, and the impeachment of Chief Justice Renato C. Corona. Relief operations personally led by the President during the flood may indeed have had some uplifting effect, although not very significant, considering

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What are the chances the same high public satisfaction ratings of Aquino will be sustained in the next surveys? Not very promising, unless his administration starts delivering on truly popular reforms. To start with, his ratings are already very high and would have more room to go downwards. Also, it is more difficult for a President to please the public on his third year in office. By this time, the euphoria of the elections has already worn off, and the public has become more impatient for genuine reforms and less forgiving of any governmental misstep. The latest SWS survey then should not lead the Aquino administration into complacency. It should challenge government to deliver genuine good governance, economic and institutional reforms that would truly uplift the lives of the people.

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To Hedge or Not to Hedge As tensions rise, America and China woo Asia

By Ricardo Saludo

STRATEGY POINTS As Apec declares unity as key to prosperity and leadership, America warns that territorial disputes can hamper growth and spark war After a decade of Asean-style hedging among big powers, the Philippines embraces the U.S. and takes on China. Should Asean change course, too? Beijing backed Asean against Hanoi’s aggression, financial contagion and global recession. Is it now the enemy?

Secretary-General Surin Pitsuwan welcomes U.S. Secretary of State Hillary Clinton at Asean Secretariat Asean

he messages couldn’t be more different. At the 20th Asia Pacific Economic Cooperation (Apec) summit in Vladivostok on September 8-9, the gathered leaders from across the ocean spoke of oneness “to strengthen the region’s prosperity and leadership in the world economy.”

The 2012 Leaders’ Declaration, with the conference theme, “Integrate to Grow, Innovate to Prosper,” called for freer trade, greater transparency, more fiscal responsibility and disaster prevention, green industries and accessible education, and more secure food and supply chains. And not a word about frictions between countries. Representing absent U.S. President Barack Obama, Secretary of State Hillary Clinton sang a different tune from the summiteers. As reported by Agence France Presse, she told the forum: “Now is the time for everyone to make efforts to reduce the tension and strengthen the diplomatic involvement” — a widely perceived reference to territorial disputes in the South and East China Seas. She had much the same message in her meetings with foreign ministers of the Association of Southeast Asian

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Nations in Jakarta, and with Chinese Foreign Minister Yang Jiechi in Beijing the week before Apec. “We believe the nations of the region should work collaboratively together to resolve disputes without coercion, without intimidation, without threats, and certainly without the use of force,” the U.S. Secretary of State told media after the Jakarta discussions. She also urged Asean to forge a binding code of conduct to prevent incidents and reduce tensions among rival claimants in the South China Sea. As if three repetitions didn’t make the point clear enough, a fourth came from Clinton’s defense counterpart. As BBC reported, Secretary Leon Panetta began his Asian tour in Tokyo on Sunday with a warning: “I am concerned that when these countries engage in

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provocations of one kind or another over these various islands ... a misjudgment on one side or the other could result in violence, and could result in conflict. And that conflict would then have the potential of expanding.” Chinese Foreign Minister Yang downplayed regional worries, while insisting there was “plentiful historical and jurisprudential evidence for ... sovereignty over islands in the South China Sea and adjacent waters.” In his Sept. 5 press conference with Clinton in Beijing’s Great Hall of the People, Yang said China and Asean members agree to “work towards the eventual adoption of a code of conduct.” He also added that “freedom and safety of navigation in the South China Sea is assured.”

America’s Pacific Pivot. So who’s got the right

story: war-worried Washington or becalming Beijing, whose foreign minister said further about the region’s waters: “There is no issue currently in this area, nor will there ever be issues in that area in the future.” In fact, those two contradictory perspectives are the very messages America and China are propagating in their decades-old bid to build spheres of influence, if not outright alliances, among Asian nations, especially those in Asean.

Hawkish elements in China’s state and military-linked media have accused the U.S. of “using the disputes ... to justify an enhanced military presence in Southeast Asia,” reports Michael Swaine in his 2012 essay, “Chinese Leadership and Elite Responses to the U.S. Pacific Pivot” for the Carnegie Endowment for International Peace, a Washington-based think-tank. The Pivot is the Obama administration’s policy shift to refocus U.S. geopolitical and security strategy on Asia, including 60% of its naval assets, as outlined in the Pentagon’s Defense Strategic Guidance published in January. Those unofficial but Beijing-influenced articles also contend that Washington “is using Manila to strengthen its control over the region and to contain China.” Whether that view is valid, the U.S. has certainly increased military activities in Southeast Asia, especially with the Philippines and Vietnam, as maritime confrontations with China intensified in recent years. Armed Forces International cited those tensions as backdrop for U.S.-Vietnam naval exercises in April. U.S. Navy ships now get repaired in Vietnam shipyards, including the old American base at Cam Ranh Bay. In June, reported World Politics Review, Panetta became

Photo and range of missiles reportedly being deployed in southern China: To protect its forces and allies, the U.S. plans anti-missile systems YouTube

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Vietnamese President Truong Tan Seng meets Chinese leader Hu Jintao at APEC: Isolating the Philippines? CNTV

the first American defense secretary to visit the facility since the Vietnam War ended 37 years ago.

The end of hedging. Equally dramatic is the

swing in U.S.-Philippine military cooperation. As De La Salle University professor Renato Cruz de Castro explains in “Between the Clawing Eagle and the Ascendant Dragon: The Demise of the Philippine Policy of Hedging,” the Aquino administration junked its predecessor’s decade-old policy of “balancing the major powers (United States, Japan, and China) in East Asia against each other to enhance he country’s national security goals” — as Asean has done. Today, U.S. military engagement in the Philippines has gone far beyond the narrow confines of counterterrorism assistance in Mindanao. Major naval vessels have docked in Subic, reports the Philippine Star, including three nuclear submarines this year, all with Tomahawk cruise missiles capable of carrying 200-kiloton atomic warheads more than 1,000 km — from Manila to southern China. A U.S. Navy vessel will also be repaired in the former American naval base, according to the Philippine Daily Inquirer. And in July, Reuters quoted President Benigno Aquino III saying that the Philippines might ask U.S. spy planes to help patrol disputed waters in the South China Sea. And if China is worried about the region ganging up on it, it won’t help to learn that Japan is giving the Philippines 12 armed patrol

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boats fitted with modern equipment. South Korea and Australia may also help, London’s The Guardian reported last month, and Washington plans to give two navy ships on top of the two coast-guard cutters it turned over to Manila some months ago.

Beijing the ‘bully.’ If America is allegedly exploiting

territorial confrontations to escalate its military deployment in Southeast Asia, China has certainly done much to give its neighbors, especially the Philippines, reason to cry “Uncle Sam!” As if Manila was not intimidated enough in confrontations over a Philippine-authorized research ship in the Spratlys and the arrest of Chinese fishermen in Scarborough Shoal, Beijing bared in July a plan to build a garrison in the Spratlys, according to Agence France Presse. In the same month came news in Chinese media about the deployment of a ballistic missile brigade in Guangdong Province (see picture and map, page 12) reportedly capable of hitting all of Asean, including the entire Philippines and northern islands of Indonesia. If that was supposed to dissuade countries challenging Beijing’s territorial claims, it also gave Washington the opening to offer anti-missile systems to its allies. Last month the Wall Street Journal reported that the U.S. plans “a major expansion of missile defenses in Asia.” While North Korea was the supposed focus on the planned anti-missile systems, they can just as well be used against Chinese projectiles. The initial plan is

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to install a second X-Band radar in a southern Japan island to supplement the first installation, also in Japan. And the U.S. is scouting for a site for the third X-Band somewhere in Southeast Asia. Since its navy won’t be a match for the Seventh Fleet for at least a decade, China would rely mainly on its ballistic missiles to counter the U.S. Navy in any future conflict, especially in the South China Sea, where fourfifths of its imported oil passes. But robust U.S. antimissile defenses could blunt the first salvo of Chinese projectiles, allowing air strikes against command and control sites to immobilize or blind many, if not most of China’s coastal rocket batteries.

Whither Asean? In this high-stakes military

machinations, where will Asean go? Or will it whither from divisive superpower politics? For the grouping’s leader Indonesia, the immediate concern is restoring its unity after the unprecedented failure to issue a joint communique at the end of its ministerial conference in July. Indonesian Foreign Minister Marty Natalegawa found Asean’s loss of common words “utterly irresponsible,” blogged the Voice of America. “Let’s keep it an exception. Asean continues to remain united, to be cohesive on all issues of common concern, not least and especially on the issue of the South China Sea.” That will take much diplomatic mediation by Minister Marty himself, who must smooth differences between Manila and Hanoi, on one hand, and Phnom Penh, on the other. Not to mention America and China: they are said to be using the Philippines and Cambodia, respectively, as proxies to push their agenda in Asean. Both big powers are now trying to get on the good side of Indonesia. Early last month Chinese Foreign Minister Yang swung through Kuala Lumpur, Jakarta and Brunei Darussalam. Minister Marty said in a Jakarta Globe report on The Irrawaddy site that Yang reported good

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progress in discussions with Asean on the Code of Conduct. Secretary Clinton meanwhile expressed full U.S. support for Indonesia’s mediating role, praising Marty and President Susilo Bambang Yudhoyono for their efforts to forge a common Asean position on the South China Sea.

Odd Manila out? Besides acknowledging Indonesia’s

stature in Asean, Beijing may also be moving to isolate the Philippines. At Apec, reported Agence France Presse, Chinese President Hu Jintao was unable to find time for Philippine President Aquino, but met with leaders of other rival island claimants, including Japan and Vietnam. Even Vietnamese President Truong Tan Sang, whose country has had skirmishes with China over disputed islands, had a full delegation sit-down with Hu, when both countries affirmed their commitment to resolve disputes peacefully.

Upon his return from Vladivostok on Sept. 9, President Aquino declared: “The leaders of Singapore, Malaysia, and Vietnam have extended their warm support to us... particularly regarding the talks on the West Philippine Sea,” according to news site Rappler.com. But the following day Singapore’s Foreign Ministry issued a denial: “we do not take sides ... PM Lee called on all claimants to exercise restraint and for disputes to be resolved peacefully and in accordance with international law.” If most of Asean may be reluctant to cross China, it may be more than just fear of the military and economic pressure it has put on the Philippines over their confrontations on the high seas. In fact, as several diplomacy scholars have pointed out, the Chinese have been good neighbors to Asean for more than two decades. By contrast, the Americans had pulled back for much of that time, prompting calls to reengage in Asia as late as 2006.

Making friends and influencing nations. In her 2003 paper, “China and Asean: Renavigating Relations

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Reuters Sept. 18 video on escalating Chinese protests against Japan over the disputed Diaoyutai/Senkaku islands

for a 21st Century Asia,” University of Delaware professor Alice Ba recounted the key stages of SinoAsean relations. She noted that since 1978, China has been supportive of Asean in major regional concerns. In 1978-89 they were de facto allies against Vietnam’s occupation of Cambodia. From 1990 to 1997, relations further improved, especially after Indonesia normalized ties with China, which had been frozen after the crushing by longtime strongman Suharto in 1960 of a Beijing-backed communist coup attempt. Rapport between China and Asean further intensified during the 1997 Asian financial crisis, when Beijing supported regional recovery and currency stability by not devaluing the renminbi, despite the huge loss in export competitiveness due to regionwide devaluations. This contrasted with the West’s strident lecturing and imposition of harsh emergency loan conditions. And in the past decade, China further buttressed ties through burgeoning trade, investment, development aid, and even military cooperation, as recounted by respected China expert Willy Lam in his 2005 article, “Beijing’s Strategy to Counter U.S. Influence in Asia.” Indeed, it wasn’t just in Asia, but all over the developing world. In his master’s thesis, “Influence

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— The New Weapon in the Battle for Southeast Asia,” U.S. Army Major Richard Manning noted that Beijing gave aid with no strings attached. He added: “It sought to cultivate relationships with countries that had poor relations with the United States. Today, the PRC still utilizes the same approach, but is now targeting U.S. allies in an attempt to undermine these relationships.”

While America was away. By contrast, the

United States has, for the most past, diminished in stature and engagement after the Vietnam War and even more so following the collapse of the Soviet Union in 1990. In his 2007 paper, “Does China seek to dominate Asia and reduce U.S. influence as a regional power?,” Georgetown University professor Robert Sutter recounted that America went through periods of lost confidence over the loss of South Vietnam in the 1970s and Japan’s economic rise in the 1980s. Then came the decade of disinterest in Asia as a Cold War arena amid Soviet decline, and Washington’s reluctance to engage with regional groupings for fear of its prerogatives as the sole superpower being curbed in international bodies. The war on terror brought the Americans back to a degree, mainly to recruit allies against

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To hedge or not to hedge

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the extremists. And after the 2008 U.S. financial debacle, America was too bogged down in economic and fiscal burdens to compete with China for regional influence. All that changed, of course, with the Pacific Pivot, spurred by the realization that the U.S. must regain clout in what will be the world’s largest economic region in the coming decades. So which will Asean side with — absentee America on the comeback to regain its past clout, or resurgent China, which has been largely supportive of its neighbors and is now poised to become the world’s largest economy and an even more formidable military power in the coming decade? In his 2007 paper, Professor Sutter argued that China would not dominate Asia, given some major weaknesses holding it back. Plus: “Most Asian governments maneuver and hedge against China’s rise, and they find a strong U.S. presence in Asia fundamentally important and reassuring.” In short, China won’t dominate because Asean will hedge. Five years later, at the 6th Berlin Conference on Asian Security this past June, the Georgetown professor summed up that the forum found no reason to drastically change the current U.S. strategy toward China: “a continuation of the wide ranging positive engagement along with carefully managed growing areas of economic, political and security competition.” Now if the United States continues to engage China pretty much along the same lines as it has done for years, what good reason is there for Asean to make a drastic shift in its decades-old big-power balancing act, possibly risking its all-important consensus and unity? Indeed, why did Manila change gear from the hedging tack, now wanting the rest of Asean to do the same? Go figure.

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APEC 2012: Issues and Priorities Weighing heavily on the prospects of economic cooperation, are unresolved territorial disputes involving many of its member-countries To counter apparent moves to isolate the Philippines in the South China Sea issue, the Philippine government must reach out to all claimants and push for joint development of disputed territories

Last September 7-8, world leaders gathered in Vladivostok, Russia to discuss global and regional concerns at the 20th Asia-Pacific Economic Cooperation (APEC) Summit. At the end of the two-day summit, leaders from APEC’s 21-member economies came out with a 2012 Leaders’ Declaration reiterating commitments to “trade and investment liberalization” and “regional economic integration,” among others. The summit’s significant achievement, as cited by many observers, was on liberalizing trade on ecofriendly goods. APEC members agreed on a list of 54 products whose tariff rates will be reduced to 5% or less by the end of 2015. According to U.S. Trade

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Representative Ron Kirk, said agreement is expected to advance “green growth goals” and also provide “a meaningful impact on trade and job creation in the region.” Apart from the list of eco-friendly products, there appears little out of the summit that would alter the region’s prospects. The outlook for Asia-Pacific as a whole seems promising, but its growth may still be hampered by economic realities such as the Eurozone crisis. Findings from the Pacific Economic Cooperation Council’s “State of the Region 20122013” show that growth in the region is expected to inch to just 3.7% this year from last year’s 3.5%. For economies in the Asia-Pacific region to stay afloat, they must look inward and find other sources of growth, instead of relying too much on exports to Europe and America, as posited in a 2012 World Bank report. The report says: “The best prospects for the region to maintain high rates of growth, job creation, and poverty reduction are through rebalancing towards domestic demand and investing in productivity increases and further international integration.” Moreover, China’s economy is slowing down with a 7.6% growth in the second quarter, which could dampen prospects for the number of economies that depend on China to sustain their own growth. The

Disputed territories in the region Peace and Freedom (blog)

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European Chamber of Commerce in China has said that State-led investment is “not sustainable,” but the country still has enormous potential for growth and opportunities for foreign investors, according to a China Daily report. It remains imperative, therefore, for economic leaders to strengthen regional ties and remain responsive to new trends and scenarios. Weighing heavily on the prospects of economic cooperation in the region, however, are unresolved tensions involving APEC members China, Japan, South Korea, Vietnam and the Philippines. These tensions were deliberately excluded from the APEC agenda, but there were still occasions for talks at the sidelines between leaders of some disputing countries, for instance between China’s Hu and Vietnam’s Sang, and even between Hu and Japan’s Noda. For the Philippines, unfortunately, the anticipated meeting between President Aquino and Hu failed to materialize. As part of President Aquino’s arrival statement from APEC, he mentioned the “warm support” of leaders from Singapore, Malaysia and Vietnam on topics including the West Philippine Sea. Said statement was played up in the media, earning a denial from the Singaporean government later on that it supported the Philippines’ position in the dispute. This denial of Singapore’s support, along with China’s Apec meetings with Asean members -but not the Philippines -- point to the possible isolation of the Philippines in the South China Sea issue. If true, the Philippine government must maintain its relevance in the discussion and reach out to all claimants to push for its stand of joint exploration and development of disputed territories.

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Protests over world’s most powerful film

As well it should, the U.S. government is presently on high alert, with security in its embassies around the globe tightened, and some staff already withdrawn from some dangerous posts. Last September 15, U.S. President Barack Obama also issued a statement rejecting “the denigration of any religion – including Islam.” Yet, he says, “there is never any justification for violence.”

The U.S. government is tightening security in its embassies around the world, following a wave of anti-U.S. protests over a film about the prophet Muhammad

A wave of anti-U.S. protests swept the Muslim world over the release of a film titled “The Innocence of Muslims” which allegedly called Islam “a cancer” and portrayed the prophet Muhammad as a philanderer and pedophile. Shot in California by a man calling himself “Sam Bacile,” the film has driven Islamist militants to attack the American Embassy in Libya and kill Ambassador Chris Stevens and three other staff last September 11. The said film brings to mind a series of Danish caricatures of Muhammad in 2005, which also triggered similar outrage from Muslims. The protests have since spread to many other areas in the Middle East, Africa, Europe and even Asia (please see interactive map here).

Muslim protests around the world triggered by the incendiary film Google

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The U.S. government has mobilized the U.S. Marines to augment local security forces in critical posts like Yemen and Sudan. It is studying whether to deploy the U.S. Marines to secure other areas. In the Philippines, the Aquino administration has sought to assure foreign diplomats in the country that they and their embassies “are safe from possible attacks by al-Qaeda.” Local daily The Philippine Star cites Deputy Presidential Spokesperson Abigail Valte as saying that “Muslims in the country have always been law-abiding citizens and the government does not expect violent incidents similar to the anti-US protests in the Middle East and other regions.” Recently, the Moro Islamic Liberation Front (MILF), the largest Muslim insurgent group in the Philippines also issued a statement saying that it will not join the wave of anti-U.S. protests. Philippine media outfit GMA News quotes Ghazali Jaafar, MILF’s chief political officer, as branding the killing of Ambassador Stevens “a senseless act of violence.” Despite these assurances, however, foreign diplomats and their governments must undertake precautionary measures to secure themselves and their offices in Manila. The Philippine government must also instruct local police to tighten security in various embassies in the country, just in case Islamist militants or other troublemakers come to challenge the Aquino administration’s assurances of safety.

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ccording to President Benigno Aquino III, in his third State of the Nation Address on July 23, the Philippines welcomed 2.1 million tourist arrivals as of the first half of 2012, and the Department of Tourism is aiming to boost that figure to 4.6 million by the end of 2012 and 10 million by 2016.

Putting the Philippines on 10 million vacation plans

To be sure, the Philippines has improved in the number of international tourist arrivals over the last three years. Based on the United Nations World Tourism Organization’s Tourism Highlights 2012 Edition, the Philippines had an estimated 3.9 million tourist arrivals in 2011, up from 3 million in 2009 and 3.5 million in 2010.

The government’s goal of 10 million tourist arrivals by 2016 is an ambitious target that will require substantial investments in infrastructure on the ground By Jerome Balinton

Rising tourism figures notwithstanding, the country still lags behind most Southeast Asian nations in terms of tourist arrivals and revenue, according to a World Economic Forum report The capacity of the local travel and tourism industry to lure more tourists is hinged on travel and tourism infrastructure development and reforms in aviation policies President Aquino has announced ambitious infrastructure projects to address some of the shortcomings

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Substantial resources, reforms needed. For the

country to draw 10 million tourists by 2016, substantial resources and reforms might be needed.

STRATEGY POINTS

Despite the country’s positive figures, however, it still trails other countries in the Southeast Asia region. In terms of 2011 international tourist arrivals, it trailed Malaysia (24.7 million), Thailand (19.1 million), Singapore (10.4 million), Indonesia (7.7 million), and Vietnam (6.0 million), and was ahead of only Cambodia (2.9 million), Myanmar (0.4 million), and Brunei Darussalam (0.24 million).

WORLD

In its “ASEAN Travel & Tourism Competitiveness Report 2012,” released in May, the World Economic Forum ranked the Philippines 94th out of 139 countries in its global travel and tourism competitiveness index (TTCI) based on 14 pillars. In the ASEAN (Association of South-East Asian Nations) region, the Philippines ranked seventh out of eight countries. On a scale of 1 to 7 on the 14 pillars, the Philippines was regarded as “average-to-worst” in terms of air and ground transport infrastructures (2.8), tourism and ICT infrastructures (2.6 and 2.5, respectively), natural and cultural resources (3.3 and 2.2, respectively), and health and hygiene (3.8). The country was rated “average-to-best” in terms of policy rules and regulations (4.4), environment sustainability (4.2), safety and security (4.1), prioritization of travel

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Putting the Philippines on the maps of 10M tourists

and tourism (4.5), price competitiveness (5.2), human resources (4.7), and affinity for travel and tourism (4.6).

Please refer to the two tables below for the performance of ASEAN in T&T rankings.

Travel and Tourism Competitiveness Index for Southeast Asia Region Worst

Median/Average

Best

PILLARS

Singapore

Malaysia

Thailand

Brunei

Indonesia

Vietnam

Philippines Cambodia

TTCI 1.Policy rules and regulations 2. Environmental sustainability

10 1 41

35 21 64

41 76 97

67 120 136

74 88 127

80 67 115

94 70 94

109 132 82

ASEAN (median) 75 73 96

3. Safety and security 4. Health and Hygiene 5. Prioritization of Travel and Tourism 6. Air transport infrastructure 7. Ground transport infrastructure 8. Tourism infrastructure 9. ICT Infrastructure 10. Price competitiveness 11. Human resources 12. Affinity for Travel & Tourism 13. Natural resources 14. Cultural resources

13 55 2 14 2 33 20 29 2 12 96 30

83 75 46 34 36 74 52 3 37 17 22 33

94 80 38 23 56 40 81 15 74 24 21 32

23 70 127 41 49 91 47 1 47 78 38 91

72 115 15 58 82 116 96 4 51 121 17 39

68 89 107 85 77 110 67 16 72 87 51 36

109 97 70 80 114 98 98 20 86 65 70 76

79 133 13 113 103 131 123 31 109 21 53 111

76 85 42 50 67 95 74 16 62 45 45 38

TTCR sample 4.1 4.3 4.6 4.8 4.5 4.5 3.3 3.9 3.8 3.4 4.6 4.8 4.7 3.9 2.9

Rank (out of 139 countries)â&#x20AC;? PILLARS

Singapore Malaysia

Thailand

Brunei

Indonesia Vietnam

Philippines Cambodia

TTCI 1.Policy rules and regulations 2. Environmental sustainability 3. Safety and security 4. Health and Hygiene 5. Prioritization of Travel and Tourism 6. Air transport infrastructure 7. Ground transport infrastructure 8. Tourism infrastructure 9. ICT Infrastructure 10. Price competitiveness

5.2 6.0 4.9 6.1 5.2 6.4 5.0 6.6 5.1 5.2 5.1

4.6 5.1 4.6 4.5 4.5 4.8 4.2 4.6 3.6 3.7 5.6

4.5 4.4 4.2 4.4 4.4 4.9 4.5 4.1 4.9 2.9 5.2

4.1 3.7 3.6 5.7 4.7 3.3 4.0 4.2 2.8 3.9 5.8

4.0 4.2 3.9 4.7 2.6 5.7 3.3 3.2 2.0 2.5 5.6

3.9 4.4 4.1 4.8 4.1 4.0 2.7 3.3 2.1 3.2 5.2

3.7 4.4 4.2 4.1 3.8 4.5 2.8 2.8 2.6 2.5 5.2

3.4 3.4 4.3 4.6 1.5 5.8 2.3 3.0 1.4 1.9 5.1

ASEAN (median) 4.2 4.4 4.2 4.9 3.8 4.9 3.6 4.0 3.1 3.2 5.3

11. Human resources 12. Affinity for Travel & Tourism 13. Natural resources 14. Cultural resources

6.1 5.7 2.6 3.9

5.2 5.4 4.5 3.8

4.8 5.3 4.6 3.9

5.1 4.5 4.0 1.8

5.0 4.2 4.0 3.5

4.9 4.5 4.7 3.6

4.7 4.6 3.0 2.2

4.3 5.3 3.3 1.6

5.0 4.9 3.5 3.0

*Average score of the 139 economies covered in the TTCI Score 1-7 scale Table from The ASEAN Travel & Tourism Competitiveness Report 2012, World Economic Forum

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‘Physical infrastructure plays a critical role in promoting economic development, inclusive growth, and regional integration, by improving a country’s productivity, connectivity, accessibility, and attractiveness’ In rating the performance of ASEAN countries, the report classifies them into four groups: “Singapore is in a league of its own, leading ASEAN in all but two pillars of the TTCI. Second, Malaysia and Thailand do well, despite a few weaknesses. The third group consists of Vietnam, Indonesia, and Brunei Darussalam, which all display very wide performance swings. Finally, both the Philippines and Cambodia present serious shortcomings in most pillars.” According to project manager Thierry Geiger, “Physical infrastructure plays a critical role in promoting economic development, inclusive growth, and regional integration, by improving a country’s productivity, connectivity, accessibility, and attractiveness. Yet, infrastructure represents one of the biggest challenges faced by ASEAN countries, owing to years of under-investments and a lack of planning in the context of rapid economic growth.”

The importance of air transportation. The importance of infrastructure is highlighted in a 2001

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study from the UN Economic and Social Commission for Asia and the Pacific, “Promotion of Investment in Tourism Infrastructure,” which listed among its suggested measures for creating a favorable atmosphere for investment in tourism infrastructure in the Philippines: “The government should eliminate barriers to infrastructure development by increasing access and incentives for airport development, modernization of air traffic control systems and structure, the improvement of highways and roads, and the development of parks, beaches, and convention facilities.” According to the study, availability of international air access is one of the controlling factors of the nature and magnitude of the international visitor market. In 2007, the U.S. Federal Aviation Administration (FAA) downgraded the Philippines’ rating from Category 1 to Category 2, after identifying 88 significant safety concerns. This led to preventing

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Putting the Philippines on the maps of 10M tourists

The importance of travel and tourism to the Philippine economy Travel and tourism is an important economic activity in most countries around the world, and the Philippines is no exception, according to the World Travel & Tourism Council (WTTC), in its “Travel & Tourism: Economic Impact 2012” report for the Philippines.

Direct and projected contribution of travel and tourism in the GDP

On one hand, the total contribution (direct employment plus indirect and induced contributions) of travel and tourism to employment -- 9.6% of total employment (3,547,500) jobs in 2011 – is expected to rise by 3.7% in 2012 to 3,677,500 jobs, after which it should rise by 1.9% per year until 2022, when its 4,448,000 direct and indirect will comprise 9.5% of total employment, according to the WTTC report. WTTC said the direct contribution of travel and tourism to the country’s Gross Domestic Product in 2011 was ₱194.7 billion (2% of GDP). That amount was forecast to rise by 9.9% to ₱214 billion in 2012, and is expected to grow from there by 6.5% per year, to ₱400.4 billion (2.4% of GDP) by 2022. The direct contribution to GDP primarily reflects the economic activity generated by industries, such as hotels, travel agents, airlines and other passenger transportation services (including commuter service). Meanwhile, the total contribution (GDP generated directly by the travel and tourism industry plus its indirect and induced impacts) was ₱830.8 billion (8.5% of GDP) in 2011, and is forecast to rise by 7.8% in 2012, and to rise by 5.2% per year to ₱1,481.1 billion in 2022.

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2012

2022 2022

2010 2010

2012

2008 2008

2006

2004

2006

2004

% of whole economy GDP

2002

According to the report, travel and tourism directly supported 778,000 jobs in 2011 (2.1% of total employment). The number of travel and tourism jobs is expected to grow by 5.7% in 2012, and then by 3.3% per year until 2022, when its 1,135,000 jobs will comprise 2.4% of total employment.

2002

Constant 2011 PHPbn

Graphs from Travel & Tourism: Economic Impact 2012, World Travel & Tourism Council, show the direct contribution of travel and tourism to GDP in 2011 and its projected growth by 2022

Total contribution and projected growth of travel and tourism in GDP Constant 2011 PHPbn

2011 Indirect

Direct

2012 Induced

2022

% of whole economy GDP

2011 Direct

Indirect

2012 Induced

2022

Graph from Travel & Tourism: Economic Impact 2012, World Travel & Tourism Council 2012 shows the total contribution of travel and tourism (direct contribution plus indirect and induced impacts) to GDP in 2011 and its projected growth by 2022

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‘Pocket Open Skies Policy eases restrictions on foreign airlines, allowing them to land in international airports around the Philippines and opening up the country to more foreign visitors’ ~ President

Benigno Aquino III

Philippine air carriers from adding new routes to the U.S. Meanwhile, in 2010, the 27-nation European Union, restricted Philippine-registered international carriers from flying in its airspace for failure to comply with international safety standards. In late January, an FAA technical review found there were still 23 significant safety concerns that needed to be addressed, as summarized in a March Business Mirror news story, which also reported a presidential spokesman’s acknowledgment that the country’s current aviation status was preventing it from fully promoting the tourism industry.

Pocket Open Skies outside Manila. “Tourism

is very important to the Philippines. We have paid particular attention to road and air infrastructure and the implementation of the Pocket Open Skies Policy which eases restrictions on foreign airlines, allowing them to land in international airports around the Philippines and opening up the country to more

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foreign visitors,” President Aquino was quoted as saying in February in Global Leaders for Tourism, a UNWTO publication. In July, the president told participants of the 7th Consuls-General and Tourism Directors Tour that the policy has already generated almost a 15% increase in incoming and outgoing flights to the country from January to June 2012, as reported on the Rappler news site. The Pocket Open Skies Policy was ushered in through an executive order signed by Aquino in March 2011.

Open skies good but country still not ready for more visitors? In an interview comprising

part of the Oxford Business Group’s 2012 report on the Philippines, Lance Gokongwei of low-cost carrier Cebu Pacific Air expressed belief that the Philippines‘ tourism industry stands to gain from the opening of airports to more (foreign) carriers, but he said the

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Putting the Philippines on the maps of 10M tourists

country is “not yet prepared to meet the needs of a continued rise in visitors,” because outside Metro Manila, there is no major gateway for international air travel.

skies per se, but they believe such an open skies policy should be negotiated on a reciprocal basis, otherwise it may hinder the ability of local carriers to compete with foreign carriers, Gokongwei said.

Gokongwei hopes that the open skies policy and the public-private partnership program will provide a boost to the upgrading and expansion of additional airports. Local carriers are not against pocket open

The inability to provide gateways for international flights is one of the major impediments to the growth of Philippine tourism. This is the basis for economist Roy van der Weide to say that the Philippines is

Philippine medical tourism: Outside looking in? One other source of international tourists that might go by the wayside if local air and ground infrastructure issues aren’t addressed is the growing international medical tourism market. According to HealthCORE’s Philippine Medical Tourism Compendium 2011, the global medical tourism market has become one of the fastest growing sectors in the world economy, with revenues estimated at approximately US$40 billion in 2010 and projected to grow to US$70 billion by 2013. (The publication link is to the executive summary, the full report is available for purchase) As previously reported in The CenSEI Report article “Medical Tourism: The Globalization of Health Care,” by Tanya L. Mariano (Vol. 2, No. 4, Jan. 30 – Feb. 5, 2012), in 2006, the Philippines established the Philippine Medical Tourism Program (PMTP), a public-private partnership, to promote the country as a viable destination for foreign travelers seeking health and wellness services. As recounted in the TCR piece, despite steady government support from the administration of thenPresident Gloria Macapagal Arroyo, there was “obviously a failure to sustain and effectively capitalize on the momentum of the PMTP,” according to the HealthCORE report. The piece also recalled then-Health Secretary Dr. Francisco Duque III saying, in his speech at the grand launch of the PMTP in 2006, that “tender, loving Pinoy care,” which he called our “biggest draw,” could not make up for what the country lacked in tourism infrastructure. The TCR piece cited 2008 research from the Deloitte Center for Health Solutions that acknowledged efforts of the Philippines to become a major player in the medical tourism market, but still left it in the periphery of medical tourism hubs already established around the world. According to 2011 research from India-based research firm RNCOS, as of 2010, Thailand, India, and Singapore accounted for 89% of Asia’s medical tourism industry, Thailand received 40% of Asia’s medical tourists in 2010, and India is expected to capture 38% of the market by 2013. Figures provided by HealthCORE in Nov. 2011, just prior to The 1st Philippine Global Healthcare Forum, indicate that the Philippines earned $1.3 billion in revenues from medical tourism from 2006 to 2010.

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While the Philippines continues to show incremental progress in drawing tourists, a comparison with other countries shows it still has much ground to make up, much more ground than a catchy slogan can cover by itself “internationally poorly connected,” in his 2010 paper for the World Bank, “Philippine Tourism: A Small Sized Sector.”

Infrastructure constraints identified. In his

paper, van der Weide identifies the infrastructure constraints to tourism development in the Philippines as below-par international and domestic airports, poor ground transport services, and lack of adequate accommodations. According to van der Weide, the main international airports in Manila are unlikely to leave a good impression: The Ninoy Aquino International Airport (NAIA) has “outdated facilities,” NAIA 2 is too small to be the new main terminal, and while NAIA 3 has the most modern facilities of the three terminals, it is now “outdated and would require substantial investments to upgrade the facilities to international standards. Apart from all that, while van der Weide thinks Clark International Airport in Pampanga has the space

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needed to make it a modern-day international airport, he notes it is located almost two hours away from Manila, and that the travel time between Clark and Manila could easily get longer without the necessary investment in the ground infrastructure.

Ambitious plans for the next four years.

Recognizing that the improvement of the country’s infrastructure is intertwined with the growth of the tourism industry, President Aquino laid out his plans for the next four years of his term. In his recent State of the Nation Address, Aquino said that before the end of his term, the New Bohol Airport in Panglao, New Legaspi Airport in Daraga, and Laguindingan Airport in Misamis Oriental will have been built. The president also promised that international airports in the major southern cities of Mactan, Tacloban, and Puerto Princesa would be upgraded so they can receive more passengers, while other southern airports – in Butuan, Cotabato, Dipolog,

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Pagadian, Tawi-Tawi, Southern Leyte, and San Vicente in Palawan – would be remodeled, and that by July 2013, the “inherited” defects in NAIA 3 will have been fully repaired. Ground transport are also being addressed. According to the president, the LRT Line 1 Cavite Extension project, which will alleviate traffic in Las Piñas, Parañaque, and Cavite, began to move forward in June. And in order to “further improve” traffic in Metro Manila, Aquino said there will be two elevated roads directly connecting the North Luzon and South Luzon Expressways. According to Aquino, the North-South elevated connecting roads will be completed in 2015, and will reduce travel time between Clark and Calamba (in Laguna) to 1 hour and 40 minutes. Ambitious plans have their place in guiding people to act, but these plans also require a sustained commitment to implement, all the more when the objective is to more than double annual tourist arrivals in four years. While the Philippines continues to show incremental progress in drawing tourists, a comparison with other countries shows it still has much ground to make up, much more ground than a catchy slogan can cover by itself. Improving our air transport and ground infrastructure is still the key to showing the rest of the world we mean business, even when the business is about promoting more fun.

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It is imperative that the Philippine government carefully monitors currency risks and continues to hone the countries BPO competitiveness Philippine call centers last week raised concerns about the continuous appreciation of the peso against the dollar and warned of the effects of possible price hikes. The BusinessWorld article reports that the call center industry is “not unduly worried,” but that the peso’s gains are something being carefully watched. According to the Business Processing Association of the Philippines, in its Investor Primer 2012 (download link), the entire Business Process Outsourcing (BPO) industry employs about 638,000 Filipinos directly and 1.6 million, indirectly. These are the people who might be adversely affected if the industry becomes uncompetitive due to the peso’s appreciation. In addition, the organization forecasts the BPO industry to grow by up to 20% over the next five years. Since local call centers and other BPO companies charge foreign outsourcing clients in dollar amounts, but pay for its operations in pesos, the local currency’s continued appreciation would mean disproportionately escalating costs for these companies. So, how much impact would the continuously appreciating peso have on the BPO industry? According to the Contact Center Association of the Philippines (CCAP), not much, at least not yet. “There’s still a significant preference for voice services offered by the Philippines even with the fluctuating peso,” says its president, Benedict Hernandez, at the sidelines of a call center expo.

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Hernandez cites the apparent advantage of Filipino call-center agents, particularly their language skills, which have made the country the top destination for voice services.

it is in the non-voice segment of the industry, where the Philippines is just second to India, where Filipinos might easily lose share to their South Asian neighbor. Non-voice services comprise 46% of the entire local BPO industry.

CCAP Executive Director Jojo Uligan, however, in the same ABS-CBN news report, indicated a specific rate. Should the peso appreciate to below ₱41 against the dollar, he says, the result would be disastrous for call centers. At the time of this writing, the peso-to-dollar exchange rate stood at ₱41.56 to the dollar.

In addition, other developing countries, who do not have a pronounced accent like Indians have, are also catching up with the Philippines’ BPO competitiveness. In Southeast Asia Emerges as Outsourcing Destination, an article in online resource BPO Outcomes, these are countries like Vietnam, Thailand, Malaysia, and Latin American countries.

Another cause for concern is the significant depreciation of the Indian rupee. Cites columnist Boo Chanco, in his Philippine Star column, the Philippine BPO industry is now at a 30% “competitive disadvantage to India” because of the rupee’s depreciation.

In the face of these developments, it is imperative that the Philippine government, particularly its central bank, carefully monitors currency risks and continues to hone the country’s BPO competitive edge. Chanco reports, however, that the Bangko Sentral ng Pilipinas feels its policy responses to foreign exchange risks have so far been sufficient. Perhaps, as economist Noro Usui of the Asian Development Bank opines, it is also important to pursue industrialization at the same time that the country is developing its BPO services sector.

Of course, the Filipinos’ significant skills advantage still makes the country the choice destination for outsourced call center operations, where it is number 1 in the world, according to BPAP’s Investor Primer. However, US dollar - peso exchange rate (2004 to present)

Raising Philippine aviation to Category 1 Raising the country’s aviation status to Category 1 requires reforms to modernize air traffic systems in the Civil Aviation Authority and increase the number of qualified safety personnel

Philippine Peso & Indian Rupee vs. US Dollar (2008 to Present)

Prospects for the upgrade have improved with the avowed focus on the matter by the new DOTC Secretary and the promised settlement by the country’s flag carrier of its ₱5.2 billion debt with CAAP

Graph from “Too Much of a Good Thing”, The Philippine Star

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Upon his assumption into office, newly appointed Department of Transport and Communications (DOTC)

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The lack of safety personnel is one of 22 concerns identified by the FAA. Says Hotchkiss, as reported in the Inquirer article, this and the lack of an “integrated electronic system to modernize the sector’s database” are the only two items that remain unresolved by CAAP.

Philippine Airlines moves towards new altitudes, showing fleet modernization plans of the country’s flag carrier YouTube

Secretary Joseph Emilio Abaya vowed to regain Category 1 status from the Federal Aviation Administration (FAA). Civil Aviation Authority of the Philippines (CAAP) Director-General Lt. Gen. William Hotchkiss III, however, says securing the upgrade may take time, reports the Philippine Daily Inquirer. Hotchkiss adds that CAAP has decided to prioritize the preparations for an upcoming audit in October by the International Civil Aviation Organization (ICAO), a specialized agency of the United Nations. Passing the ICAO audit would increase the country’s chances of getting a Category 1 status from the FAA, says Hotchkiss.

According to an ABS CBN News report, Philippine Airlines could boost the country’s chances of regaining Category 1 status from the FAA. The Commission on Audit estimates that salaries of CAAP personnel such as safety inspectors, check pilots, air traffic controllers, aircraft mechanics, and communications specialists are 80% below industry standard, making them “targets of poachers from foreign airlines,” says the article. But settlement by the country’s flag carrier of its ₱5.2 billion debt with CAAP, something assured by PAL’s President & CEO Ramon Ang, could help CAAP attain fiscal stability and provide their staff with better compensation. In terms of systems modernization, this can be possible through the Communication Navigation Surveillance/Air Traffic Management Project, a ₱9.6-billion undertaking that entails the installment of satellites, communications equipment, and surveillance radars and is expected to significantly improve aviation safety and efficiency.

Currently, the Philippines is considered by the FAA, ICAO, and the European Union (EU) as non-compliant with international standards. In 2008, the FAA lowered the country’s rating to Category 2, which meant local carriers would not be allowed to expand their existing operations to the U.S. until necessary improvements are made. The following year, the ICAO named the Philippines and 10 other countries as a “significant safety concern,” as reported by Manila Bulletin. In 2010, the EU banned all Philippine airlines from flying into the region.

Business Mirror reports that the European Chamber of Commerce of the Philippines (ECCP), in a letter to then DOTC Secretary Manuel Roxas and Department of Tourism Secretary Ramon Jimenez, urged the Philippine government to drastically improve the country’s civil aviation, and one of their recommendations is the swift implementation of the said project. ECCP President Hubert d’Aboville says the ICAO had also told the DOTC to expedite implementation of the project.

To gain the approval of both ICAO and FAA, CAAP must immediately address the shortage of qualified safety personnel and accelerate the modernization of air traffic management systems.

In July 2011, Roxas stopped the project in fears that it was tainted with corruption. It now rests on the shoulders of newly appointed DOTC Secretary Abaya to see to it that modernization efforts are implemented.

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Driving Development with Mobile Phones For communities in the developing world, the mobile revolution is bringing economic power at the touch of a screen or a keypad By Marishka Noelle M. Cabrera

pplications on mobile phones are influencing progress in developing countries in the areas of agriculture, health, financial services, and governance, according to the World Bank, in its 2012 “Maximizing Mobile” report.

STRATEGY POINTS The 2012 report “Maximizing Mobile” from the World Bank describes how mobile phones are addressing development challenges with applications that are rooted in the realities of developing countries

The report, written and researched jointly by the ICT Sector Unit and infoDev, a global partnership program of the World Bank Group, departs from a traditional discussion of information-technology connectivity, discussing instead its applications and how information and communication technologies “are being used to transform different sectors of the global economy.”

Mobile phones are enabling people living in rural areas to buy products, monitor health conditions, connect to the Internet, and improve agricultural practices

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The mobile revolution, the report posits, is transforming livelihoods, helping to create new businesses, and changing the way people communicate. After all, with over six billion mobile

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Driving development with mobile phones

phone subscriptions all over the globe, what it calls the “near-ubiquity of mobile phones” can provide access to content with the capability to empower and enrich lifestyles. In 2010, 99% of the population in both China (from 95% in 2005) and the Philippines (unchanged from 2005) was covered by a mobile cellular network, while India had 83% of its population covered from 31% in 2005, Kenya 89% from 62%, Pakistan 92% from 36%, and Sri Lanka 98% from 85%.

Getting online from the countryside. For

China’s vast rural areas, mobile phones are becoming the device of choice to connect to the Internet, as discussed in a July story in BBC. In the report, the state-linked China Internet Network Information Center (CINIC) says over 50% of the year’s new Internet users are from the countryside. Internet access is made more convenient as smart phones become more affordable.

with no ready access to real-time information about the various suppliers. “The most precious commodity for BOP (bottom of pyramid) is time,” SlimTrader CEO Femi Akinde reveals in the report. And when purchasing something as common as a transportation ticket can take up an entire day, conveniences such as those that can link a user to the inventory, ordering, and payment databases of participating businesses go a long way. Users can then inquire about the availability of products and make their purchases by sending an SMS. Payment is made through mobile

The Mobile Revolution

“The emergence of smartphones under 1,000 yuan [$157 or £100] sharply lowered the threshold for using the devices and encouraged average mobile phone users to become mobile web surfers,” the BBC quotes the CINIC report. Here are more mobile phone applications that were developed in the context of local realities aimed to address challenges in the developing world more effectively:

Shopping via SMS. Operating in Uganda,

Kenya, Nigeria, and South Africa, SlimTrader is the first platform of its kind in Africa that allows consumers to shop for goods and services through text messages (SMS). A June 2011 report from VentureBeat as part of the series “Conversations on the Global App Economy,” sponsored by Nokia, describes the challenges of consumers in rural areas

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The infographic depicts how mobile phone services are being adopted in the developing world, page 9, ‘Maximizing Mobile’

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The mobile revolution is transforming livelihoods, helping to create new businesses, and changing the way people communicate services, such as M-PESA, Airtel, MTN, Mobile Money, and Interswitch. In rural India, few businesses are able to reach small villages of 5,000 people or less. Featured in a March 2011 BBC story, United Villages is a rural supply company that believes it can fill the gap in the country’s rural supply chain by linking big businesses to even the smallest of villages. According to the report, the company has so far built a distribution network catering to more than 700 rural retailers. The system begins as a field officer takes orders from retailers, wires them to a central warehouse with a mobile app, and then products are delivered to the local stores. Prior to the service, some store owners had to close their shops in order to travel to the nearest market, which is normally 30 to 40 km away, to purchase supplies.

Electronic wallets and mobile money.

Philippine telecom giants Smart Communications and Globe Telecom both offer “electronic wallets,” in the form of Smart Money and GCash, respectively, that allow subscribers to send and withdraw money, pay bills, shop, receive remittances, donate to charity, and reload prepaid accounts in a secure and convenient way. The United States Agency for International Development (USAID) has launched a mobile banking project in the Philippines aimed at expanding

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access to financial services as part of the agency’s Scaling Innovations in Mobile Money (SIMM) project, as announced in a September 8 Philippine Daily Inquirer report. Due to the Philippines’ high penetration rate of mobile phone subscribers, the project hopes to bridge the gap for Filipinos who do not have access to banks. Key areas for the project include payment system, government services, and electronic payroll distribution. Meanwhile, Kenya has been utilizing mobile money to send money to relatives in remote areas, pay for utility bills and taxi fares, or to ensure the smooth flow of business operations since 2007. A joint venture between telecom giant Vodafone and Kenya’s Safaricom, M-PESA (M stands for “mobile” and Pesa is Swahili for “money”) is the first to operate on a large scale, according to a November 2010 story on the BBC site. The system works by having customers register with Safaricom at an M-Pesa outlet before they can load money onto their phone. The money is then sent to a third party via text message, and the recipient takes the phone to their nearest vendor to pick up the cash.

Mobile phones foster better crop prices, even better crops. Small-scale agriculture in Africa gets

a boost from mobile phones, as discussed in the site How We Made it in Africa. By addressing the lack of transparent information about the market (wholesale and retail) prices of crops, mobile phone-based services are allowing farmers to “negotiate better deals with traders,” as well as “improve the timing of getting their crops to the market” with a simple text message.

Beyond providing market information, companies like Kenya’s M-Farm enables farmers “to group together through their mobile phones to offer exporters and big retailers large quantities of crops” and to “save on

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Driving development with mobile phones

the cost of inputs such as fertilisers and pesticides by buying in bulk.” Access to agriculture insurance and information about improving farming practices are also being offered through mobile phones. A device called Nano Ganesh is a phone-controlled water pump-starter that is allowing Indian farmers to water their crops remotely, as described in an August

2010 article in The Atlantic. The device, which costs between $12-$268 (depending on the model), is connected to both a mobile phone and an electric water pump. The user then calls that phone and enters a code to start it up. With other companies riding the wave of mobile innovation, farmers can now rely on timely weather information and farming and disease control techniques to be sent to them.

Going mobile for inclusive growth In a January 2011 study, global consultancy firm Deloitte posits that in the coming years, India’s rural areas will fuel growth in mobile phone services, due in part to low rural penetration levels. The study, produced jointly by Deloitte and the Associated Chambers of Commerce and Industry of India, takes off from the idea that Mobile Value Added Services (MVAS) have the potential to be used in areas in order to “bridge the digital divide and to foster inclusive growth in India.” As such, the study focuses on understanding the current and future state of MVAS in the country, as well as key drivers, challenges, and solutions. The study identified the following key drivers for MVAS: 1. Government mandate for inclusive growth 2. Increasing mobile phone, and network penetration 3. Need for differentiation among telecom operators and device manufacturers 4. Increasing consumer demand and awareness, even in non-urban areas 5. Business need of service providers such as hospitals and banks 6. Automation due to Information and Communications Technology The study also identified three broad categories of MVAS: 1. Information-based services, involving one-way dissemination of information, e.g., epidemic alerts, disaster management updates, etc. 2. Application-based services, which involve interactivity and require the consumer to play an active role, such as in checking the status of payments, IVR (interactive voice response)-based language training services, etc. 3. Enablement services, which provide close substitutes for services usually provided by a physical infrastructure, such as a bank or a school, e.g., person-to-person payments, travel reservations, etc. Moving past text messaging, the study discusses what it refers to as “utility MVAS,” services that seek to digitally empower citizens by providing efficient access to essential information and basic services. It identifies four categories of mobile value-added services – M-Commerce, M-Education, M-Health, and M-Governance – all of which will require extensive cooperation between government, regulators, service providers, and stakeholders.

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Mobile phones help teach children.

Researchers with the Mobile and Immersive Learning for Literacy in Emerging Economies (MILLEE) Project are using mobile phones to teach children in rural China how to read, according to a 2010 report from Wired. The MILLEE research project aims to enhance access to literacy among children in the developing world. Inspired by traditional Chinese children’s games, scholars from Carnegie Mellon, University of California-Berkeley, and the Chinese Academy of Sciences developed two mobile learning games: Multimedia Word and Drumming Stroke. MW, the report says, gives hints—a sketch, clues for pronunciation, or a photo—for children to be able to recognize characters. In Drumming Stroke, players “pass the mobile phone to one another to the rhythm of a phone-generated drum sound,” and each one “writes one stroke of a given Chinese character by following the exact stroke order.” In the Philippines, teachers are maximizing the potential of mobile phones through the Text2Teach project. In a March 2009 article in Philippine Daily Inquirer, the initiative aims to bring interactive, multimedia educational materials that enhance the student’s learning experience. With the use of a Nokia N95 8GB mobile phone, which a teacher plugs into a TV in the classroom, “387 interactive, educational videos in math, science and English are preloaded into the phones for the teachers to use in class.” In partnership with the Department of Education, Nokia, Ayala Foundation, Globe Telecom, and Southeast Asian Ministers of Education Organization Regional Center for Educational Innovation and Technologies (SEAMEO INNOTECH), the non-profit program has now reached 557 schools and trained more than 1,600 teachers nationwide since it began

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in 2003, as noted in a release published in Sun Star Cebu in March 2012.

Citizen journalism powered by mobile telecommunications. During the height

of a violent Maoist insurgency in the Indian state of Chhattisgarh, journalist Shubhranshu Choudhary had to find a way to get the voices of the “disenfranchised indigenous communities” out to the national media, as reported in a February story in CNN. As a Knight International Journalism Fellow, he drew the support from the International Center for Journalists, where he began an experiment in citizen journalism. CGNet Swara is “a voice portal that allows anyone with a mobile phone to record or listen to news and items of interest.” Upon dialing the service’s number, users press “1” to record a report, or “2” to listen to it. Once a report has been recorded, it is “verified and edited by a team of moderators before being made accessible on the service,” the CNN report qualifies. Even in mainstream media, citizen journalism is gaining popularity. GMA Network’s YouScoop empowers ordinary Filipinos to share newsworthy stories with the use of their mobile phones. By taking a photo or a video and sending it either via the Web or through a mobile phone, stories may be aired on GMA News TV or published on GMA News Online.

Mobile tech is paving a way for more efficient health care. Innovations in awareness,

prevention, diagnosis, and treatment are made possible with the ubiquity of mobile phones in developed and developing countries. A May 2012 article, “How Mobile Devices are Transforming Healthcare,” by Darrell M. West of the Center for Technology Innovation at the Brookings Institution, discusses the various ways in which mobile technology is applied in different countries, such as:

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News & Strategy Alerts Technology

Domain disputes on the rise due to Chinese cybersquatters

American economist Jeffrey Sachs suggests economic isolation may end if people living in far-flung areas had mobile devices and wireless connectivity Global Envision

reporting dengue outbreaks in India and Sri Lanka, reminding tuberculosis patients to take the prescribed Rifafol medicine in South Africa, advising pregnant women during the different stages of pregnancy in the United States, recording and transmitting patient information in remote parts of Japan, giving quick diagnosis and suggested treatments in rural Malawi, among several other applications. More than making lives in the developing world a little bit better, American economist Jeffrey Sachs believes in the role of mobile phones in ending extreme poverty, as he explains in a video in the site Global Envision. “If every village,” the professor and director of the Earth Institute in Columbia University says, “had wireless connectivity, and it had computers in [schools, clinics, community centers, and farmer cooperatives], [and] if community health workers or agriculture workers were carrying their cellphones, interconnected with the computers, there’d be no such thing as economic isolation anymore.”

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Businesses should be vigilant against cybersquatters and take steps to protect their companies online, such as through preventive purchases of domain names for their brands and trademarks Passing into law a Cybercrime Prevention Law will help curb cybersquatting in the Philippines

Legal disputes over Internet domain names could rise this year, largely driven by Chinese cybersquatters, according to a PC World article that details the findings of a report by legal firm Sweet & Maxwell. Cybersquatting “involves the pre-emptive registration of trademarks by third parties as domain names” in order to “exploit the first-come, first-served nature of the domain name registration system to register names of trademarks, famous people or businesses with which they have no connection,” according to the World Intellectual Property Organization (WIPO). Cybersquatters then auction the domains, sell them directly to the person or organization involved at inflated prices, or keep the registration and use the name of the concerned person or company to attract business to their own sites. Figures cited in the Sweet & Maxwell report, entitled “Domain Names: Global Practice and Procedure,” show that disputes adjudicated by the WIPO numbered 2,944 in January to July 2012 alone. This represents a 6% rise from the 2,775 cases in the same period last year.

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Luxury goods companies remain the primary target. Big name brands such as Swarovski, Armani, Burberry, Dior, Cartier, and Gucci are among those that had been involved in disputes. Gucci in 2012 had six legal cases contesting over 100 domains, all of which were registered in China with the goal of funneling traffic to counterfeit goods. The article notes that cases concerning Chinese goods had increased two-fold since 2009, but U.S. registrations still generate the most disputes. It also mentions that while reported cybersquatting is on the rise, a factor that could be driving this increase is the mounting willingness of companies to take legal action to assert control of domains related to their products. WIPO is one of four dispute-resolution service providers accredited by the Internet Corporation for Assigned Names and Numbers (ICANN), the international body that coordinates online domain naming. Domain disputes are evaluated based on the ICANN’s Uniform Domain Name Dispute Resolution Policy, which requires one to submit to a mandatory administrative proceeding if someone complains that “(i) your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; (ii) you have no rights or legitimate interests in respect of the domain name; and (iii) your domain name has been registered and is being used in bad faith.” In light of the increase in domain disputes, businesses should take steps to protect their companies online. A preventive measure would be to purchase domain names that reflect or are similar to one’s company name and other trademarks. If costs are prohibitive, companies

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can instead choose to take legal action only when a domain is found to be taking advantage of the firm’s good name for its own gains. Authorities should also be more vigilant in monitoring domains registered in China which could be selling fake items. In the Philippines, the recent enactment of the Cybercrime Prevention Act of 2012 renders cybersquatting punishable by law. Violators could be slapped with imprisonment of 6-12 years or a fine not exceeding ₱500,000, or both.

Apple launches the iPhone 5 No surprises in the launch of iPhone 5, but the newest iteration will keep the iPhone brand the single best-selling smartphone line in the world

After much anticipation, Apple finally unveiled on Sept 12 its newest iPhone model, the iPhone 5, which comes with a bigger screen and a faster processor and is lighter and thinner than its predecessor -- technical specifications here. The latest iPhone offering has a 4-inch retina display, a better 8-megapixel camera, improved A6 processor, Ultrafast Wireless Technology and a longer battery life, the tech giant announced in its press release. Despite the secrecy that typically surrounds the development of new iPhone models, observers note that what finally came out was really not a surprise and merely confirmed all rumored features prior to Apple’s official announcement.

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Bigger yet lighter - the new iPhone 5

YouTube

The iconic smartphone’s new dock connector, however still managed to upset some fans despite its expected size reduction. Dubbed “Lighting”, the smaller, 8-pin connector enables Apple to reduce the iPhone’s weight and thickness – but its claim of being “thinnest smartphone in the world” was debunked by research firm Strategy Analytics and UK-based online technology publication TechRadar. The connector basically makes all chargers, speakers, and thousands of other peripherals and accessories utilizing the older 30-pin connector unusable without additional converters. While the new connector might turn off some buyers, it is expected to be a boon for accessory makers. Tech site GigaOm.com comments, “third-party accessory makers… will have the opportunity to sell you a whole new iPod dock, new cases, new chargers, or any accessory you currently use that connects via the port on the bottom of your iPod or iPhone… Those will be available, naturally, sometime before the holidays.” GigaOM.com says Apple will make tons of revenue from accessory sales, as well, citing a Fiscal Times report that estimates company revenues from these sales already at somewhere between $2 billion to $3 billion in 2011. iPhone 5’s impact on Apple’s share price, projected sales and smartphone market share? Already the

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world’s most valuable company, shares of Apple hit record highs following announcement of the new flagship, reports Reuters. Bloomberg cites an estimate that Apple will be able to sell 10 million units by September and 48.2 million by December. In comparison, rival Samsung’s flagship Galaxy S III smartphone is reported to have already sold 20 million units since its launch last May and is projected to exceed 30 million units sold by the end of the year. Apple’s newest phone is projected to keep the iPhone brand the single best-selling smartphone line. Samsung will keep its large (36%) share of the market, though, with its various models. (Figures on 2nd quarter 2012 worldwide market share for smartphones here, as cited by Yahoo! Finance). Forbes.com offers an analysis of the smartphone playing field and sees competition heating up. It also sees Apple expanding to “largely unexplored emerging markets to keep the upside potential intact.” Apple has yet to disclose when it will start offering iPhone 5 in the Philippines, but Globe Telecom as well as Smart Communications (via Techlokal.com) are reported to be already getting ready to offer nanoSIMs, the sim card compatible with the iPhone 5, before the end of the month.

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Dial ‘C’ for Caution:

Cancer-causing Agents in Everyday Products By Victoria Fritz

STRATEGY POINTS Everyday products have agents considered carcinogenic to humans by the World Health Organization, e.g., asbestos, benzene, formaldehyde, and vinyl chloride While everyday products have agents considered carcinogenic to humans, they might not necessarily be present in dangerous levels The World Health Organization has declared diesel engine exhaust as carcinogenic to humans, but measuring people’s exposure to it is difficult because of its chemical complexity With many rumors going around regarding the carcinogenicity of many everyday products, it’s still best to look to established authorities for guidance on these matters

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ew things are comparable to the scent of a new car. It’s one of the great pleasures in modern life. It could also be a health hazard.

Whether you like it because it smells “new” or just different, take it easy on the sniffing. The upholstery probably has small amounts of vinyl chloride, and inside a new car, the air can contain higher levels of vinyl chloride than in ambient air while it evaporates from the new plastic parts, especially since it’s an enclosed area. Vinyl chloride has been shown to increase the risk of a rare form of liver cancer called angiosarcoma. This is according to the United State Environmental Protection Agency (EPA), whose fact sheet on vinyl chloride derives data from the Agency for Toxic Substances and Disease Registry’s (ATSDR’s) “Toxicological Profile for Vinyl Chloride” and “Case Studies in Environmental Medicine, Vinyl Chloride Toxicity.” It’s no better on the outside. In a press release issued in June this year, the World Health Organization’s (WHO)

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Dial ‘C’ for caution: Cancer-causing agents in everyday products

International Agency for Research on Cancer (IARC) announced that diesel engine exhaust also causes cancer, particularly lung cancer. It was previously classified as “probably carcinogenic” back in 1988, but with a tag as a high priority for re-evaluation. Many everyday products in our home and workplace contain substances that are classified as carcinogenic by the WHO. The IARC has compiled a 2012 list of substances with “sufficient evidence of carcinogenicity in humans,” also known as Group 1 agents, based on a historical review of its monographs. According to the IARC’s 2006 preamble to its monographs, a Group 1 agent is considered carcinogenic to humans. In the IARC briefing paper, an agent is defined as “any entity that is subject to evaluation” (page 2) in their program. Agents are chosen based on evidence of human exposure and evidence/suspicion of carcinogenicity (page 3). For

Group 1 agents, studies have provided a significant amount of evidence that a compound is cancercausing in humans.

Is asbestos in the house? A booklet called “Asbestos In The Home,” jointly published by the United States Consumer Products Safety Commission, the Environmental Protection Agency and the American Lung Association, notes that most products made at present do not contain asbestos. Many countries have banned its use completely. However China, Russia and even the United States are not included in this list, as compiled by the International Ban Asbetos Secretariat. The Philippines is also not on the list. It is possible that some everyday products in our midst might still contain asbestos, whether they’re new products from countries that have not banned asbestos completely or old products that were

SELECT GROUP 1 AGENTS AND EVERYDAY PRODUCTS THAT CONTAIN THEM SUBSTANCE

RESULTING TYPE OF CANCER

Asbetos

EVERYDAY PRODUCTS THAT CONTAIN THEM

Pre-1980s: vinyl asbestos floor tiles, soundproofing, patching and joint compounds, textured paints

Lung cancer (mesothelioma)

Benzene

Gasoline, car exhaust fumes, glues, solvents, paints, art supplies, cigarette smoke

Leukemia and cancers of other blood cells

Diesel Engine Exhaust

Vehicles, power generators

Lung cancer

Formaldehyde

Plywood, furniture, wallpaper, glues, antiseptics, cosmetics and nail polish

Cancer of the nasal passages, throat, and respiratory tract; leukemia

Vinyl Chloride

PVC pipes used in water supply, packaging materials; smaller amounts in furniture and car upholstery

Rare form of liver cancer called angiosarcoma

Table from TCR compilation of data from the IARC, the American Cancer Society, the U.S. Environmental Protection Agency, Consumer Product Safety Commission, the Wisconsin Department of Health Services, the National Cancer Institute and the National Resource Defense Council

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manufactured in countries before they decided to ban asbestos completely. Asbestos is used in resilient floor tiles (vinyl asbestos, asphalt, and rubber), soundproofing material and textured paint, among other things. It is known to increase the risk of mesothelioma, a cancer of the lining of the chest and abdominal cavity. At any rate, the aforementioned booklet advises that “THE BEST THING TO DO WITH ASBESTOS MATERIAL IN GOOD CONDITION IS TO LEAVE IT ALONE!” Trying to remove it may create a health hazard where there was none before.

Benzene all around. Benzene is commonly found in the air around us, but the levels are usually very low, according to an American Cancer Society page on benzene. It comes from gasoline, automobile exhaust fumes, and emissions or waste water from certain factories. Levels can be acute in enclosed spaces with poor or no ventilation, where there are glues, solvents, paints and art supplies present. During heavy traffic, at gas stations and near industrial sources, the levels may be higher. Cigarette smoke is also a significant source of exposure to benzene, accounting for about half of the U.S. national exposure to the substance. Benzene is known to cause cancer, particularly leukemia and cancers of other blood cells. On the American Cancer Society site, a July 2011 piece, “Is your car killing you with benzene?” by Dr. Ted Gansler, discussed issues related to benzene, by way of analyzing an e-mail message making the rounds of cyberspace regarding dangerous levels of benzene in automobile interiors. Before getting into the claims of the e-mail message, he said: “Although benzene is linked to leukemia, very little research has looked at whether the interior surfaces of cars release dangerous amounts of benzene, and the information that is available does not support the e-mail’s claims.”

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He reports that a German study published in 2007 looked specifically at the air inside parked cars, and did not find a hazard to human health. “Their analysis detected some cancer-causing chemicals and others that are considered probable or possible carcinogens, but these chemicals were present at levels similar to those found in the air of buildings. Some chemicals that are similar to benzene were found, but benzene was not reported in the results of this study,” Dr. Gansler wrote. Having said all that, he does provide some commonsense tips for people who want to reduce the benzene to which they’re exposed in other settings, including staying away from cigarette smoke, limiting exposure to gasoline fumes by pumping gas carefully and choosing gas stations with vapor-recovery systems that capture the fumes, and avoiding skin contact with gasoline.

Diesel fumes from vehicles and generators.

Diesel engine exhaust was recently reclassified as carcinogenic to humans by the WHO, as announced in a press release last June 2012 by the IARC. There has been an ongoing concern about the risks posed by diesel engine exhaust. This was highlighted by the publication in March this year of a study by the U.S. National Cancer Institute/National Institute for Occupational Health on underground miners which showed an increased risk of death from lung cancer among exposed workers, as discussed in the press release. The study also noted a positive association (with limited evidence) with an increased risk of bladder cancer. Though the study was on miners, diesel engine exhaust is ubiquitous. The study notes that large populations are exposed to it daily through the ambient air. Diesel engines are used not only by vehicles on the road, but also by trains and ships and even power generators. Dr. Kurt Straif, Head of the IARC Monographs Program,

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Dial ‘C’ for caution: Cancer-causing agents in everyday products

observed that though the “main studies that led to this conclusion were in highly exposed workers … initial studies showing a risk in heavily exposed occupational groups were followed by positive findings for the general population.” An American Cancer Society page on diesel exhaust has this elaboration: “Exposure to diesel exhaust is widespread in the modern world. Exhaust from diesel engines brings a complex mixture of soot and gases to roadways, cities, farms, and other places. Health concerns about diesel exhaust relate not only to cancer, but also to other health problems such as lung (respiratory) and heart diseases.” It adds that while people are exposed to diesel exhaust by breathing in the soot and gases, “(t)he amount of diesel exhaust people are exposed to varies greatly. Measuring these exposures is not easy because diesel exhaust is chemically complex and many parts of it are also found in a lot of other sources. This has been … a major challenge in scientific studies.”

Formaldehyde from wood products. Another

substance deemed carcinogenic by the WHO is formaldehyde. According to the National Resources Defense Council’s (NRDC) fact sheet on formaldehyde, this compound is used in many household items, such as plywood, furniture, composite or pressed wood products, wallpaper, glues, antiseptics, cosmetic and nail polish. Long-term exposure can lead to cancer of the nasal passages and throat, and other parts of the respiratory tract. In order to minimize exposure, NRDC recommends the following: 1. Look for wood furniture or fixtures that use particleboard are laminated or coated 2. Choose exterior-grade rather than interiorgrade pressed wood products for remodeling 3. Make sure areas with products that contain formaldehyde are well-ventilated

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‘Health concerns about diesel exhaust relate not only to cancer but to other health problems such as lung and heart diseases’ ~ American Cancer Society

Vinyl and polyvinyl chloride in furniture, car upholstery, water pipes. Most of the vinyl chloride

produced in the U.S. goes into the production of polyvinyl chloride (PVC), according to the EPA fact sheet mentioned at the beginning of this piece. PVC is used in manufacturing many different types of plastic and vinyl products, such as pipes that deliver water to households. Smaller amounts of vinyl chloride are used in furniture and automobile upholstery, wall coverings, and automotive parts.

Levels of vinyl chloride in ambient air are usually quite low, coming from discharge of exhaust gases from factories, or evaporation from areas where chemical wastes are stored. As mentioned earlier, higher levels of this compound may be found in new cars. Drinking water may also contain this substance through contact with PVC pipes. Exposure through inhalation increases the risk of angiosarcoma of the liver in humans. In several rat studies, it was shown that exposure at a young age “are associated with higher liver cancer incidence than similar or much longer exposures that occur after maturity.”

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SELECT GROUP 3 AGENTS AGENT

PRODUCT THAT CONTAINS AGENT

Caffeine

Coffee, Tea

Carrageenan

Ice Cream, Cheese

Crude Oil Flourescent Lighting Flourides (inorganic)

Drinking Water

Hair Coloring Products (personal use) Isopropyl Alcohol

Rubbing Alcohol

Jet Fuel Mercury Polystyrene

Plastic Cups and Cutlery, CD and DVD Cases, etc.

Sulfur Dioxide

Dried Fruits, Food Preservatives, Bleach, Disinfectant

Table from TCR compilation of data from WHO-IARC, The Daily Mail, the Polystyrene Packaging Council and the Australian Government’s National Pollutant Inventory

SELECTED CANCER MYTHS AND FACTS MYTH

FACT

Antiperspirants cause breast cancer

No conclusive evidence, according to the National Cancer Institute

Microwave plastic containers release cancer-causing substances into food

Microwave-safe plastic containers and wraps are safe to use in the microwave

Sugar can cause cancer to grow faster

All cells depend on blood sugar for energy. Sugar doesn’t speed the growth of cancer cells.

Table from TCR compilation of data from “Cancer causes: Popular myths about the causes of cancer,” Mayo Clinic

The American Cancer Society (ACS) also bases its list of cancer-causing substances on the IARC list. In a news feature by America Online last July 2010, ACS called for more research on other compounds suspected of being cancer-causing, and pervasive in consumer products: styrene (used in food foam packaging), tetrachloroethylene (dry cleaning), and titanium dioxide (cosmetics, paint, varnishes, etc.).

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The other item on the list, diesel exhaust, has since been moved to a Group 1 classification. Going back to the IARC list, following the agents found to be carcinogenic to humans are the Group 2A agents (pages 5-9) and the 2B agents (pages 9-17). Group 2A agents are “probably carcinogenic to humans.” This means there is sufficient evidence

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News & Strategy Alerts Health/Lifestyle of carcinogenicity in animals and limited evidence of carcinogenicity in humans. Group 2B agents are “possibly carcinogenic to humans,” which means there is limited evidence of carcinogenicity in humans and less than sufficient evidence of carcinogenicity in experimental animals. For lack of conclusive evidence, these compounds will not be included here.

Clarifying some myths. Group 3 agents (pages

17-31) are “not classifiable as to its carcinogenicity to humans.” The evidence of carcinogenicity is inadequate in humans, and inadequate or limited in experimental animals. Due to the widespread reach of rumors regarding cancer-causing agents, some Group 3 items will be included here just to clarify that they have not been found cancer-causing to humans as of yet. Carrageenan was deemed unclassifiable by the IARC, but was found to cause gastrointestinal cancers by Dr. Joanne Tobacman, a professor of clinical medicine at the University of Iowa. She said this after a review of 45 studies on the effects of this substance. This was reported in a Sept. 13 article posted on the U.K.’s Daily Mail site.

The Mayo Clinic has also compiled a list of myths that they have clarified regarding carcinogenicity of certain products. With all the rumors of this or that product causing cancer, and with all the concern about cancer becoming a leading cause of death, people are rightly concerned about their chances of getting sick. Nonetheless, it’s probably better to look to established authorities like the World Health Organization, the American Cancer Society, and similar groups for guidance on these matters, rather than from chain e-mails.

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Rising suicide cases in the Philippines The Philippines is not among countries with the highest suicide rates, yet the rising incidence of local cases is alarming Rising suicide cases must be addressed through interventions that consider psychological, social, biological, cultural and environmental factors The Department of Health (DOH) sounded the alarm over the rising number of suicide cases in the Philippines, with at least two incidents per day or 700 cases per year, in a report from Sun Star Iloilo. In said report, Dr. Venus Serra Arain of the National Center for Mental Health pointed out the lack of a comprehensive program on mental health in the country and stressed the need for continuing research on suicide and non-suicide behavior that addresses the risk and protective factors of the vulnerable sector, which includes students, jilted lovers, and persons suffering from depression. The National Statistics Office (NSO), as cited by a Philippine Daily Inquirer report, says that, in the last 21 years, the suicide rate in the Philippines has gone up with cases involving mostly young people aged 24 and below. NSO says the suicide rate from 1984 to 2005 went up from 0.46 to seven out of every 200,000 men and from 0.24 to two for every 200,000 women. The increasing suicide rate in the country is an issue that must be addressed by looking at socioeconomic factors (unemployment and poverty), the level of awareness that can bring about early intervention, mental health of the population (cases of depression), and centers that can help individuals cope with adverse life situations. Focused suicide

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prevention programs can also be set up to boost awareness and help individuals cope. A study on suicide cases in the Philippines which analyzes 1974-2005 data found that suicide attempts and mortality were generally higher among adolescents and young adults. Though the rising number of suicide cases is alarming, and is something that must be acted upon promptly, globally, the Philippines is not among the countries with the highest suicide rates. Data from the World Health Organization (WHO) reveal the suicide rate in the Philippines as of 2011: 2.5 per 100,000 men and 1.7 per 100,000 women. According to the WHO, on the average, almost 3,000 people commit suicide daily and 20 or more may attempt to end their lives. Among the countries with the highest suicide rates based on WHO data are: Lithuania (61.3 per 100,000 males and 10.4 per 100,000 females), Republic of Korea (39.9 and 22.1), Japan (36.2 and 13.2) and the Russian Federation (53.9 and 9.5). In line with World Suicide Prevention Day 2012, Shin Young-soo, WHO regional director for the Western Pacific, encouraged the adoption of “good and effective suicide prevention practices” and urged member-states to invest in mental health services and in training healthcare providers in suicide prevention. Cited in a report from The Philippine Star, the WHO said that, in Europe and North America, mental disorders are the major risk factors in suicide, while in Asian countries, impulsiveness plays an “important role.”

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The complexity of suicide lies in the psychological, social, biological, cultural and environmental factors involved that cause the deep suffering of the person. It is, likewise, devastating for families, friends, and people close to the victim. The WHO suggests addressing protective factors against suicide, which includes: helping at-risk individuals to become resilient in coping with adverse life events; instilling in them a sense of personal worth and confidence; equipping them with effective coping and problem-solving skills and adaptive help-seeking behaviors; and helping them to develop stronger spiritual and social ties.

Toxic toys in Divisoria samples Extra care and scrutiny should be made by early Christmas shoppers, in light of the proliferation of toys which contain toxic chemicals Pertinent Consumer Act guidelines on toys, plus other measures to promote safe and sustainable children’s products, should be effectively implemented With the start of the Christmas shopping season, the EcoWaste Coalition, a network of health and environment advocates, warned consumers against buying cheap and unlabeled toys which may contain chemicals that are harmful to children. The warning was issued following a testing of about 150 toy samples from local discount hub Divisoria, 74 (49%) of which were found to contain toxic metals “above levels of concern.” The investigation also showed that 148 of the samples carried no license to operate on their labels, and that none provided complete product information, including their chemical composition.

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and Children’s Products: Limitations of Current Responses and Recommendations for Government and Industry, provide recommendations to the U.S. federal government and toy industry which might also be applicable to the Philippine situation.

Dangerous toys

GMA News Online

Lead, the toxic substance found in many of the contaminated samples, can be very harmful to people, especially children. Kidshealth.org reports that lead ingestion, skin contact or inhalation in the form of dust can cause mental retardation, learning disabilities, decreased intelligence quotient scores, growth delays and behavioural problems among children. According to the World Health Organization lead exposure is also linked to anemia, hearing loss and kidney damage. Needless to say, extra care and scrutiny should be made by buyers in purchasing products, especially those for use of young children. Shoddy craftsmanship, unbelievably low prices, and flimsy packaging, including lack of proper labels, are most of the time giveaways on which products to avoid. Likewise, toys may altogether be avoided. In 10 Tips for Buying Toys and Alternative Gifts for Children, blogger Alexandra Zissu offers sensible alternatives to toys: educational materials such as books, clothes, tickets in a children show, and food. On top of reminders to buyers, there are some things that the government can do to minimize the risk posed by toxic contamination in locally sold toy products. A paper by the Massachusetts Toxics Use Reduction Institute, entitled Toxic Chemicals in Toys

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The said paper identifies two major reasons why toys in the market contain toxic chemicals: lack of regulation and violation of existing regulations, due largely to “complex global supply chains.” In the Philippines, there must be more effective implementation of the Consumer Act, particularly the Department of Health guidelines regulating activities of manufacturers, importers and distributors of toys in the country. The said guidelines impose on these kinds of companies the need to secure licenses to operate and obtain a “Certificate of Conformity for every shipment/ freight, batch/lot… of toys manufactured, imported or distributed in the Philippines.” It is highly doubtful whether such regulation is being strictly enforced, what with five-and-dime toy stores proliferating in Divisoria and everywhere else in the country. The following are some of the recommendations by the Massachusetts paper, which may also be worth heeding and applying here in the country: • Ensure consumers’ “right to know” about toxic chemicals in children’s products, through enforcement of proper labeling, advocacy and awareness campaigns; • Promote the design and development of safer children’s products; • Identify chemicals of concern and establish robust systems to test for these chemicals; • Engage openly with stakeholders, through the creation of business-NGO (or civil society) working groups; • Develop a sustainability roadmap for the development of sustainable children’s products.

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