BusinessMirror April 12, 2016

  In a report made available to the  BusinessMirror,  McKinsey Global Institute’s study, entitled “Ur-ban World: The Global Consumers to Watch,” estimated that in Asia,

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PESO EXCHANGE RATES n US 46.1250 n JAPAN 0.4261 n UK 64.8333 n HK 5.9442 n CHINA 7.1260 n SINGAPORE 34.1086 n AUSTRALIA 34.5891 n EU 52.4672 n SAUDI ARABIA 12.3033 Source: BSP (8 April 2016 )

A broader look at today’s businessBusinessMirrorBusinessMirror

www.businessmirror.com.ph n Monday, April 11, 2016 Vol. 11 No. 184 P. | | 7 DAYS A WEEK

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Exploit rise in working-agepopulation, policy-makers told

Farmers suffer El Niño’s wrath

PPP IN PHILIPPINES POP QUIZ: HOW MUCH DO YOU REALLY KNOW?

Alberto C. Agra

PPP Lead

BMReports

39 LGU PPP PROJECTS

885542211111

1 2 3 4 5 6 7 8

Markets

Property Redevelopment

Water

Terminal

Reclamation

Housing

Health

Wind

Slaughterhouse

Columbarium

Port

Bridge

BM GRAPHICS: JOB RUZGAL AUTHOR: ALBERTO C. AGRA

MONTHLY RAINFALL FORECAST Normal (mm) April 2016

1981-2010 Forecast (mm) % NormalApril 2016

Forecast (mm) % Normal Normal (mm) (1981-2010)

Monthly Rainfall Forecast

SOURCE: PAGASA

HOW much or how little do you know about public-private

partnerships (PPPs) in the Philippines? Should PPPs be understood by ordinary citizens? Is there a broad learning ecology on PPPs? Do stakeholders have a common understanding of what a PPP is and what it is not?

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B F V. ESpecial to the BM

First of three parts

THE violence that erupted during the dispersal of the pro-

test rally blocking an impor-tant highway in Kidapawan City, North Cotabato, re-cently was a grim lesson in re-ality. When there’s prolonged drought and dry spells, com-munities that depend on ag-riculture go hungry.

For those in Metro Ma-

nila who have never lived in a farming community, this was just a barely un-derstood and largely abstract concept, until the vivid photos and videos of the dispersal slammed the reality of the farmers’ lot right in front of the public’s consciousness. At first, what happened in Kida-pawan was portrayed as a simple local law-enforcement incident. The attempted message was that people ignored the law, prompting local officials to send in the police. It turned out that the matter was not that simple. The farmers agreed to join the rally because of one simple fact: their

crops had failed due to lack of water. They were hungry and desperate.

Upbeat toneTHE national government, through the Department of Agriculture (DA), did take steps to mitigate the expected effects of the El Niño-spawned drought. The weather bureau also issued regular reports of the different provinces that suffered from below-normal rainfall.

However, the focus of the DA’s press releases on the drought tended to be upbeat, which had the effect of down-playing the real extent of the problem.

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THE number of working-age residents in Metro Manila is forecast to rise by more than 29

percent, or 2.5 million, in 15 years, and this demographic fact will compel a rethinking of existing business models to allow for the profitable exploitation of this new age demographic, a global think tank said.

2.5MNumber of young people who will be added to the working- age population in Metro Manila by 2030

ALYS

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VP HOPEFULS SQUARE OFF IN DEBATEThe six-cornered vice-presidential debate before a jam-packed gallery at the University of Santo Tomas pavilion kicked off smoothly on Sunday, but quickly heated up when candidates were asked about their stand on corruption.

Story on A8-A9

INSIDE

SPORTS C1

B F V. ESpecial to the

Ttest rally blocking an important highway in Kidapawan City, North Cotabato, recently was a grim lesson in reality. When there’s prolonged drought and dry spells, communities that depend on agriculture go hungry.

For those in Metro Ma

ONE MORE FIGHT?Manny Pacquiao, 11 months after his record-selling Floyd Mayweather Jr. loss, returned to form with heavy punches, overpowering Timothy Bradley Jr. to close their trilogy and cruise to triumph by scores of 116-110 from all three judges.

AP PHOTO

Special to the BM

the country’s National Capital Re-gion (NCR) was seen as some of the world’s most densely populated cit-ies filled with young consumers.  This contrasts starkly against a global phenomenon, especially among the more advanced econo-mies, which are forecast to show expanding elderly demographics, even as their working age popula-tion decline over the next 15 years.

McKinsey Global Institute es-timated the current working class population within the NCR at 8.5 million. The think tank also said Manila and neighboring Jakarta were to report the largest working age population increases from 2016 to 2030.

A c c o r d i n g t o Mc K i n s e y, Manila’s working age population will increase by as much as the en-tire working age population in Rome today by 2030. As a result, consumption ac-tivities will intensify and hit an estimated $74 billion as the NCR population expands, according to the think tank’s estimates.

The expansion in the demo-graphic space should not only result from the natural birth rate, but also the migration of young people from rural to the more urbanized region in search for higher quality educa-tion and career path. The various local companies were then urged to study the demographic changes in order to adapt to the shifts in the consumer base and to cater successfully to the shifting taste of the consuming population. “Those of working age in South Asia and Southeast Asia are ris-ing consumer groups where aver-age incomes are still relatively low today but are set to increase; their consumption habits are evolving,” the global business and economic think tank said. “These consumers are likely to be responsible for a spurt in con-sumer demand for a broad range of goods and services, similar to the patterns we observe among those of working age in China,” it added. The Philippines has proven a consumption-driven economy with a record of resiliency against volatilities in the global economy. “The Philippines is heavily dependent on consumption. In fact, we’re 70-percent driven by household spending,” Bank of the Philippine Islands (BPI) research officer Nicholas Antonio Mapa told the BusinessMirror earlier.

Also, McKinsey said the adop-tion or use of digital technology in companies play a major role in the evolving consumption story in the coming years. “They [the younger consumers] are very likely to shop around for financial services and buy online…. They have more choices than previ-ous generations. Millennials grew up with the Internet and digital technologies,” the think tank noted.

Aside from having proper tech-nological platforms for options for online purchases, McKinsey said firms must not let go of traditional person-to-person marketing strat-egies as younger generations tend to value “word-of-mouth” informa-tion on products from their peers.

“Cohorts that have grown up in the era of technological connec-tivity demonstrate some evidence of two shifts in attitude based on McKinsey’s research across indus-tries. One is a propensity to trust their peers when judging whether a good or service is worth buying, rather than relying on information from the companies and organiza-tions that provide them,” the think tank said.

Also, among the observed at-titude that firms must look into is the expectation of a fast-delivery system from firms that offer online services and delivery of products. The think tank said younger con-sumers have a “desire for immediate delivery of those goods and services… or at least as quickly as possible.” “Companies should take note and explore whether these attitudes of-fer new opportunities,” the think tank said.

BusinessMirror www.businessmirror.com.ph Monday, April 11, 2016A2

BMReportsFarmers suffer El Niño’s wrath C

There was no sense of urgency. For example, the DA issued a press release on March 27, titled “Battling the Heat,” five days before violence erupted in Kidapawan City on April 1.

The press release said: “In spite of the strong El Niño that has been battering the entire nation since September last year, the Department of Agriculture [DA] is optimistic that only a small percentage in production and yield decrease will be felt.”

The DA’s press release was factual. How-ever, it glossed over the drought’s effect on farmers. “For more than a year, February 2015 to March 2016, 313,356 hectares, from com-bined rice- and corn-production areas, were reportedly affected,” the press release stated. “This is 231,666 hectares less than the affected areas during the 2009 and 2010 dry spell.”

The statement continued the “minimal damage, according to agri-experts, may be at-tributed to the prompt distribution of support and assistance, as well as the dissemination of information to farmers.”

The DA also focused on its cloud- seeding efforts, describing it as its “most effective El Niño adoption strategies,” which “bring in positive results.”

“In Mindanao, particularly in Soccsksar-gen, Agriculture Secretary Proceso J. Alcala called for additional hours of sorties, follow-ing a successful series of cloud seeding.”

“In other parts of the country, cloud-seed-ing operations have already taken off—result-ing to scattered rain showers that provided a refreshing break for the arid farmlands,” the DA proudly stated in its press release.

Finally, a sense of urgencyAFTER scores were hurt in the violent disper-sal in Kidapawan, the agriculture secretary said his agency will “fast-track monitoring to ensure the efficient delivery of appropri-ate services/interventions critical for the re-habilitation of affected areas.”

As proof that the agency did something to help farmers in drought-stricken areas, he said from April to July, the DA plans to dis-tribute thousands of bags of seeds, rice and thousands of tons of fertilizer for distribution to affected farmers.

He added the “water-augmentation initia-tives” will also be undertaken. This will consist of setting up “332 pump and engine sets, nine units of diversion dams, 1,816 units of pump irrigation for open sources and four units of drilling rigs.” Finally, a sense of urgency can

be heard in the agriculture secretary’s tone when he used the word “critical.” Gone are the positive phrases “minimal damage” and “positive results.” This latest effort of the DA will definitely help farmers recover from their plight. However, he neglected to mention that this surge of assistance will come at a time when the adverse effects of the drought were expected to ease.

The statisticsTHIS writer obtained data from the Rice and Corn Situation Outlook report, which was released by the Philippine Statistics Author-ity in January. The report presented the January-to-June 2016 palay and crop outlook with rainfall data obtained from the Philippine Atmo-spheric, Geophysical and Astronomical Ser-vices Administration (Pagasa).

The report said, “Rainfall outlook indi-cates that below normal to way below normal rainfall conditions will likely be experienced due to the ongoing El Niño affecting rainfall pattern that may lead to very dry conditions over large areas of the country.”

As early as January this year, this report foresaw that palay and corn production would be lower for the first half of the year due to the lack of rainfall.

“Based on standing crop, probable pro-duction in January to March 2016 will be 4.15 million metric tons [MMT] 4.98 percent below the 4.37 MMT output in 2015,” the re-port said. “Harvest area may contract from 1.15 million hectares in 2015 to 1.10 million hectares in 2016.” The figures clearly presented a decline in potential crop production. The statement that “harvest area may contract” was the only reference on how this would affect farming communities. Less arable land means fewer crops to harvest. And for farmers, that’s a definite loss of income.

But what happens if conditions are so dire, farming activities cannot commence? What happens to the people living in the affected farming communities?

Clear languageTHE weather bureau regularly publishes re-ports explaining how the current prevailing weather will impact agricultural operations. Thelma A. Cinco, head of the Impact Assess-ment and Application Section, Climatology

and Agronometeorology Division of Pagasa, explained that these reports were designed to help farmers understand prevailing weather conditions and help them decide whether to plant crops.

Cinco explained that Pagasa had a specific meaning to the word “drought”.

“From December, January to February, we had three consecutive months of way below- normal rainfall condition,” Cinco said. “We consider that as drought in affected areas.”

“Way below-normal rainfall meant that there has been a greater than 60-percent re-duction from the recorded average rainfall in an area,” she added.

“A dry spell meant that certain areas un-derwent three consecutive months of below- normal rainfall condition,” she added. “Below- normal rainfall condition means rainfall in those areas have fallen at least 21 percent to as much as 60 percent from the average rainfall.”

She also explained that “dry condition” meant there was two consecutive months of below-normal rainfall for any given area. Based on Pagasa’s climate report for Janu-ary and February, five regions were adversely affected by the ongoing El Niño, namely, Region 9 (Zamboanga Peninsula), Region 10 (Northern Mindanao), Region 11 (Davao Region), Region 12 (Soccsksargen) and the ARMM (Autono-mous Region in Muslim Mindanao).

The report prepared by Cinco’s depart-ment also showed that one region, Region 13 (Caraga Region) in parched Mindanao escaped El Niño’s wrath.

The reportFOR Region 9, the report said “no farming activities may be undertaken in any part of the region because of very low rainfall re-ceived.... Zamboanga Peninsula continues to experience drought condition.” The report also revealed that farmers should expect below-normal yield in Region 10, because of “moisture stress experienced by crops during their vegetative stage.” For the Davao region, the report was blunt: “During the month, insufficient moisture supply hampered any farming activities. Con-tinuous dry spell is being experienced across the region.”

The report for Region 12 was also dire: “In-sufficient moisture persists across the region; any farming activities related to lowland palay and dry season corn may not be undertaken.”

The weather bureau’s analysis also brought

bad news for the ARMM provinces: “The re-gion has been experiencing drought condition, hence all farming activities are hampered. The rainfall received is still insufficient for any farming activities undertaken.”

The report stated clearly that the lack of wa-ter had made it nearly impossible for farmers in drought- affected areas in Mindanao to conduct their livelihood in January and February.

A source who was privy to the writing of these reports told this writer that Pagasa’s re-port for March contained a similar analysis. The source explained the report for March would be released in a “few days.” Pagasa used clear language to help the public, particularly farmers, understand how the ongoing El Niño was adversely affecting the agriculture and farming communities in specific areas.

The DA did acknowledge the weather bu-reau’s report by stating the existence of a “strong El Niño” in its March 27 press release that a “strong El Niño” in the country.

However, the DA use of the term “minimal effect” downplayed the situation in that May 27 press release, especially when compared with the weather bureau’s use of clear language.

According to the drought/dry spell out-look released by the weather bureau at the end of February, “31 percent of the country will likely experience drought.” This will cover 25 provinces. One province, Palawan, is in Luzon, while nine provinces are in the Visayas, namely, Antique, Capiz, Guimaras, Iloilo, Negros Oriental, Siquijor, Eastern Sa-mar, Northern Samar and Western Samar. The remaining 15 provinces are in Mind-anao, namely, Zamboanga del Norte, Zambo-anga del Sur, Zamboanga, Sibugay, Bukidnon, Lanao del Norte, Misamis Oriental, South Cotabato, North Cotabato, Sarangani, Sultan Kudarat, Basilan, Maguindanao, Lanao del Sur and Tawi. As announced by Alcala after the violence in Kidapawan, the agriculture department will enhance its cloud-seeding activities to combat the effects of the drought. The question now is: How effective will it be? This writer spoke with Ma. Cecilia Monteverde, the weather bureau’s technical supervisor for the cloud-seeding project and Eng. Lorenzo A. Moron, the project’s coordination officer.

Their explanation, which will appear in the next installment of this story, will explain the science of cloud seeding and its actual effect, especially in face of the ongoing El Niño.

To be continued

Working-age. . . C A

[email protected] Monday, April 11, 2016 A3

“The pace of [negotiations] will be dictated by our ensuring the con-tinued access to the EU market. We

want to make sure that by the time we graduate from the EU-GSP+ [EU under the Generalized System of

Preferences Plus], we’ve already secured the FTA,” Rodolfo told the BusinessMirror.

Since December 2014, the Phil-ippines has been benefiting from the enhanced trade preferences granted by the EU-GSP+. Under the EU-GSP+, tariff rates on some 6,200 Philippine products were slashed to zero.

As of end-June 2015, exports of Philippine products covered by the EU-GSP+ expanded by 27 percent or to €742,788.28 from €584,292.58 in 2014, according to Walter Van Hattum, economic and trade section chief of the EU delegation in Manila.

Securing an FTA with the EU, Rodolfo said, would result in higher shipments of Phil ippine products to European coun-tr ies.He said the Philippines is

particularly keen on expanding shipments of farm products to European countries. Negotia-tions for a region-to-region FTA between the EU and the Asso-ciation of Southeast Asian Na-tions (Asean) were launched in 2007 and were put on hold in 2009 to give way to a bi lateral format of negotiation.

These bilateral FTAs were con-ceived as building blocks towards a future region-to-region agree-ment. So far, the EU has completed

bilateral agreements with Singa-pore in 2014 and with Vietnam last year.

The Philippines is the EU’s sixth-largest trade partner in Asean and ranks 44th worldwide.

In 2014 the EU exported goods worth €6.8 billion to the Phil-ippines, while EU imports from the Philippines amounted to €5.7 billion. EU exports to the Philip-pines consisted mostly of trans-port equipment, machinery, food products, chemicals and electronic

components. The country’s main exports to European countries include office and telecommunica-tion equipment, machinery, food products and optical and photo-graphic instruments.

The trade in services between the EU and the Philippines was worth €3 billion in 2013.

The EU is a lso the largest foreign investor in the Phi l ip-pines, with a foreign direct in-vestment stock in the countr y of over €6.2 bi l l ion.

Philippines, EU to launch formalfree-trade agreement talks next month

We want to make sure that by the time we graduate from the EU-

GSP+, we’ve already secured the FTA.”—R

€5.7BValue of goods exported by the Philippines to EU in 2014

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THE Department of Trade and Industry said the Philippines and the European Union

(EU) will launch the first round of negotiations for a free-trade agreement (FTA) in May. Trade Undersecretary Ceferino S. Rodolfo said negotiations for an FTA could be concluded in two to three years.

BusinessMirror www.businessmirror.com.ph Monday, April 11, 2016A4

BMReports

How about the tanim or laglag bala episode? This bullet-planting scheme was so uniquely Filipino, so in-your-face hustling only a deter-mined and corrupt group of individu-als would have the gall to conceive it and get away with it.

These are the questions irate Filipino travelers ask. Many of them travel around Asia and the world and are able to compare the Naia to other airports worldwide.

Upon arriving in their foreign destinations, they see the gleaming interiors of Changi terminal in Sin-gapore, Chep Lap Kok in Hong Kong, Malaysia’s Suvarnabhumi or China’s Pudong, and suddenly feel inferior.

Pudong’s maglev would whisk passengers away to the city center in 15 minutes. Kuala Lumpur and Japan’s Narita airport are linked by super-fast trains. The rest are served by buses and taxis that do not waylay their passengers.

For instance, Naia roofs leak and there are no sleeping areas for weary travelers waiting for their connect-ing flights. There are also no enter-tainment facilities for them. Res-taurants at the terminal are so-so.

Naia 1 was supposed to offer better services after its P1.4-billion upgrade. Too bad, Nayong Pilipino, created during the Marcos years, was carved up for an access road to con-nect Naia 3 to Naia 1 in the absence of a tunnel. It was never used.

“Minalas tayo [We were un-lucky],” rues Manila International Airport Authority (Miaa) Jose An-gel Honrado. He said this before members of the media to explain the six-hour blackout that struck his turf last week. He admits, however, that the batteries he or-dered replaced in the wake of the blackout were behind his standby generators’ inability to start.

Honrado is a graduate of the Phil-ippine Air Force Flying School in Batangas. He used to be a helicopter pilot and was conferred a Master in Management from the Philippine Christian University in 2000.

But it is his closeness to the Aqui-nos that allegedly serves as his ticket to be the big kahuna of the country’s premier airport.

On July 8, 2010, he was sworn in as the general manager of the Miaa, a position he holds to this day.

He served as security consultant of President Aquino during the May 10 elections and also as spokesman of the Armed Forces of the Philip-pines (AFP). He was as aide-de-camp of the late former President Corazon Aquino.

There is a story going the rounds—which Honrado does not deny—that he threw himself to protect current President Aquino during Gringo Honasan’s siege of Malacañang in the late 1970s. Three of Aquino’s bodyguards were killed. He and Honrado survived.

Honrado is also an Aquino on his mother’s side.

While Honrado is boss of the Miaa, collections from airport taxes and fees in 2014 amounted to P9.3 billion, netting P5.25 billion. Miaa posted a net profit after tax of P3.06 billion.

The Naia was dubbed the world’s worst airport from 2011 to 2013, and the fourth worst in 2014, according to online travel web site Guide to Sleeping in Airports, which ranks airports based on comfort, conve-nience, cleanliness and customer service. In 2015 the Naia was dubbed the worst airport in Asia.

“Absolutely horrible to connect through this airport if you arrive in one terminal and need to get to another. Shuttle buses are infre-

quent and can take over an hour in the traffic. And forget about taxis; the lines take even longer,” a traveler said.

Despite the billion-peso upgrade and the transfer of five major car-riers to Naia 3 to help decongest it, Naia 1 is bugged by leaking ceilings, while Naia 2 and Naia 3 have col-lapsing floors. “Passengers remain annoyed by the poor customer ser-vice, the long queues, the subpar food selection, the lack of restrooms and the crowded seating areas. There is definitely a long way to go, but we’re thrilled to see improvements come along bit by bit,” said a blogger.

Perhaps, as one ranking official deduced, “Honrado is not getting the full cooperation of his subordinates.”

This bad blood occurred between

Honrado and the employees shortly after the Aquino administration took over in 2010.

Before that, the airport’s divi-sion chiefs were receiving midyear bonuses amounting to almost half-a-million pesos each. From this income, the employees were able to enroll their children in college, bought cars on terms, and maybe

invested in a decent home.When Honrado removed all of

these incomes, except the 13th-month pay, the employees were left with practically nothing to continue the education of their children. Some of the cars were repossessed and the dream house never became a reality.

The low morale was compounded when Honrado would go to the Palace every year and give President Aquino a check for P1.5 billion in alleged savings. The Miaa cooperative had invested some money to engage in selling cellular-phone cards at the airport’s arrival areas. The dividends from these earnings were shared by the employees, but eventually re-moved. A new concession was given the privilege to sell Smart and Globe cards, our source said.

The BusinessMirror asked one of these concessionaires how much they earn in a day. They refused. A lady seller nodded when the Busi-nessMirror suggested they earned P100,000 daily. But perhaps, it was Honrado’s military background and orientation that shocked the em-ployees most.

The employee said that during meetings, Honrado would tear up the document a subordinate submitted just to show his pique. He was also wont to throw tantrums and threats, the source said.

“I will step down on June 30, 2016,” he would tell his employees. The BusinessMirror was told that as early as three months into his job, some critics were already asking for his head.

Is bad luck behind Naia’s notoriety as ‘worst airport in the world’?

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WAS it really bad luck that plagued the Ninoy Aquino International Airport (Naia)

during the last six years, making it the focus of unwanted world attention af-ter being tagged “The worst airport in the world”?

WA S H I N G T O N — I t ’ s standard Republ ican criticism of President

Barack Obama’s handling of the economy. Unemployment has been halved from 10 percent in 2009 to 5 percent today, but that’s mainly because so many people have gotten so discouraged that they’ve just given up looking for work. Factor that in and real job-lessness is a lot higher.

But over the past six months the narrative in the jobs market has changed for the better—for Obama and for ordinary Ameri-cans. Encouraged by improving employment prospects, more than 2 million people have flooded into the work force since September, the biggest six-month gain in records going back to 1990, using data ad-justed for changes in population estimates. And unemployment has continued to fall, although slightly.

The big question is whether that

happy combination can continue. Mary Daly, a senior vice president and job-market expert at the Fed-eral Reserve (the Fed) Bank of San Francisco, thinks it can. She sees the labor force participation rate—the share of working-age Americans who are employed or looking for work—rising further as unemployment sinks to about 4.5 percent by the end of 2016.

“As the economy continues to grow and good jobs growth con-tinues, you’ll see workers being drawn back in” to the labor force, Daly said. “That could persist all the way through the end of this year and into early next year.”

Some other economists are less optimistic. Michael Feroli, chief US economist for JPMorgan Chase & Co. in New York, sees the participa-tion rate holding at about 63 percent through the end of this year as job-lessness falls another half percent-age point. Bloomberg News

PEOPLE waiting in front of arrival hall of Ninoy Aquino International Airport Terminal 3. NORIEL DE GUZMAN

Rising US labor force belies Republican criticism of Obama

SOME of the best minds watch-ing over the economy could not agree on whether or not the

US Federal Reserve (the Fed), whose monetary policy adjustments have far-reaching impact on emerging market economies, like the Philip-pines, would finally decide on an in-terest rate hike and spare everyone from the agony of second guessing decision-makers at the world’s most influential central bank.

The economists at two of the country’s largest banks hold op-posing views as to whether the Fed, which kept its policy rates unchanged and close to 0 percent in January and again in March this year, would make the adjustment and push its borrow-ing rate higher this month as some of the best economic minds in the world anticipate. There is considerable dis-agreement that such an adjustment

is forthcoming this month and there are those who continue to insist that such an adjustment could happen no earlier than December.

BDO Unibank chief market strate-gist Jonathan Ravelas told the Busi-nessMirror the local markets con-tinue to be risk averse at the moment on account of continued uncertainty in the global markets, as well.

“The dovish statements of the Fed [have] raised concerns on global

growth. In the near-term this will cause investors to be risk averse,” Ravelas said in response to a query.

“This is causing the local players to take profits. This could take the PSEi [Philippine Stock Exchange in-dex] to 7000. The market will look for new data to support the rise,” he quickly added. The numbers at the close of trading at the Philippine Stock Exchange on Friday show the index at 7,247.2, rising by 0.2 percent

from the previous day’s close.Bank of the Philippine Islands

(BPI) research officer Nicholas An-tonio Mapa would stress he would not consider the latest to come out of the Fed as significantly more dovish than earlier statements.

Mapa said the latest US Fed state-ments would likely compel markets to put on “a bit more risk-on senti-ment for the time being.”

“For the Philippines we’ll be tak-ing our cue from all these shifts in sentiment with possible blips in June on the election outcome,” Mapa said.  

“By September or October, we may see very good growth numbers that will turn sentiment around as we focus on our bread-and-butter game plan for growth: consumption and with inflation and oil still low, we could see a very robust showing,” he added. Bianca Cuaresma

Economists disagree on timing of US Fed interest rate increase

�e dovish statements of the Fed have raised concerns on

global growth. In the near-term this will cause investors to be risk averse.”—R

Airport taxes and fees collected by the Miaa in 2014

₧9.3B%

[email protected] Monday, April 11, 2016 A5BusinessMirror

AseanMondayThe Southeast Asian city-state ranks behind London

and New York, and two points ahead of Hong Kong on the Global Financial Centres Index, published on April 6 on the firm’s web site.

The index, which has a scale of 1,000 points, is based on surveys of 2,520 financial-services professionals, ac-cording to the press release.

T he ra n k ing ref lects key compet it ive a r -eas inc lud ing business env ironment, f ina n-

c i a l sector deve lopment a nd inf ra st r uct u re of t he 86 hubs a rou nd t he world covered by t he su r vey.

Tokyo ranks fifth and Zurich sixth in the results. Z/Yen Group first published the survey in March 2007, according to its web site.

According to the most recent official data, Singapore lagged behind Hong Kong in terms of total assets un-der management.

Assets held by Singapore’s fund management industry climbed 30 percent to S$2.36 tril lion ($1.75 tril lion) in 2014, the latest figure avail-able, according to the Monetary Authority of Singapore.

Hong Kong’s combined fund assets amounted to a record HK$17.7 trillion ($2.3 trillion) in that year, according to the city’s Securities and Futures Commission. Bloomberg News

Singapore edges Hong Kong as No. 3 financial center SINGAPORE edged past

Hong Kong as the world’s No. 3 financial center,

according to a survey by London-based research firm Z/Yen Group.

THE total value of investment submitted to the Thai Board of Investment (BOI) in the first quarter of this year jumped 234 percent to 89.9 billion baht due to the government’s

investment measures and the BOI’s proactive approach, according to Deputy Prime Minister Somkid Jatusripitak.

The figure was a significant leap from 26.9 billion baht in the same period of last year.

“It is very good news that investment submitted to the BOI in the first three months tripled from the same period of last year,” Somkid said.

In March alone the total investment value jumped 420 percent to 54 billion baht, up from 10 billion in the same period of 2015.

Somkid said the rise in investment value stemmed from the efficiency of the BOI in promoting investment.

Japan, China, South Korea and Singapore accounted for the lion’s share of investment in the first quarter.

Investors from those four countries expressed an interest in the automotive, petrochemical, aviation and electrical sectors.

However, Somkid urged the BOI to implement further pro-active measures in order to help accelerate investment in the remainder of the year.

Given the impressive rise in new investment in the first quarter, Somkid said he is confident total investment would reach the target of 450 billion baht this year.

In addition, Somkid appointed a new BOI special task force to pursue projects that were approved since 2014 but have not yet started real investment.

He said the task force would inspect projects worth up to 1.9 trillion baht to see if there are problems that the BOI could solve in order to accelerate their investment.

“This task force will check on these projects to determine the problems that are hindering or delaying their investment,” Somkid said.

If all the projects given the green light since 2014 started real investment, it would increase the total investment value to outpace the target and reach 600-700 billion baht, said the BOI Secretary-General Hiranya Suchinai.

Kan Trakulhoon, former president and chief executive of Siam Cement Group and also advisor to the deputy prime min-ister, said rising sales of cement in the first quarter of this year also reflected an improvement in the economy. TNS

Thailand’s investment leaps in first quarter

YANGON—Myanmar is expecting its rice export to reach 4 million tons in 2020 as more markets will be explored, China’s Xinhua news agency reported Soe Tun, vice presi-

dent of Myanmar Rice Federation, as saying.“We expect to export about 2 million tons for this fiscal year

2016-2017. Moreover, we expect the export to reach 4 million tons in 2020 if we can explore more markets,” he told Xinhua.The federation expects Myanmar rice to penetrate into more mar-kets to pick up export.

Therefore, they urged newly appointed Agricultural Minister Aung Thu to sign government to government agreements with foreign countries for more rice export at a meeting held in Nay Pyi Taw, he added. The country signed memorandum of understand-ing (MOU) for rice export to China, Indonesia and Philippines last year. However, these MOUs have expired.

Thus, the federation urged the minister not only to amend these MOUs but also to sign MOU with Japan this year. Myanmar exported over 1.4 million tons of rice last year, mostly to China and European countries.

According to a United Nations report, its national paddy pro-duction in 2015 is down two per cent on the average of the past three years due to flood triggered by Cyclone Komen in late July and early August. PNA/Bernama

Myanmar expects 4M tons of rice export in 2020

AIRBUS Helicopters is upbeat on the sales potential of its H145 light utility helicopter in Southeast Asia, where it envisions the number of choppers taking to the skies to double to 200

over the next five years.Some 100 new H145s could be delivered to the region both for ci-

vilian and military use over that period, said Lionel Sinai-Sinelnikoff, vice president for Southeast Asia.

The region’s prospects has led Airbus Helicopters, the helicopter manufacturing division of European aerospace group Airbus, to stage a series of demonstration flights in Thailand, Malaysia, Indonesia and Taiwan to showcase the aircraft's capabilities to potential buyers.

Airbus Helicopters is seeking to further raise its profile in Thai-land, where there are nine H145 series helicopters in operation, with 11 more due for delivery between now and the end of 2017, said Matthieu Debrand, head of Airbus Helicopters Thailand. Debrand, however, declined to name the buyers. TNS

Airbus Helicopter expects big sales in Southeast Asia

Buoyed by some good economic news and a surge of goodwill from his base of supporters, President Barack Obama is seeing his ap-proval rating rise. �at puts Obama, who leaves o�ce in January, in a position to remain a force in the po-litical debate at a point in his �nal term when some of his predecessors faded into the background.

For the �rst time since 2013, more than half of Americans, 53 percent, have a favorable opinion and 44 percent have an unfavorable opinion of the president, according to a new Associated Press-GfK poll. �at’s an improvement since Febru-ary, when 45 percent said they rated him favorably.

�e survey found the apparent uptick in approval extended across issues, including foreign a�airs, immigration and, most notably, the economy, where people said they felt slightly better about their own prospects and Obama’s stew-ardship.

Asked about their opinion of Obama more generally, those sur-veyed were more likely to give him a positive rating than any of the can-didates for president, Republican or Democrat.

Terry Trudeau, 66, said he pre-ferred Obama to “all of them” run-

ning for the White House.“One of the qualities I like is he’s

been able to work with other coun-tries and make deals,” Trudeau said, citing Obama’s climate-change pacts with China as an example. “Donald Trump will never be able to do that. He would try to bully them.”

Obama’s numbers remain modest.Compared with his predecessors,

he’s well above Republican George W. Bush, who had about a 30-per-cent approval rating at this point in his presidency, but below Democrat Bill Clinton’s roughly 60 percent, according to polls conducted by Gallup. Still, where each of those second-term presidents largely sat on the sidelines during the races to replace them, Obama is poised to stay in the game.

Approval ratings generally are tied to how people feel about the economy. Obama has enjoyed and

promoted a steady trickle of positive economic news. �e survey showed people were slightly more likely to describe the economy as good and slightly more optimistic about their own �nancial situations than they were in February.

Still, 54 percent characterize the economy as poor.

While the poll found an increase in approval among Democrats and with people under 50, there is no evidence that Republican opposi-tion is thawing or that the president has become a less polarizing �gure. Only about 1 in 10 Republicans ex-pressed a positive opinion of Obama or the job he’s doing.

“I just feel that he’s out of touch with what’s going on. I feel like he’s more concerned with his legacy that making change,” said Angela Buck-master, a 47-year-old Republican from Lansing, Michigan.

Still, the numbers may help ex-plain some of Obama’s recent swag-ger and why it’s likely to continue as he tries to rally his party behind its eventual 2016 nominee—Hillary Clinton or Bernie Sanders.

Obama has been quick to take aim at the Republican candidates. �is past week, he called front-runner Trump’s latest immigra-tion proposal “half-baked.” �e president seized the spotlight with a new rule and aggressive critique aimed at corporate-tax dodgers, risking riling Wall Street but capitalizing on the populism of the moment.

He has put himself at the front and center of the �ght over the Su-preme Court, returning on �urs-day to the law school where he once taught and portraying the Republi-can blockade of his nominee to re-place conservative Justice Antonin Scalia as a threat to democracy.

Obama also conducted his �rst interview as president with Fox News Sunday, a favorite show for conservatives.

�e White House says Obama al-ways planned to squeeze every last minute out of his two terms, regard-less of his popularity. Aides have promised more policy announce-ments, particularly economic initia-tives, as several e�orts long in the works come to fruition.

Also, he probably will be a force in the campaign, working to �re up his core coalition of young, African-American and Hispanic voters, and backers in industrial states, where he has continued to show strength.

Eighty-one percent of those questioned in the poll say the economy is a very or extremely im-portant issue to them personally, compared with the 74 percent who say that about health care or the 69 percent about the threat posed by the Islamic State (IS) group.

People were split 49 percent to 49 percent, in their approval or disapproval of Obama’s handling of the economy. But that divide was a slight improvement over the 44-percent approval in February.

On other issues, views of Obama are not as rosy. More in the sur-vey disapprove than approve of his handling of world a�airs, the threat from IS, immigration and health care. But on each measure, Obama has improved at least slightly since February.

�e AP-GfK Poll of 1,076 adults was conducted online from March 31 to April 4, using a sample drawn from GfK’s probability-based KnowledgePanel, which is designed to be representative of the US popu-lation. �e margin of sampling error for all respondents is plus or minus 3.3 percentage points. AP

WorldBusinessMirror

The

A6 | Monday, April 11, 2016 • Editor: Lyn Resurreccion

Improved economic outlook boosts Obama approval –pollWASHINGTON—As many

people in the United States hold their noses in

the search for the next president, they’re increasingly warming to the president they already have.

WASHINGTON—Three weeks ago, a debilitating digital virus spread quickly in computer networks at

three Southern California hospitals owned by Prime Healthcare Services, encrypting medical and other data so it was impossible to access.

Using a pop-up window, unidenti�ed hackers demanded about $17,000 in the hard-to-trace cybercurrency called bitcoin for the digital key to unlock the data.

The company says it defeated the cy-berattack without paying a ransom. But it acknowledged that some patients were temporarily prevented from receiving ra-diology treatments, and other operations were disrupted brie�y while computer sys-tems were down.

The attempted extortion by criminal hackers was the latest case of what the Fed-eral Bureau of Investigation (FBI) says is a fast-growing threat to vulnerable individuals, companies and low-pro�le critical infrastruc-ture, like hospitals, schools and local police.

The security breaches—which temporar-

ily disable digital networks but usually don’t steal the data—not only have endangered public safety, but revealed a worrying new weakness as public and private institutions struggle to adapt to the digital era.

So-called ransomware attacks have surged so sharply that the FBI says hacking victims in the United States have paid more than $209 million in ransom payments in the �rst three months of this year, compared with $25 million in all of 2015. The FBI has not re-ported any arrests.

“Ransomware is a growing threat to businesses and individuals alike,” Chris Stangl, a section chief in the FBI’s cyber division, said in a statement to the Los An-geles Times.

Companies should train employees not to open digital attachments or to click on unfamiliar web links in e-mails that might contain viruses or other malware, Stangl said. They also should back up critical data and use up-to-date virus-detection software.

Government o�cials are particularly concerned that hackers could lock up digital

networks that run electrical grids, and oil and natural gas lines, Andy Ozment, assistant sec-retary of cybersecurity and communications at the Department of Homeland Security, said in a telephone interview.

Ransomware attacks likely are increas-ing because people are willing to pay, Oz-ment said. “It’s safe to assume if criminals continue to do it, they are making money from it,” he said.

Most of the Internet extortion targets private companies, which rarely advertise paying ransom. Towns must disclose use of taxpayer funds.

In March 2015, for example, the Lincoln County Sheri�’s Department in coastal Maine paid about $350 in bitcoin for the key to its encrypted data after a malware attack. After the data was unlocked, Western Union reim-bursed the county for the ransom payment, according to a county o�cial who described the transaction.

That followed similar reported attacks on law enforcement in Tewksbury, Massa-chusetts, Midlothian, 3; Dickson County,

Tennessee, Collinville, Alabama; and Dur-ham, New Hampshire. Some police chiefs refused to pay, saying they had backed up their data or it wasn’t crucial.

The price apparently has risen sharply in recent months.

This year the Horry County School District in northeast South Carolina paid a ransom of $10,000 in bitcoin after dozens of their school servers were infected.

On February 5 Hollywood Presbyterian Medical Center paid about $17,000 in bitcoin to regain control of its patients’ information.

The disruption was so severe that the hospital’s central medical records system was largely unusable for 10 days, and some pa-tients were transferred to other facilities for treatment, o�cials said. The 434-bed short-term acute care hospital is owned by CHC of South Korea.

In March hackers encrypted data at Med-Star Health, which operates 10 hospitals in Maryland and the District of Columbia. The virus caused delays in service and treatment until computers were brought back online.

The company said it did not pay a reported $19,000 ransom demand.

Analysts say hospitals are being targeted because many recently converted to digital records from paper, and their data security isn’t yet as strong as banks, insurance com-panies and government networks that have been hacked in the past.

“The problem is that hospitals aren’t very mature when it comes to cybersecurity and dealing with robust, sophisticated online attacks,” Eduardo Cabrera, vice president for cybersecurity strategy at the security company Trend Micro Inc. in Irving, Texas. “A hospital needs health data in order to treat its patients. Hackers know there [are] major con-sequences if they don’t act quickly.”

The hackers, many from Eastern Europe or Russia, have found ransomware to be so pro�table that they set up call centers, said Cabrera, who investigated underground hacking rings as chief information security of-�cer for the US Secret Service.

English-speakers with the hacking group will talk to victims over the phone or online

and “help” them through the process of con-verting dollars into bitcoin and settling the ransom, he said.

Prime Healthcare, which operates 42 hospitals in 14 states, said it is still conduct-ing a forensic investigation of the March 18 ransomware attack on Desert Valley Hospital in Victorville, Chino Valley Medical Center in Chino, and Alvarado Hospital Medical Center in San Diego.

Sreekant Gotti, the company’s CIO, said in a written statement that the company, which is based in Ontario, Calif., did not pay the ransom.

Computer “systems were quickly brought back online without compromising patient safety, or patient or employee data” because they had backed up the data, he added.

“These kinds of vulnerabilities are wide-spread in the health-care industry and need to be addressed ahead of time,” Gotti said. “For that reason, Prime Healthcare had vari-ous levels of protection and controls built into its systems, including multiple levels of backup.” TNS

CRIMINAL HACKERS NOW TARGET HOSPITALS, POLICE STATIONS AND SCHOOLS

K ABUL, Afghanistan—Af-ghan President Ashraf Ghani on Saturday committed to

pushing reforms after his picks for at-torney general and interior minister won long-sought Cabinet con�rma-tion, while US Secretary of State John Kerry pleaded with the government’s power-sharing leaders to bury their “factional divisions” for the good of the country.

Yet, Ghani could not cite progress toward ending a bitter feud with Af-ghanistan’s chief executive, Abdullah Abdullah, that has hobbled the Kabul government for 18 months.

�e unwieldy arrangement, which Kerry helped to forge, has left in-terim ministers in critical positions while the US ally struggles to con-front lawlessness, corruption and the Taliban’s resilient and perhaps expanding insurgency.

“Democracy requires credible insti-tutions,” Kerry told reporters at the end of his brief stopover in Afghani-stan on his way to Japan for a meet-ing of foreign ministers. “More than that, it requires people from di�er-ent political, ethnic and geographic factions to be able to come together and work toward a common good.”

Underscoring the unstable securi-ty situation, several rounds exploded about 650 feet away from the US Em-bassy in Kabul after Kerry had left the premises on Saturday evening. A US o�cial described the explo-sions as small, and said there was no indication the secretary of state was the target. Local media reported no injuries.

Ghani, at a news conference, hailed the Cabinet votes in parliament as a political turning point. Progress on that front “assures us there will be fundamental, comprehensive re-forms,” he said through an interpreter.

Kerry backed him up and stressed the need for a uni�ed approach be-tween the competing Ghani and Abdullah camps, hardened still al-most two years after a contested presi-dential election.

In the coming months, the North Atlantic Treaty Organization and in-ternational donor summits could de�ne long-term security and aid commit-ments critical to the Afghan govern-ment’s survival, so Kerry sought clarity on Afghanistan’s direction.

Kerry called on the Taliban to re-engage in peace talks dormant for almost a year, and said there was no change now in President Barack Obama’s plans for troop levels in Af-ghanistan. �ere are 9,800 US forces on the ground in Afghanistan, and that number is set to fall to 5,500 next year.

“But he always has said he will listen to his commanders on the ground,” Kerry said.

Gen. John Nicholson, the top US commander in Afghanistan, is re-viewing needs; Kerry said that would guide Obama’s �nal decision.

Ghani declined to weigh in on what he said was a US matter.

For Kerry, the stop in Kabul was his second visit in as many days to a country that the United  States long has wished to stabilize. On Friday in Baghdad, Kerry backed e�orts by Iraq’s prime minister to settle a po-litical crisis and stressed the impor-tance of having a “uni�ed and func-tioning government” to confront the Islamic State group.

Kerry met alone with Ghani and then included Abdullah in a lengthy three-way discussion on a porch in the presidential compound. Kerry also participated in separate talks with the foreign minister on secu-rity, governance and economic de-velopment. AP

Kerry presses Afghan govt leaders on unity

briefs BELGIANS FIND ELUSIVE

‘MANINTHEHAT’

RUSSIA DEFENDS SELLING ARMS TO AZERBAIJAN, ARMENIA

SWEDE ARRESTED IN BRUSSELS ‘BRAINWASHED’ BY MILITANTS

PRESIDENT Barack Obama at the White House Easter Egg Roll in Washington on March 28. Americans’ ratings of Obama are creeping up. AP/JACQUELYN MARTIN

MALMO, Sweden—Osama Krayem lived a delinquent lifestyle in Rosen-gard, an immigrant neighborhood in the Swedish city of Malmo, before he was “brainwashed” and joined Islam-ic militants in Syria, community activ-ists and his aunt said on Saturday.

The 23-year-old is now under ar-rest in Belgium, where prosecutors accuse him of involvement in the Brussels attacks.

Krayem grew up in Rosengard, a district notorious in Sweden for high crime and unemployment rates where more than 80 percent of the residents are �rst- or second-generation immigrants. Muham-mad Khorshid, who runs a program in Rosengard to help immigrants integrate into Swedish society, told The Associated Press that Krayem comes from a Palestinian family.

“He was well-known to the lo-cal police for multiple criminal ac-tivities like thefts, for instance,” said Khorshid, who is from Iraq. He said Krayem “was the perfect target for radicalization—no job, no future, no money.” AP

BRUSSELS—After nearly three weeks of frantic searching, Belgian authori-ties announced on Saturday they had �nally identi�ed the elusive “man in the hat” spotted alongside the two suicide bombers who blew them-selves up at  Brussels  Airport: It was Paris attacks suspect Mohamed Abrini.

Belgium’s Federal Prosecution Of-�ce said the recently detained Abrini, 31—the last identi�ed suspect at large from the deadly November 13 Paris attacks—had also confessed to being the vest- and hat-wearing man linked to the Brussels bombers whose image had been widely circu-lated by authorities.

“After being confronted with the results of the di�erent expert exami-nations, he confessed his presence at the crime scene,” they said in a terse statement.

The revelation that a Paris attacks suspect escorted two of the  Brus-sels  bombers to their deaths at the city’s airport is the strongest sign yet that the Islamic State attackers who brought mayhem to both European cities—killing a total of 162 people—were intimately linked. AP

MOSCOW—Russia on Saturday de-fended its policy of selling arms to both Armenia and Azerbaijan, whose military forces have faced o� in a sharp escalation of �ghting around separat-ist Nagorno-Karabakh.

Prime Minister Dmitry Medvedev said if Russia stopped selling arms, both countries would simply seek new suppliers.

“They would buy weapons in other countries, and the degree of their deadliness wouldn’t change,” he told Russian state television fol-lowing visits to the capitals of Arme-nia and Azerbaijan. “But at the same time, this could to a certain degree destroy the balance” of forces that exists in the South Caucasus region.

Both Azerbaijani and Armenian forces this month have used artillery, tanks and other weapons on a scale not seen since a separatist war end-ed in 1994. The war left Karabakh, of-�cially part of Azerbaijan, under the control of local ethnic Armenian forces and the Armenian military. AP

Percentage of the people polled who approve of Obama

53

The [email protected] Monday, April 11, 2016 A7

HK emerges as hub for creating offshore firms

The revelations come from a tremendous cache of documents leaked from the Panamanian law firm Mossack Fonseca and published by the International Consor t ium of Invest igat ive Journalists (ICIJ).

Hong Kong was Mossack Fon-seca’s go-to spot for financial in-termediaries like P&P Secretari-al Management, home to 2,212 accountants, banks and other middlemen Mossack Fonseca used to set up 37,675 offshore companies for its global clients between 1977 and 2015—more than any other place in the world, according to ICIJ’s analy-sis. Hong Kong has emerged as a major design center for offshore vehicles, a place brimming with people expert at packaging and protecting wealth.

The back pages of newspapers here teem with advertisements for corporate formation com-panies, one-stop shops promis-ing fast bank-account opening, corporate compliance, tax and accountancy services.

Offshore vehicles are used to minimize tax, mitigate political risk and circumvent onerous reg-ulations in China. And they are completely legal.

But Hong Kong’s offshore fi-nancial machinery works so well, and so discreetly, that it can be abused by those seeking to hide illicit assets or evade taxes.

As traditional havens, l ike Switzerland, cave to years of grinding pressure from Euro-pean and American tax authori-ties, unsavory money is drawn to Hong Kong, which, despite re-forms, retains its reputation for secrecy, noncooperation, and a light regulatory touch, watchdog groups and lawyers say.

“Hong Kong attracts this type of hot money from across the re-gion and globally, partly because of its perceived stability,” said Iain Willis, a partner at Latymer Partners, a corporate intelligence advisory firm in London.

“‘Light-touch’ financial reg-ulation, easy rules on compa-ny incorporation and l imited transparency” add to its appeal, he said.

‘Groundless’ reportsCHINA’S Foreign Ministry dis-missed ICIJ’s reports as “ground-less,” and the government has aggressively censored discussion of them. Hong Kong tax authori-ties said in an e-mail on Friday that they would “take necessary actions” based on the offshore leaks, and work to “enhance the efficiency and effectiveness” of enforcement as required.

Mossack Fonseca tapped P&P Secretarial Management—which is run by an accountant named Wai-hon Chiu, according to cor-porate filings—to register Har-vest Sun Trading in the British Virgin Islands.

Great fortunes in small officesP&P Secretarial is not listed in the telephone directory, and its contact details are not easy to find on the Internet. Its name is not among the three busi-nesses listed at the entrance to the second-f loor office it now oc-cupies in Hong Kong’s Wan Chai district. The front door opens onto a lone ivy plant stuck in a corner of two blank white walls. There is no receptionist, and unannounced visitors are not welcome.

“The boss is away. He will be back next week,” said a woman in a dark dress, who confirmed that P&P Secretarial did, indeed, have a presence in the office, which did not bear its name. She refused to give her name. Great fortunes run through small of-fices like this, and not just from c l ients of Mossac k Fonseca , which derived nearly a third of its business from Hong Kong and China, according to ICIJ.

“It’s quite natural that Hong Kong would grow to play a signifi-cant role in the plumbing infra-structure of globalization,” said Martin Kenney, an asset-recovery

lawyer in the British Virgin Islands. “They are the architects, designers and engineers of the structures.”

In part, the prominence of off-shore vehicles in Hong Kong has to do with its special relationship with mainland China.

Many investors set up offshore vehicles so they can sell mainland assets without being subjected to layers of government approval. Others have used, and sometimes abused, offshore structures to take advantage of China’s tax breaks for foreign companies.

More foreign direct invest-ment to China between 1979 and 2014 ostensibly came from the British Virgin Islands than from anywhere else, aside from Hong Kong, according to the US Congressional Research Service.

Does not tax income from abroadHONG KONG does not tax in-come that originates abroad, a policy that supports the pro-liferation of foreign-registered companies. Hong Kong’s inde-pendent legal system and effec-tive escape route from mainland China’s currency controls—it’s easier to move money between mainland China and Hong Kong than elsewhere—also add to its appeal, lawyers say.

The kind of political uncer-tainty that drove investors off-shore before Hong Kong’s 1997 handover persists today. The Ba-sic Law, a miniconstitution that enshrines China’s “one country, t wo systems” pol ic y towa rd Hong Kong, expires in 2047.

“We are on borrowed time,” said David Webb, a former in-vestment banker and Hong Kong shareholder activist. Offshore vehicles have become so com-monplace that 75 percent of Hong Kong-listed companies are actu-ally domiciled in Bermuda or the Cayman Islands, according to an analysis by Webb.

But there are other, more con-troversial uses of Hong Kong’s offshore machinery. The Pana-ma Papers, together with past leaks published by ICIJ, show how China’s own political and economic elite use Hong Kong i nter me d i a r ies to get t he i r money out of China. While the leaks contain no allegations of wrongdoing, they are a sore spot for China’s top leadership, which has been trumpeting nationalism and moral virtue as it tries to slow capital flight and fight corruption.

China is top source of offshore fundsMUCH of the wealth that runs through Hong Kong comes from mainland China, which is wide-ly seen as a growth market in the offshore industry. The top source of funds that Mossack Fonseca helped move offshore was China, according to an anal-ysis of ICIJ data by the Guardian

newspaper. In 2009, when presi-dent Xi Jinping’s brother-in-law Deng Jiagui wanted to register two companies in the British Virgin Islands, his advisers at Mossack Fonseca turned to a Hong Kong firm called Wong Brothers and Co., according to ICIJ’s documents.

The firm’s lead partner is an accountant named Charles Chan-lum Chow. Chow was a member of the Chinese People’s Political Consultative Conference, a gov-ernment advisory body, in south-ern Guangdong province from at least 2003 to 2013, according to state media reports and govern-ment web sites.

He spent 12 years on the board of China Aerospace International Holdings, the listed subsidiary of the main contractor for China’s space program. Chow did not re-spond to requests for comment.

Deng’s companies went dor-mant before Xi took power, ac-cording to ICIJ, and no allegations of wrongdoing have been made. It’s not clear what happened to whatever Xi family assets those companies once held. “Everybody in the elite needs Hong Kong,” said Ho-fung Hung, an associ-ate professor at Johns Hopkins University. “Everybody. Even Xi Jinping’s family needs it. They don’t have an incentive to shut this channel to move money out.”

Money from FranceIT’S not just Chinese running money t hrough Hong Kong. W hen a compa ny l i n ked to France’s far-right National Front party wanted to move money out of the country, associates of party leader Marine Le Pen used shell companies in Hong Kong, ac-cording to a report in Le Monde newspaper based on the Panama Papers. The French daily has also linked a separate Hong Kong firm with family members of Algeria’s governing elite.

The company that helps run two of those firms, P&B Man-agement Services, is housed in a dimly-lit office in Wan Chai district, according to Hong Kong corporate filings.

Staff there declined to speak w ith a repor ter. L arge-sca le counterfeiters from Germany, Austria and Japan, as well as C h i n a , r u n of f - shore st r uc-tures out of Hong Kong to laun-der their money, said Douglas Clark, a lawyer at Hong Kong’s Gilt Chambers. “ That’s part of Hong Kong being a trading city and entrepot,” he said. “It wel-comes everyone.”

HK: Second most secretive jurisdictionDESPITE a recent crackdown on secrecy, Hong Kong is still ranked as the second most secretive

jurisdiction in the world, after Switzerland, by the Tax Justice Network, a UK advocacy group.

Rules are only as good as their enforcement, said John Christensen, Ta x Justice Net-work ’s d i re c tor, a nd “ Hon g Kong has never had a strong super v isor y culture.”

In 2014 Hong Kong began requiring companies to have at least one real person serving as a director. This effectively barred the practice of creating impene-trable daisy chains of corporate ownership, in which one myste-rious company was controlled by another mysterious company.

But clients can easily register companies under other people’s names. “They can always find their relative as the nominee,” said the director of a small incor-poration firm also based in Wan Chai district, who would only give his surname, Lee, for fear of com-promising client privacy.

He said most clients don’t mind using their real names in filings. The big secrecy business runs out of the gleaming skyscrapers of Hong Kong’s Central business district, where elite firms charge ten times his rates, he said.

“Wealthy people, they won’t come here,” he said. “They’ll go to Central. They don’t mind pay-ing a few thousand more for more secured, private service.” AP

EU to drag corporate-tax havens into open amid Panama furorEUROPEAN Union (EU) reg-

ulators are looking to force corporate-tax avoidance via

offshore havens into the open, with fresh proposals due next week made more urgent by the Panama Papers revelations.

The European Commission on Tuesday will consider how to re-quire large companies to make public what they pay in tax in each of the 28 EU countries and possibly outside the bloc, as well.

“There is an important con-nection between our continuing work on tax transparency and tax havens that we are building into the proposal,” EU Financial

Services Commissioner Jonathan Hill said in a statement on Sat-urday. The proposal would cover multinational companies with revenue of at least €750 million ($855 million). The commission, which polices the European sin-gle market, figures it would catch companies that account for 90 percent of EU corporate revenue.

The country-by-country trans-parency plan was first floated after revelations in 2014 that Luxem-bourg, at the heart of the EU, had struck sweetheart tax deals with multinational companies.

The commission has also used its antitrust powers to go after

companies that benefited from custom-made tax breaks.

In October it ordered the Neth-erlands to claim back as much as €30 million in unpaid taxes from Starbucks Corp., and Luxembourg to collect a similar amount from a Fiat Chrysler Automobiles NV financing unit.

Tuesday’s proposal wil l re-quire approval by EU govern-ments and the European Parlia-ment. It will be crafted as ac-counting legislation, which can be passed by a supermajority of the 28 governments, not as a tax measure requiring unanimity.

Bloomberg News

HONG KONG—�e same year Jasmine Li, whose grandfather was the fourth-ranked

politician in China at the time, donned a floral Carolina Herrera gown and debuted at a ball in Paris, a company called Harvest Sun Trading Ltd. was born in an aging building at the edge of Hong Kong’s red-light district. �e next year Li bought the company for $1.

37,675The number of offshore companies Mossack Fonseca has set up

�eBroaderLookMonday, April 11, 2016A8

VP hopefuls square off in debateVICEPRESIDENTIAL DEBATEDEBATE

�e six-cornered vice-presi-dential debate before a jam-packed gallery at the University of Santo Tomas (UST) pavilion kicked o� smoothly on Sunday, but quickly heated up like the Pacquiao-Brad-ley match �ve hours earlier, when candidates were asked about their stand on corruption.

At the live TV debate spon-sored by the Commission on Elec-tions (Comelec), CNN Philippines, Kapisanan ng mga Broadkaster ng Pilipinas, UST and the Business-Mirror, the contenders stood �rm in their positions on key issues,

despite strong challenges from their opponents. Mudslinging be-came the game as the vice-presi-dential candidates tried to outdo each other and boost their chanc-es of winning to be a heartbeat away from the presidency.

Debate moderator Pia Honti-veros of CNN Philippines quipped on whether the third installment of Pacquiao vs. Bradley was an un-dercard to the Marcos vs. Cayetano word war that developed in the heated debate.

�e obvious target at the homestretch toward Election Day

was Sen. Ferdinand Marcos Jr., who has consistently ranked in a statistical tie for the top spot in the most credible electoral surveys.

Even before the start of the vice-presidential debate, militant workers braved the 30°Celsius heat and picketed the España gate of the UST. �ey were met by equally passionate Marcos loyal-ists bearing placards containing responses to allegations of cor-ruption and human-rights viola-tions that the heir of the late dic-tator faced during the debate.

“What does the son have

to do with it?” asked one of the Marcos loyalists in response to militants’ chants against the pos-sible return of another Marcos in Malacañang.

In response to the �rst ques-tion on how to address corruption, Marcos claimed that in his 27 years of service, he had never been linked to corruption, and drew boos from the audience. His supporters re-sponded with an even louder chant of “BBM,” which stands for “Bong-bong Marcos,” to drown the dis-sent. “Bongbong” is the nickname of the late President’s son.

B B F D C

IN the contest for the second-highest position in the country, the occupant of which could end up

merely as a spare tire, the candidates and their supporters appeared more raucous and belligerent than those engaged in the elections themselves.

ALYS

A SA

LEN

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�eBroaderLookwww.businessmirror.com.ph | Monday, April 11, 2016 A9

VICEPRESIDENTIAL DEBATE BusinessMirror

ing Internet speeds.Most of the candidates said the

next administration needs to work double-time to catch up with the backlog on infrastructure needed to improve mobility of goods and people.

Replying to a question from BusinessMirror columnist John Mangun about what they will do to improve provincial transportation, Marcos cited the need to bring the people out of congested urban ar-eas while infrastructure is beng improved.

Marcos also pitched the com-

pletion of north rail and south rail systems, noting how rail systems have been proven, time and again, to be the cheapest way to move passengers and cargo.

On the general question of im-proving tra�c, Honasan said no less than a systematic and holistic plan-ning will do. While the infrastruc-ture is being built and installed, he said more trees should be planted and more manpower harnessed for the simultaneous programs.

Marcos said he wants to both reduce the number of vehicles but must improve the public-transport system and �nish all bypass roads.

Pointing out that 70 percent of the population are commuters, Robredo also noted that 13 percent of roads are used by buses; the rest, private cars.

Meanwhile, Trillanes sug-gested the transfer of government centers to Pampanga and Nueva Ecija, adding that there is a need for rural-development plans to de-velop provinces.

In the National Capital Region, some candidates said the govern-ment can discourage the culture of bringing cars by creating mass-transport systems, such as those found in Hong Kong and Singapore.

It was the debate on corrup-tion that took much of the nearly three-hour debate.

Sen. Francis G. Escudero pressed for the immediate passage of the Free-dom of Information bill as a deter-rent and even suggested a ban on pockets in uniforms of Bureau of Customs personnel.

For his part, Sen. Gregorio B. Honasan II acknowledged that graft and corruption remains a serious is-sue that can be addressed by amend-ing the existing codes governing appropriation and disbursement of public funds to plug loopholes.

Acknowledging the “corrosive in�uence” of graft and corrup-tion, Marcos cautioned that reform measures would only be e�ective if “implemented fairly and do not in-volve politics.”

Rep. Leni Robredo hammered on “accountability, transparency and people’s participation in gover-nance” as deterrent to corruption. Sen. Antonio F. Trillanes IV sug-gested raising government salaries to discourage corruption.

Sen. Alan S. Cayetano, in turn, debunked Marcos’s claim linking him to corruption issues. Cayetano

insisted that no big businessman was supporting his candidacy.

Marcos wondered why Cayet-ano was raising corruption issues against him only now and chal-lenged Cayetano to produce proof, saying the Aquino administration would have already used this and �led cases against him if such evi-dence exists.

When Cayetano pressed on that the evidence includes the P4-billion alleged ill-gotten wealth recovered by the government, Marcos challenged him to produce proof, adding that he is willing to

face Cayetano in court.Marcos, in turn, downplayed

Cayetano’s insistence on implicat-ing the Marcoses in nonpayment of liabilities over human-rights abus-es committed during the martial-law regime, saying the settlement of claims is now between the vic-tims and the government.

Besides corruption, a host of economic issues was also discussed at length by the candidates, nota-bly on tra�c and mobility, which curtail productivity; the need and use of taxes; using judicial reforms to encourage investors; and boost-

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BusinessMirror Editor: Carla Mortel-Baricaua

Tourism& EntertainmentMonday, April 11, 2016A10

Every summer, cowboys (and cowgirls) from all over the country converge in the provincial capital of Masbate City to show o� their skills, such as lassoing, bull riding, whip-ping and carambola, among others.

Come April 12 to 16, Masbate will bristle once more with Texan-themed adventure, as it holds the Rodeo Masbateño Festival.

A much-awaited event is the Cattle Drive, where scores of cows are let loose in the streets of Mas-bate City to chase pedestrians, akin to the popular Bull Run in San Fer-minez, Spain.

Spectators can get a feel of this one-of-a-kind festival fever by dressing up in a checkered long sleeves, leather vests, jeans, boots and Western-style wide-brimmed hats. Visitors can tour the sprawl-ing cattle ranches, where they can be cowboys even for a few �eeting mo-

ments by learning to ride a horse, las-so a cow and other skills of the trade.

Masbate Gov. Vince Revil said the rodeo is their unique way of luring visitors to showcase its coun-try-ranch lifestyle and its best-kept natural wonders. He said that be-yond its “Wild Wild West” peg, the province is an exciting travel fron-tier, especially for beach bums who want to bask in uncrowded shores.

�e province is a part of the Al-bay-Masbate-Sorsogon (Almasor) travel cluster crafted by the De-partment of Tourism Region 5, which seeks to boost visitor arriv-als in the Bicol region.

Just a few minutes from the city is Buntod Sandbar, a 251-hect-are reef marine sanctuary which boasts of a 200-meter stretch of white sand and mangrove for-est. You can snorkel in the glassy sea, paddle a native banca or kayak

around the sandbar.Managed by the Masbate City

government and a �sherfolk orga-nization, it has been awarded the Para El Mar Best Marine Sanctuary by the Marine Science Network.

Further down south in Balud town is the Palani Beach, a wide cove in a sleepy shore reminiscent of Boracay’s raw allure. With only a handful of resorts in a vast expanse, you can play beach-ball games, go

bamboo rafting, row a dugout canoe, or idly laze on the cabanas to gaze at the sunset.

Along the way is Fazenda de Es-peranza in Milagros town, an agri-cultural retreat and halfwayhouse for victims of substance abuse pre-paring reintegration into society. Literally meaning “farms of hope,” this is a visually refreshing pitstop with the undulating mountain ranges, which conjure of pastoral

Alpine images. You can cool o� with �avored cow’s milk or take home organic farm produce and native souvenirs to help fund the institution.

Up north in the northern point of Dimasalang town is Porta Vega, which o�ers an unparalleled stun-ning view of the dusk and the moonrise in a milelong stretch of uninhabited �ne-sand beach.

If you can’t get enough of the sand

and sea, you can hide o� to the nearby Ticao Island, whose iconic spot is the postcard-pretty Catan-dayagan Falls, with gushing waters emanating from a cli� and droping directly into the sea.

Nearby is Burubangcaso Islet, which boasts of talcum �ne sand, crystalline water and a huge mono-lithic rock. It is among the chain of islands in Masbate that you can al-most call your own because of the absence of the madding crowd.

Tucked in Ticao’s northern por-tion is Halea Nature Park, a hidden placid cove teeming with aquatic life. Named after a mythical char-acter of Bicol folklore, the marine sanctuary is beautifully framed by limestone rocks and patches of sleepy shores.

On the other side of the island is the Manta Bowl of Ticao Pass, the habitat of the manta rays and where butanding (whale sharks), the world’s biggest �shes, occasionally stray from their feeding grounds in Donsol, Sorsogon. You can also go scuba diving at the Ticao Island Re-sort and foray into the world of these amazing underwater creatures.

�is is Masbate—a mesmerizing blend of cowboys and beaches.

OF COWBOYS AND BEACHES

THE Department of Tour-ism (DOT), in partnership with Asean-Japan Center,

recently organized “Meet Japan: Seminar on the Latest Trend of Japanese Women Travelers,”  as part of its mandate on improving competitiveness of tourism stake-holders, industry professionals and front-liners.

“As the Philippines enjoys ro-bust arrivals from Japan at an an-nual rate of 6.88 percent, new and complex market segments and trends also continue to rise. To stay in the game, understanding the ever-changing Japanese market is a crucial task for us in the tourism industry,” Tourism Undersecretary Maria Victoria Jasmin said.

�e two-part seminar, held consecutively in Manila and Cebu, sought to understand one of the fast-rising Japanese niche mar-kets today, the Joshi tabi travelers, or Japanese women travelers. Its

goal was to equip DOT-accredited tourism stakeholders and indus-try professionals with the lat-est market intelligence, enabling them to chalk up their market reach in Japan.

�e objective is to get a strong grip on the latest trends of the traveling market, and tap poten-tial niche markets in Japan, such as  Joshi tabi  travelers, or Japanese women travelers, according to the undersecretary for Tourism Regu-lations, Coordination and Re-source Generation. 

Naohiro Fukawa of Mile Post Consultants Inc., speaking before tour agency representatives, hotels and Japanese-speaking tour guides, said Joshi tabi tourists comprise of women in their 20s, 30, 40s and 50s, who are either women with ca-reers, married women with kids in grade school and/or in college.

Joshi tabi  travelers, Fukawa added, “have the time and resourc-

es to spend for travel,” citing their preference for shopping  zakka,  or original local products. However, “value for money is crucial to Joshi tabi travelers,” emphasized by the destination-management expert of 20 years.

To tap this price-conscious Japa-nese travel segment, Fukawa shared that Philippine tourism industry must know what the country’s val-ue propositions are and how to sell them strategically. “It is all about correct and persuasive messaging,” he added, referring to how travel brochures should be presented. �e keywords that catch  Joshi tabi’s attention, according to Fukawa, are “assured travel, comfortable travel, reasonably priced, origi-nal, cute, trendy, fashionable, hot/tropical, standard, premium feeling, inclusive pricing,” under-lining the importance of complete travel experience at a reasonable or even bargain price.

Endorsement from a well-known celebrity is also encouraged, Fukawa added, in reference to Joshi tabi  travelers’ persuasion for the latest trends on TV and movie ce-lebrities. “�e unique and diverse characteristics of the Philippines and its proximity to Tokyo should be a good starting point in creating a strong image for the country,” Fu-kawa concluded.

Travel journalist Michiko Ono Amsden of Japan Travel Writers’ Association said women travelers are an important travel segment, citing a 2016 Japan Tourism Mar-keting Co. research that says 60 percent of women make travel deci-sions by themselves.

Among the things that compel Japanese women travelers to come to the Philippines, Amsden enu-merated, include the country be-ing a multigateway destination, providing “easy access to both urban and natural attractions,”

and the “Filipino’s unique warm hospitality.”

“It seems more reasonable for Japanese travelers, in general, to �y low-cost carriers to the Phil-ippines and stay here in a luxury hotel with luxury amenities than elsewhere in the world,” Amsden added, citing that the Philippines has largely been undiscovered to date, with its more than 7,000 is-lands and the increasing number of high-end shopping malls, resorts and spas.

According to the latest DOT data, Japanese arrivals to the coun-try counted for more than 495,000 in 2015, making up for 9.25 percent of the total market share. �irt-eight percent of Japanese travelers visit the Philippines for food and beverage, while 24 percent come here for shopping and 19 percent for recreation. Same data show that 56 percent of Japanese visi-tors are visiting the country for

holidays, while 14 percent were here for business purposes.

“Meet Japan: Seminar on the Latest Trend of Japanese Women Travelers” was organized by the DOT’s O�ce of Tourism Stan-dards and Regulations, headed by its Director Rica Bueno; and Of-�ce of Industry Manpower Devel-opment, headed by its O�cer in Charge Arlene Alipio, in coopera-tion with the Asean-Japan Cen-ter, headed by its Project Manager Ken Fujita.

Meet Japan makes up the year-round series of seminars aimed at capacity-building of tourism enterprises on best practices, such us market-matching, latest travel trends, niche markets and devel-oping tourism industry manpower on globally accepted skills that in-clude basic foreign-language train-ing, cultural sensitivity, tour guid-ing and personality development, among others.

DOT, Asean-Japan Center host seminar on Japan’s Ladies Market

S L F P

IT isn’t hard to fathom why Masbate is regarded the Philippines’s cowboy land.

Situated off the Bicol mainland, the province is the country’s “Rodeo Capital” with its vast cattle ranches and the telltale cowboys who tame the herd.

CATANDAYAGAN falls

RODEO Masbateño Festival

SCENIC zigzag road in Milagros BURUBANGCASO Islet

CATTLE ranches

PALANI beachKAYAKING at Alta Mar on Ticao Island

SCUBA diving at Manta Bowl on Ticao Island

BusinessMirrorEditor: Carla Mortel-Baricaua

Tourism& EntertainmentMonday, April 11, 2016 A11

MFM is the �rst and only Asian edition of Madrid Fusion, the most important international gastronomy event in the world, and celebrated annually in Madrid since 2003.

�rough  MFM 2016, Spain also conquered Asia once again through the Philippine shores. But this time, the culinary industry is extremely grateful that the former colonizers are also helping Filipino chefs and farmers conquer the world through the Madrid FusiÓn platform.

  “Madrid FusiÓn is the event where the world goes to learn the fu-ture of food. We have found a most powerful platform to showcase Filipino culinary artistry for the second time, building an image for Manila and the Philippines as the place to learn about the past and the future of food,” Tourism Sec-retary Ramon R. Jimenez Jr. said during the opening ceremony at the SMX Convention Center.

“Imagine an event that not only attracts people to travel but also build an awareness for a place and the experience it o�ers,” he added.

  MFM 2016 is organized by the Department of Tourism (DOT), Tourism Promotions Board (TPB), Foro de Debate and Arum. �is year’s theme, “�e Manila Gal-leon: East meets West,” celebrates the 450th  anniversary of the Gal-leon Trade that linked Asia with the Western World. 

Twenty “rock star” chefs from

the world over, including New York-based Filipinos Amy Besa and Romy Dorotan, Manila-based Filipinos Tatung Sarthou and Michael Aspi-ras, Mexican Jorge Vallejo, Spaniard Joan Roca, Japanese Yoshihiro Nari-sawa, Korean Junsik Yim and Peru-vian Virgilio Martinez, conducted a series of presentations and press conferences for journalists, foodies and industry practitioners.

Other activities included semi-nars; presentations; buyers program; the Flavors of the Philippines, which is a monthlong festival featuring food-related activities; and regional lunches featuring Luzon and Pan-lasa on the �rst day, the Visayas and Almusal on the second day, and Mindanao and Street food on the third day.

Last, MFM was highlighted by the International Gastronomy Congress, where the Michelin-star chefs from Asia, Europe and Americas shared their knowledge on progressive gastronomy and their best practices. 

Flavors of the Philippines Festival 2016A PRELUDE to MFM 2016 is the fourth  edition of the annual Festi-val de la Paella Gigante, featuring a live cooking demonstration of a 10-foot diameter paella valenciana that boasts of 100 kilos of rice, 13 liters of olive oil and 265 kilos of mix chick-en, chorizo, shrimp, prawns, squid

and mussels, cooked the traditional way by nine of the country’s top chefs and restaurateurs over char-coal and �rewood, held on March 12 in Greenbelt Park, Makati City.

  �e charity event also formally launched Flavors of the Philippines Festival 2016, which is envisioned to position the Philippines as a “center of food and gastronomy in Asia.” 

A monthlong festival showcas-ing the best of the country’s gas-tronomic o�erings ranging from culinary tours, food trucks, bar crawls, concerts, to agricultural fairs, weekend gourmet markets and bazaars, Flavors of the Philip-pines is being held simultaneously in di�erent malls, restaurants and venues across Luzon, the Visayas and Mindanao beginning March 31 through April 30.         

�e  highlights of this year’s Fla-vors include a Tapas Exhibition at the Metropolitan Museum of the Philippines on March 31, showcas-ing a selection of Spanish designs dedicated to the world of food; Market Tours in Old Manila by Smokey Tours from April 1 to 30; a one-day culinary heritage tour to various destinations in Cavite, Malolos, Pampanga, Malabon, Antipolo-Angono and Laguna-Quezon by Food Holidays; and Soccsksargen or SOX Food and Fashion event, “Treasures of SOX: A Food, Travel, and Trade Expo,” on  April 11 to 14 at the Glorietta Activity Center. 

 DOT Region 4A launchesculinary travel guideIn celebration of the Flavors of the Philippines Festival 2016, the DOT Region 4A hosted the launch of “Food Holidays Philippines,” an annual culinary travel guide pub-lished by Colors Integrated Travel Media Inc., on April 5. 

Government o�cials, tourism stakeholders, historians and food connoisseurs gathered together at General Emilio Aguinaldo Shrine in Kawit, Cavite, to witness the unveiling of the cover of this latest edition of the gastronomical guide book that aims to revisit Philippine history, heritage, destinations and culinary tradition. 

“�is event marks the dawning of Calabarzon region as the center of historical culinary tourism in the Philippines”, DOT Region 4-A Direc-tor Rebecca V. Labit said, in reference to Region 4A top billing “culinary day tours” and “overnight food trips” sections in the book.                  

During the book launch, the chiv-alry of the “Tagayan Ritual” was also showcased, with o�cials from the DOT led by Undersecretary Ma. �e-resa Martinez and other tourism

stakeholders taking turns to pro-pose a toast, portraying the poetic and hospitable nature of people of Quezon Province. Guests were, likewise, treated to an intimate tertulia featuring delectable dishes by the Culinary Generals and the Razor Chefs of Cavite, reminiscent of Calabarzon’s food history and its contribution to the Galleon Trade. 

According to the publisher, Clang Garcia, Food Holidays  took almost two years in the making. “It’s a dream come true to share with you a product of extensive research into the cooking and dining traditions from the ma-jor islands of Luzon, the Visayas and Mindanao, encapsulated in one publication”, she said, feeling strongly about the dearth of a good gastronomical guide book in the Philippines.

�is culinary event forms part of “Eat Your History,” a culinary heritage tour of Cavite, Malolos, Pampanga, Malabon, Antipolo-An-gono and Laguna-Quezon, which was also launched at the event.  It is organized by Garcia in partner-ship with the respective DOT Re-gional O�ces.

 World Street Food Congress 2016ROUNDING up the monthlong food festival is Makansutra’s World Street Food Congress (WSFC) 2016 happening on April 20 to 24 at the Bonifacio Global City grounds.  �e �rst to be held outside Singapore, WSFC 2016 will be one of the big-gest international food events in Asia. It is composed of �e World Street Food Dialogue, �e World Street Food Awards and �e World Street Food Jamboree, showcas-ing unique and iconic street food from 24 hawkers around the world, including the Philippines, Malay-sia, Singapore and the US.

Madrid Fusin, gastronomic events bring more fun to local food scene  

B L R. G

THE world’s focus was once again upon the Philippines as the country staged the

second edition of Madrid Fusin Manila (MFM) from April 7 to 9.

PAELLA GIGANTE. From cooking and dishing out, participated in by about 50 chefs led by Fernando Aracama of Le Toques Blanches Philippines Chef Association.

JUDITH B. IMPERIAL, executive director of �e Cravings Group, was re-

cently inducted as the president of the Association of Human Resources Managers in the Hos-pitality Industry (AHRM) Board for 2016 to 2017.  �e induction was held at the Ra�es Hotel in Makati City with lawyer Maria Victoria Jasmin, Undersecretary of the Department of Tourism (DOT) as Inducting O�cer of the new AHRM Board.

�e AHRM hands out the prestigious Mabuhay Awards since 1996. It is an annual dis-tinction given to top-perform-ing rank and �le employees, supervisors and managers from its member-establishments for their exemplary contribution. �rough the Mabuhay Award, AHRM aims to continue raising the bar for excellence in perfor-mance, service and commitment for the entire Philippine hospi-tality industry.

IMPERIAL NAMED NEW PRESIDENT OF AHRM

PHOTO shows (from left) Marian Barnes, vice president of Association of Human Resources Managers in the Hospitality Industry (AHRM) and human resources director of So�tel Philippine Plaza; Angelina Blanco, secretary of AHRM and dean of Asian School of Hospitality Arts; Arlyn Aliño, treasurer of AHRM, HR manager of Island Cove Hotel & Leisure Park; Judith Imperial, president of AHRM and executive director of The Cravings Group; Atty. Maria Victoria Jasmin, undersecretary of the Department of Tourism; Myrna Reyes, auditor of AHRM, HR director of Lyceum of the Philippines University; Ferlyn Leyson, public relations o�cer of AHRM and HR manager of AIM Conference Center; and Andre Alip, director of AHRM, vice-president for Corporate HR of Hotel H20.

THE Philippine jeepney on display at the Gen. Emilio Aguinaldo Shrine in Kawit, Cavite TEDDY PELAEZ

AT the launch of Food Holidays Philippines are (from left) Tourism Assistant Secretary Arturo Boncato Jr., Tourism Undersecretary Ma. Theresa Martinez, book publisher Clang Garcia, DOT-Region 4A Director Rebecca Villanueva-Labit, and NHCP Chairman Maria Serena Diokno TEDDY PELAEZ

THE culinary rockstars of MFM 2016 are (from left) Chef Kevin Cherkas, Bali; Chef Romy Dorotan, Philippines/New York; Chef Nurdin Topham, Hong Kong; Chef Leah Cohen, USA; Chef Jungsik Yim, South Korea; Chef Tatung Sarthou, Philippines; Jurdin Burtron, Spain; Chef Michael Aspiras, Philippines; Chef Fernando Perez Arellano, Spain; Chef Enrique Olvera, Mexico; Dr. Sanchez de Mora, Spain

(FROM left) Chef Margarita Fores; Enrique Feas, Economic Counselor of the Spanish Economic and Commercial O�ce in the Philippines; Lourdes Plana, socia directora of Foro de Debate; Iñigo Canedo, Arum director; DOT Director Verna Buensuceso; Tourism Assistant Secretary Arturo Boncato Jr.

EATON, Hong Kong presents the “Family Getaway Promotion” this school holidays, o�ering a 25-

per cent o� room rates and children under 12 years, eat for free at breakfast from now until June 30.

Eaton, Hong Kong’s family rooms have two separate bedrooms, a parents’ room and an adjoining children’s room with an adjoining bathroom. The parents’ room has a double bed, while the children’s room has a sofa bed and two bunk beds, which can be folded away during the day to o�er guests more space. The family room can comfortably �t a fam-ily of �ve. Our little VIPs, under 12 years who stay in our popular family room will also receive each an “Eaton’s Little VIP Amenity Set,” a especially designed back-packs for each child, where the little VIPs can �nd a kids’ drawing book featuring a number of fun games and drawing pages.

Conveniently located at Nathan Road, Eaton, Hong Kong is a three-minute walk to the Jordan MTR stations. Family travel-

lers can enjoy the hotel facilities includ-ing an array of value-added services, including daily Tai Chi Class with our inhouse Tai Chi Master, walking tours to the famous local markets like Tem-ple Street and Jade Market. To make sure families are connected, we make sure you have free Wi-Fi access during your stay and provide you with a free-to-use smartphone with complimentary mobile data, local calls and international calls to selected countries. The heated

rooftop swimming pool is also perfect for kids to have some fun, while our Exert Fitness Center provides parents with extensive �tness equipment.

The hotel also has a range of family restaurants, from our award-winning Cantonese restaurant, Yat Tung Heen, Main St. Café—a hit with the children for their fun and tasty snacks, to the all time favourite Yaguro Japanese restaurant for fresh sushi, sashimi and Izakaya cuisine.

EATON, HONG KONG OFFERS AN EXCLUSIVE FAMILY GETAWAY PROMOTION UNTIL JUNE

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BusinessMirror Editor: Lyn Resurreccion • www.businessmirror.com.phMonday, April 11, 2016

CHEMISTRY could be explained through catchy romantic terms. �e use of simple words that

evoke romantic or emotional messages, such as the current hugot lines used by teenagers, could help explain difficult chemistry or scientific terms.

Bringing S&T closer to people through films

THE winners in the �rst-ever Indie-Siyensya Filmmaking Competition organized by the Department of Science and Technology Science Education Institute.

T his was manifested by a group of student-f i lmmakers from Mapua Institute of Tech-nolog y who succeeded in ex-plaining the complex topic of chemical bonds in their f i lm entitled Bonding Tayo, earning them the Best Film Award at the pioneering Indie-Siyensya Fi lmmaking Competition. In-die-Siyensya was organized by Department of Science and Tech-nology’s (DOST) Science Educa-tion Institute (SEI).

At the recent awarding ceremony at the DOST headquarters in Taguig City, the team, composed of Mar-vin Nofuente, Nikkei Bernal and Charles Ongchangco, bested 15 other groups to claim the top award and went home with a P50,000 cash prize.

Their film, Bonding Tayo, is about two Chemistry students who were working on a research paper. The male character, named Nito, tries to explain chemical bonds to his partner, Elisa, through hu-got lines, or catchy romantic and emotional lines, which also served as his way to express his feelings toward her.

The board of judges composed of scientists and filmmakers said the movie chose an effective treat-ment in discussing a complex topic, such as chemistry, as it “meets the language of the millennials.”

“[We] liked it because chemistry is hard to explain and [the filmmak-ers] found such an effective way to make the subject appealing to the young audience, especially in this era of AlDub [Alden Richards and Dub smasher Maine Mendoza love team], JaDine [James Reid and Nadine Lustre love team] and the like,” said Pauline Mangilog-Saltarin, Creative Director of Jesuit Communications at the Ateneo de Manila University (ADMU), who was one of the judges.

Placing second was the team of Jasmin Robert Bansil, Aira Jill Brosas and Danielle Andrea Fer-rer for their film entitled Bathala. The film was about how a student was able to develop a prototype of a technology, which can produce energy and potable water for the Dumagats. The film netted the team a P30,000 cash prize.

The trio of Princess Bacani, Angel ica Mateo and Cr ist ina Tula won third place and P20,000 for Pwede Bang Red Uli?, a short film on scientific ingenuity in addressing color blindness and how a person’s concern for an-other can push one to look for solutions using science to help.

The other members of the board of judges were former Science Un-dersecretary Fortunato de la Peña, University of the Philippines As-sistant Professor Dr. Aletta Yñi-guez, former Sineskwela producer Marcela Claudette Villanueva, Museo Pambata Executive Direc-tor Maricel Montero and ADMU’s Communicat ion Depar t ment Chairman Dr. Severino Sarmenta.

DOST-SEI Director Dr. Josette Biyo said she was impressed with the quality of the entries, describ-ing them as “effective and enter-taining means in communicating science” to the public.

“We have proven that Filipino-made science films are indeed effec-tive means of bringing science and technology closer to the people,” Biyo said.

For his part, de la Peña urged the filmmakers to keep making films and discovering science as the field offers unlimited topics that can be tackled through artistic methods.

“I hope this activity marks the start of your own story, whether in film or in science. We hope that you really use your gifts for the best cause, that is, to serve the nation,” he said.

The films were shown to high-school and college students on March 29 and 30 at the DOST’s Philippine Science Heritage Center in Bicutan, Taguig City.

Film entries were limited to five to 10 minutes in length, and were guided by the theme, “Spec-trum: Capturing the Colors of Sci-ence.” The films were judged based on content, technical excellence and creativity.

Indie-siyensya was launched late in 2015 to spark creativity in communicating science among the youth. The competition aimed to encourage young students to capi-talize on film as a tool for influ-encing people about the benefits of science, technology and innova-tion. Biyo earlier referred to the competition as “a move to really get creative inputs from students on how they see and appreciate science and technology.”

She said the number of entries was a good indication of the high interest in science and in filmmak-ing among the youth given the relatively short timeframe from the project launch to the screening and awarding. 

“We are very happy about the number and quality of science films these students produced for this competition. It shows how talented our students are and how high the potential of film as tool for science education is in the country,” Biyo added. S&T Media Service

16Number of groups of student filmmakers who joined the Indie-Siyensya competition

WHAT do you see when you picture an ideal death? Are you sur-

rounded by friends and family members, or is the setting more intimate? Are you at a hospital or at home? Are you pain-free? Were you able to feed yourself up until your death? Is there a spiritual ele-ment to your experience?

“We talk about personal medi-cine, but there should be personal-ized death too,” said Dr. Dilip Jeste, director of the Sam and Rose Stein Institute for Research on Aging at the University of California, San Diego School of Medicine. “Find-ing out what kind of death a person would like to have should not be a taboo topic.”

To help open up the conversa-tion in our death-phobic culture, Jeste and his colleagues are work-ing on a broad definition of a “good death” that will help health-care workers and family members en-sure that a dying person’s final moments are as comfortable and meaningful as possible. “You can make it a positive experience for everybody,” Jeste said. “Yes, it is a sad experience, but knowing it is inevitable, let us see what we can do that will help.”

The group’s first step was to look at previously published studies that examined what constitutes a good death according to people who are dying, their family members and health-care workers.

The results were published this week in the American Journal of Ge-riatric Psychiatry.

T he resea rc hers sea rc hed through two large research data-bases—PubMed and PsycINFO—but they were able to find only 36 articles in the last 20 years that were relevant to their work.

Jeste said the lack of studies on a good death was not surprising.

“We don’t want to deal with un-pleasant things, and there is noth-ing good that we associate with death, so why do research on it?” he said. The articles the team did find included studies done in the United States, Japan, the Nether-lands, Iran, Israel and Turkey.

From these, they identified 11 different themes that contribute to successful dying—including digni-ty, pain-free status, quality of life, family, emotional well-being, and religiosity and spirituality.

Also on the list were life com-pletion, treatment preferences, preference for dying process, re-lationship with health-care pro-vider, and “other.” The authors report that the most important elements of a good death differ depending on whom you ask, but there was agreement on some of them. One hundred percent of

patients and family members as well as 94 percent of health-care workers said preference for the dying process—defined as get-ting to choose who is with you when you die, as well as where and when—is an important ele-ment of a successful death. There was also widespread agreement that being pain-free at the time of death is an important component of successful dying. Ninety percent of family members, 85 percent of patients and 83 percent of health-care workers mentioned it across the various studies.

Religiosity and spirituality—meeting with clergy, having faith, and receiving religious or spiritual comfort—appeared to be signifi-cantly more important to the defi-nition of a good death by those who were dying than to family members or health-care workers.

The authors report that this theme was brought up by 65 percent of patients, but just 59 percent of health-care workers and 50 percent of family members.

Family members were more concerned with the idea of dig-nity—defined here as being re-spected as an individual and hav-ing independence—at the end of life than either health-care work-ers or patients were. The idea that dignity was an important element of a good death was brought up by 80 percent of family members, but just 61 percent of health-care workers and 55 percent of patients.

Similarly, having a good quality of life—meaning living as usual, and believing life is worth living even at the end—was listed as an important part of a good death by 70 percent of family members, but just 35 percent of patients and 22 percent of health-care workers. “For a dying person, the concerns seem to be more existential and psychological and less physical,” Jeste said. And here the authors see a call to action.

“Although it is important that we attend to the patient’s physical symptoms...it is crucial that the health-care system...more closely address psychological, social and spirituality themes in the end-of-life care for both patients and families,” they write. They also say this work is just the start of a much longer conversation.

Jeste hopes that one day termi-nally ill patients might receive a checklist that will help them think about and express what they con-sider a good death so that family members and health-care workers can help them achieve it. “We are not just interested in research,” Jeste said.

“We are interested in improv-ing well-being.” Los Angeles Times/TNS

Researchers seek ‘good death’ checklist for those at end of life

HOW his passion turns to invention and how the gov-ernment is scaling up this

invention is Junior de Jesus’s story. De Jesus, 46, comes from a family of limited means. But this did not deter him to pursue his interest in electrical devices. He took up a vo-cational course as an electrical and electronics technician.

De Jesus has been developing vari-ous electrical devices since early 2000, back when he and his family were in Nueva Ecija. He knew he was doing useful products because the people in the province were buying his wares, but he didn’t realize then that he was, in the process, engaged in inventions. His devices were a hit in the areas which didn’t have electric supply at the time.

“I didn’t know what I was doing was, in some way, an invention,“ he said in Filipino. Later, he worked in a private company in Valenzuela City

and met his future patent partner, Rolly Atienza, who encouraged him to develop what later became Highmax Turbo Power Simulator (HTPS). The HTPS is a small device installed in a vehicle to boost its fuel consumption.

The invention of HTPSDE JESUS explained that normally, a vehicle burns only up to 70 percent of the injected fuel, thus, leaving the 30 percent unused and wasted resulting in smoke emission. But when a vehicle was installed with HTPS, it helps the engine burn almost 100 percent of the fuel. This gives off more power, en-abling the vehicle to run faster without having to add more fuel.

In effect, HTPS helps the vehicle run efficiently by maximizing fuel consumption and helps make for a cleaner environment by its near-zero smoke emission. The HTPS device is an invention that has gone through

almost a decade of product develop-ment. De Jesus started with an electri-cal ballast that he ran on several tests and adjustments, until he reached his desired performance. He went abroad for a while, where he had more time to tinker with his invention. When he returned to the country, he focused on further developing his product. His patent partner gave him P8,000 to de-velop his product. But product develop-ment is costly, so he shelled out about P100,000 in conducting further tests. In 2010 HTPS was granted a patent.

On challenges andgovernment supportDE JESUS considers the financial capi-tal as among the primary challenge since his production materials and manpower is dictated by his available funds. He had been marketing HTPS on a small scale, 15 to 20 units per month. This was until he joined inventors’

organizations, when, as member of the Filipino Inventors Society, he got wind of an exhibit at the Technological In-stitute of the Philippines-Cubao orga-nized by the Department of Science and Technology-National Capital Region (DOST-NCR). De Jesus presented his HTPS invention to Technology Applica-tion and Promotion Institute (TAPI), a DOST agency which assists the Filipino inventors. He was given a checklist of requirements, which he complied with immediately. He was surprised that in about two months, his request for as-sistance and the corresponding fund was approved and made available. “I used to hear that dealing with government takes a lot of time is dif-ficult. But based on my experience, it didn’t take very long. I’ve learned that as long as your requirements are complete, processing of your needed assistance is faster,” de Jesus re-counted his experience with TAPI.

Product improvementand future plansDE JESUS’S problem with capital has been addressed by the government sup-port he obtained early this year. Before the DOST-TAPI’s assistance, the HTPS came in a small plastic box and the PCB board prints was done by hand. But with the government financial as-sistance, de Jesus was able to improve his technology. Highmax now comes in a more com-pact package made of zinc, with better quality electrical parts that spells dura-bility. He also acquired computers and a printer so he can make adjustments in design and packaging.

With his product development made possible by government sup-port, de Jesus is more confident that he is now ready to produce the HTPS for a larger market.

In the past, only two people worked in the production of HTPS units, but

now there are five. He is currently in the process of negotiation with both the public and private sectors for mass marketing of his product. He hopes to employ people from his community in Valenzuela and move to a bigger place when his production goes full scale.

De Jesus hopes that more people will learn the value of his invention in terms of cutting down pollution and in engine efficiency. “I want Highmax to be my small contribution for the environment,” de Jesus said.

De Jesus is among the beneficia-ries of the Invention-based Enterprise Development (IBED), a program of the DOST-TAPI, which supports inventors’ invention development into a business enterprise by making it available to the consumers. IBED provides funds for the pilot production and purchase of equipment needed to manufacture new inventions.

Geraldine Bulaon-Ducusin/S&T Media Service

Gadget for fuel efficiency, cleaner environment gets DOST support

Monday, April 11, 2016 A13

Green MondayBusinessMirror

www.businessmirror.com.ph • Editor: Lyn Resurreccion

Green MondayMonday

WASHINGTON—Most computer simulations of climate change are

underestimating by at least 1 degree Fahrenheit how warm the world will get this century, a new study suggests.

Warming may be worse than experts think –study 

STORM clouds build prior to the arrival of a thunderstorm as Je� Warren of Auburn, Maine, heads for shore on his paddleboard on Lower Range Pond on March 17. A new study out of Yale says the world may warm 1 degree Farenheit more by 2100 than scientists estimate. AP/ROBERT F. BUKATY

It all comes down to clouds and how much heat they are trapping. According to the study published on Thursday in the journal Science, computer-model simulations say there is more ice and less liquid water in clouds than a decade of satellite observations show.

The more water and less ice in clouds, the more heat is trapped and less the light is reflected, said study coauthor Trude Storelvmo, a Yale atmospheric scientist.

She said even though it is below freezing, the clouds still have lots of liquid water because they don’t have enough particles that help the water turn to ice crystals.

As the climate changes, there will be more clouds with far more liquid, and global warming will be higher than previously thought, Storelvmo said.

This is just the latest in a series of studies that have found that mainstream science may be too

conservative in estimating the pace and effects of warming, including melting ice sheets in Antarctica.

“None of this is good news,” Storelvmo said. “You always hope that climate isn’t as sensitive to car-bon dioxide as we fear, same with the ice sheets, but we’re calling it as we see it. Several studies have come out and show that we’ve been too conservative up until now.”

Uncertainties in mainstream climate science are more “on the bad side” than on the side of less harm, said climate and glacier scientist Richard Alley of Pennsylvania State University, who wasn’t part of the study. “Climate science, thus, is probably more open to criticism of being too conservative than being too alarmist.”

How much warming is predicted for the next 80 or so years depends a lot on whether society cuts back on carbon-dioxide emissions.

In the worst-case scenario, with no carbon reduction, the United Na-tions Intergovernmental Panel on Climate Change sees temperatures rising by about 6.7 degrees Fahr-enheit (3.7 degrees Celsius) by the end of the century, and Storelvmo said the liquid cloud factor would add another degree or more.

While the study is “well-rea-soned” and “sobering,” there are uncertainties with the satellite ob-servations that raise questions for Chris Bretherton at the University of Washington, who wasn’t part of the study. If the Yale team is right and there’s a bigger cloud feedback, he asked, why hasn’t warming so far been even higher?

That’s a legitimate question, Storelvmo said, but computer simu-lations may also be underestimat-ing the cooling effect of aerosols that mask the warming but are diminishing in the atmosphere.

THE coral on the sea floor around the Pacific island of Kiritimati looked like a

boneyard last November—stark, white and lifeless. But there was still some hope.

This month, color returned with fuzzy reds and browns, but that’s not good news. Algae has overtaken the lifeless coral on what had been some of the most pristine coral reefs on the planet, University of Victoria coral reef scientist Julia Baum said after dozens of dives in the past week. Maybe 5 percent will survive, she estimated.

“What it really looks like is a ghost town,” Baum said. “It’s as if the buildings are standing but no one’s home.” Kiritimati is where El Niño, along with global warm-ing, has done the most damage to corals in the past two years, experts said. W hile dramatic images of unprecedented total bleaching on Australia’s Great Barrier Reef are stunning the world, thousands of miles to the east conditions are somehow even worse. “This El Niño has its most powerful grip right at this

spot,” Georgia Tech climate scien-tist Kim Cobb said in a telephone interview from the island 2,000 miles south of Hawaii.

About 36 percent of the world’s coral reefs—72 percent of the US reefs—are in such warm wa-ter they are under official death watch, and that could rise to up to 60 percent of the world’s coral by July, said Mark Eakin, the coral reef watch coordinator for the US National Oceanic and Atmospheric Administration (NOAA).

Eakin said Kiritimati was the worst he’s seen, with America Samoa a close second.

“It is unprecedented,” Baum said. “This is absolutely the most intense response, the most dra-matic death of a coral reef from an El Niño event.”

The island has been on the highest level of alert for coral stress since June 2015. NOAA’s Eakin wasn’t part of the Baum-Cobb team, but when he saw their photos, he e-mailed Baum: “I was simply aghast at the pictures.

I expected the worst, but still wasn’t prepared for those.”

He called it “gruesome.” It ’s

the heat that’s ki l l ingthe coral.Last Decembe temperatures at

Kiritimati peaked at 31.4 degrees Celsius and have been about 5° to 7° warmer than normal.

That’s the kind of temperature spike that can be the difference

between life and death for coral, Eakin said. Water temperatures around the island are nearly a degree Fahrenheit warmer than the last big El Niño, in 1997-1998, and the damage is far worse, likely an assist from man-made

warming on top of the natural-transitory warming from El Niño, Cobb said.

Coral reefs are important for fishing; nearly half a billion people rely on coral reef marine life for food, Eakin said. “Coral reefs cover

only one-tenth of 1 percent of the sea floor but are home to 25 percent of all marine species,” Eakin added in an interview.

Baum has hope that something can survive because of what she calls “little miracle corals,” the small amount of one particular species that seems to be surviv-ing so far. Perhaps over a couple decades, it can repopulate this once bright reef, she said.

InAustralia, where “100 percent of the corals are snow white on some reefs,” it is hard to imagine that Kiritimati is worse, said Terry Hughes, an Australian professor who heads the country’s National Coral Bleaching Task Force. One area to the north “is absolutely blitzed,” he said.

In the past, El Niño warming of the Pacific didn’t cause such mass-bleaching events in Aus-tralia. But the effects of recent, major El Niños have coincided with water that’s already warmer because of man-made climate change, Hughes said. “The link between bleaching and global warming is incontrovertible,” Hughes added. AP

MUCH of the coral is dead, overgrown with algae at the Paci�c island of Kiritimati. DANIELLE CLAAR/UNIVERSITY OF VICTORIA VIA AP

El Niño, warming blamed for ‘gruesome’ coral death

P LANT your tree and see it from anywhere in the globe. This is an interesting feature of a unique and lasting experience for

the participants of the upcoming Fifth Asean Plus Three Junior Science Odyssey (APTJSO) the Philippines will host in June as they are set to embark on a one-of-a-kind tree planting.

Besides laborator y skills competition, poster presentations and project pitching w i l l t e s t s t u d e n t s f ro m t h e 1 0 - A s e a n member-states, as well as representatives from China, Sweden, Taiwan and Korea, t h e p a r t i c i p a n t s w i l l b e p l a n t i n g a n d m o n i t o r i n g t r e e s o n M o u n t M a k i l i n g through the Individual Tangible Response to Ecosystem Enhancement Program (iTREE).

Organized by the Makiling Center for Mountain Ecosystems’ (MCME), iTREE is an offshoot of MCME’s Habitat Care Program, a tree-planting and nurturing activity on forest rehabilitation and restoration initiative.

It uses modern technologies, such as geographic information system, the Internet, information and mapping technologies, to allow personal monitoring online of the planted seedlings. “It encourages interested parties to visit the iTREE planting areas and plant trees for the world to see,” said Dr. Nathaniel Bantayan, MCME director and an iTREE planter himself.

For the D epar tment of S c ience and Technology (DOST) and the University of the Philippines Los Baños (UPLB)—partners in the hosting of the event—this feature of the Science Odyssey will make the event “more than just a competition” for the participants.

“We’ve been part of the APTJSO for four years and I can say this activity makes our

hosting modernly unique with this iTREE feature,” Science Education Institute Director Dr. Josette Biyo said.

DOST Undersecretar y Rowena Cristina Guevara said the activity will make lasting impression of the country’s hosting among the international delegates.

“Aside from retaining our championship, we want to make a greater and lasting impact in this hosting,” Guevara said. “We want them to see how serious we are in celebrating the role of the rainforest in mitigating climate change and in instilling the value of conservation, preservation and sustainability among the youth, not just in the Philippines, but in the whole of Asean.”

The Philippines will host for the first time this year’s APTJSO from June 13 to 17 at UPLB and shall banner the theme “Climate Change and the Rainforest.”

It will be participated in by around 84 students and 28 teachers. Two campuses from the Philippine Science High School System will represent the national team and try to defend its four-year best finishes in biology, chemistry and physics laboratory skills competitions. The tree planting will cap the weeklong event, along with a community visit by the delegates in various scientific institutions in Los Baños. “We are confident that the interna-tional delegates will get to see the Filipino commitment in f ighting cl imate change t h ro u g h o u t t h i s e ve n t,” G u e v a r a s a i d. Asean includes the 10 countries of Brunei D a ru s s a l a m , Ca m b o d i a , I n d o n e s i a , La o PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

I N the wake of Super typhoon Yolanda that struck the countr y three years ago, Fi l ip inos learned an impor tant

lesson—the need to protect the mangroves. Fil ipinos realized the impor tant role

that mangroves play in the environment. Whi le mangroves provide an abundant s o u rce o f fo o d a n d f u e l, i t a l s o h a s a ve r y i m p o r t a n t ro l e i n s av i n g c o a s t a l co m m u n i t i e s a g a i n s t s to r m a n d s to r m surges by acting as a coastal barrier.

Today, more individuals and organi-zat ions are engaging on tree planting, specif ical ly on mangrove planting.

However, though the effor ts are cal led fo r, t h e re s e a rc h a r m o f t h e D e p a r t m e nt o f Env i ro n m e nt a n d N at u ra l R e s o u rce s ( D E N R ) , t h e Ec o s y s t e m s R e s e a rc h a n d D e ve l o p m e n t B u re a u ( E R D B ) , c a l l s f o r the par t ic ipat ion of the publ ic to prac t ice s u s t a i n a b l e p l a nt i n g o f m a n g rove s.

According to ERDB Director Dr. Henr y A. Adornado, the agenc y is encouraging people’s organizations, non-governmental organizations and local government units to par tner with the government in enhancing the sustainability of mangrove plantations established through practicing Integrated Pest Management (IPM).

“ Th i s ye a r t h e b u re a u h i g h l i g ht s i t s effor ts of communicat ing the impor tance and know-how in prac tic ing IPM to ensure t h e s u r v i va l o f m a n g rove s p l a nte d i n t h e

Phi l ippines,” Adornado said. IPM involves t h e u s e o f s c i e n c e - b a s e d t e c h n i q u e s a n d p ro ce s s e s t h at w i l l e n s u re t h at a l l s e e d l i n g s p l a nte d w i l l s u r v i ve a n d g row, h e a d d e d.

Cy n t h i a C . M a rq u e z , E R D B ’s s e n i o r science research specialist on forest tree insec t pest and diseases, explained the four basic prerequisites for a sustainable mangrove planting. She said the use of IPM should star t with the selection of quality planting materials.

Another is studying the area where the mangroves will be planted, ensuring proper t ransplant ing of mangrove propagules, a n d m a i n t a i n i n g a n d m o n i t o r i n g t h e planted areas.

ERDB researcher Marcel ina V. Pacho said although there are numerous ways to control pest infestation, the impor tance o f p re ve nt i n g t h e m l i e s i n t h e p ro p e r mangrove planting.

“ B e f o re u n d e r t a k i n g a ny m a n g rove planting, it is impor tant to gather baseline information on the area to be planted,” she said.

T h e D E N R h a s a l r e a d y r e l e a s e d Depar tment Memorandum Circular 2014-0 6 , w h i c h p r o v i d e s i n f o r m a t i o n o n baselining protocols.

A d o r n a d o s a i d f o r 2 0 1 6 , E R D B i s expecting to make the baseline information available and accessible to the public.

Makiling tree planting can be seen online

ERDB to public: Plant mangroves properly

Monday, April 11, 2016 • Editor: Angel R. Calso

OpinionBusinessMirrorA14

Public officials’ freedom of speech

editorial

SINCE we are in the middle of a hotly contested presidential campaign, it is difficult to ignore that any criticism of a candidate may be “politically motivated”.

 During a tourism event over the weekend, Davao City Mayor and presidential aspirant Rodrigo Duterte made some comments that caused an uproar. “Bakit pupunta ka ba sa Mexico ngayon? Are you going to Mexico with all the kidnap-pings and killings there? Drugs. Colombia. Everywhere. America,” he said be-fore the members of the National Association of Independent Travel Agencies. 

Unfortunately for Duterte, the ambassador from Mexico to the Philippines—Julio Camarena Villaseñor—was in the audience, perhaps at the SMX Conven-tion Center to promote Filipino tourism to Mexico.

 First, some facts. By the end of 2013, the estimated number of killed in the Mexican Drug War was in excess of 111,000 people. Deaths among military and police personnel are an estimated 7 percent of the total. The Mexican drug car-tels earn an estimated $30 billion a year from supplying drugs to the US. The United States Department of State, in its latest Crime and Safety Report about Mexico City, describes the crime situation: “Crime Rating: Critical”. 

In 2013 the Mexico City newspaper El Universal cited government statistics that, in 2012, just 105,000 cases of kidnapping were reported. They wrote that this means that about 90 percent of the cases go unreported, which some say is due to a distrust of authorities.

Yet, none of that matters. The issue is, do public officials have the right—maybe obligation—to say what is on their minds regardless of how lacking in diplomacy it may be? 

The answer would probably be “yes,” but within limits. Duterte might have framed his comments differently had he known that the Mexican ambassador was listening. Or maybe not.

 During the welcoming ceremony for Pope Francis in 2015, President Aquino said in his remarks, “Some members of the clergy now seem to think that the way to be true to the faith means finding something to criticize, even to the extent that one prelate admonished me to do something about my hair, as if it were a mortal sin.” Obviously, Pope Francis was in the audience. 

Aquino went further, saying: “There was a true test of faith when many members of the Church, once advocates for the poor, the marginalized and the helpless, suddenly became silent in the face of the previous administration’s abuses, which we are still trying to rectify to this very day.” 

Were President Aquino’s comments—like Mayor Duterte’s—inappropriate for the occasion and improper in the role of a representative of the Philippines and the people? That may be for each of us to personally decide. 

Canadian Prime Minister Justin Trudeau recently said, “When you kill your enemies, you lose.” We are offended by that comment as his citizens and soldiers are not dying, fighting an often vile armed insurgency. 

However, perhaps because we are a part of the free press, we would prefer to have public officials exercise their own freedom of speech as they see fit and then take full responsibility for their words.

THE visit of His Serene Highness Prince Albert of Monaco was a memorable event that serves to highlight the bilaterial relations between our two countries.

Philippine-Monaco diplomatic relations

It was my privilege to attend the state luncheon held in his honor on April 7 at Malacañan Palace. It was the Prince’s first visit as head of state, although he had visited the Philippines previously, in 1999.

“This year,” said President Aquino in his remarks at the press conference at the luncheon, “marks the 10th anniversary of the establishment of formal dip-lomatic relations between the Philippines and Monaco.”

The President thanked the Prince for the help they have given to the country, particularly in the after-math of Supertyphoon Yolanda.

“You gave to my countrymen so willingly,” said the President, “and I am told that, in proportion to its size, the Principality of Mo-naco was one of the most generous states in terms of aid extended—and for this, you have the eternal gratitude of our country.”

Also mentioned was Prince Albert’s advocacy of environmen-tal protection and sustainable

development. “Despite the rela-tively small size of our nations,” remarked the President, “we have been advocates of climate-risk mitigation. Both the Philippines and Monaco were actively in-volved in negotiations in crafting the Paris Agreement.”

The Paris Agreement was ne-gotiated on December 12, 2015, by the representatives of 195 countries at the United Nations Framework Convention on Cli-mate Change conference held in Paris. The agreement deals with greenhouse-gases emissions miti-gation adaptation and finance.

We join President Aquino and the Filipino people in extending our thanks to Prince Albert, the Monegasque Royal Family, and the people of Monaco for their help to the Philippines, and his advocacy on environmental issues.

n n n

CONGRATULATIONS to my chief of staff Jenny Ortuoste for be-ing awarded a P200,000 writ-

ing grant by the National Book Development Board (NBDB) for her research into the culture and communication of the Philippine Thoroughbred horseracing and breeding community.

Her work was one of four that received grants for 2015; they were chosen from among 69 manu-scripts submitted under the Local History and Culture category, the most received by the NBDB in any category in any year thus far.

The annual grants, which are also given to works on science and technology, are for the “completion of local manuscripts or research works for publication…in subject areas where locally authored books are either few or nonexistent.” The financial grant allows authors to

“complete the writing phase of a book-length manuscript eligible for publication.”

Jenny is a PhD Communica-tion candidate at the University of the Philippines College of Mass Communication. She conducted the research for her doctoral dis-sertation, a pioneering work ex-amining, among other things, the meaning-bearing systems—signs, symbols and speech—of the racing community. The work is meant to contribute to knowledge on Phil-ippine cultural studies, semiotics and sociolinguistics, among other fields of study.

n n n

WE commiserate with the faculty and staff who were affected by the fire that gutted the University of the Philippines Faculty Center on April 1.

The fire destroyed artworks, books, research materials, furni-ture and equipment, and memora-bilia of significant events collected over decades.

The loss to history and heritage is incalculable, but the spirit of the UP community is strong and resilient; we are confident that they will rebuild, restore, renew.

For updates and what to do-nate to help FC rise again, please visit the UP Diliman website (upd.edu.ph).   

n n n Atty. Rojas is vice chairman and

general manager of the Philippine Charity Sweepstakes Office.

RISING SUNAtty. Jose Ferdinand M. Rojas II

11. All PPPs must be approved by the Neda and the PPP Center.12. Profits of the private sector has first priority in the cash flow for BOT law projects. 13. The basis for the award in a com-petitive challenge/unsolicited pro-posal is the same for all modalities.14. There could be a PPP for an ex-isting facility of government.15. To date, there are more local government unit PPP projects than NGA projects.

Answers:1. True. “The State recognizes the indispensable role of the private sector” in governance and devel-opment.2. False. PPP is not a panacea. It is but one of several change strate-gies.3. False. The BOT law is just one of many PPP laws.4. False. Unfortunately.5. True. Better value-for-money, in-novation, risk allocation are other reasons for PPPs.6. False. Government-owned and

-controlled corporations and LGUs can enter into PPPs.7. True. This is the bundling ap-proach.8. False. A JV is not one of the BOT law modalities.9. True. This is one of the most feared risk in Philippine PPPs.10. False. Other parameters, de-pending on the modality, are lowest subsidy from government, lowest tariff by end-users, or least pur-chase price or rental.11. False. The Neda approval de-pends on the modality and thresh-old. The PPP Center does not have the mandate to approve projects.12. False. Operations cost, debt payments and taxes take prece-dence over profits/dividends.13. False. Under the BOT law and most PPP ordinances provide for the right-to-match, while the Neda JV Guidelines allows an option-to-outbid.14. True. This could either be a concession or rehabilitate-operate-transfer arrangement.15. True. So true.

PPP LEADBy Alberto Agra

The President thanked the Prince for the help they have given to the country, particularly in the aftermath of Supertyphoon Yolanda. “You gave to my countrymen so willingly,” said the President, “and I am told that, in proportion to its size, the Principality of Monaco was one of the most generous states in terms of aid extended—and for this, you have the eternal gratitude of our country.”

Continued from A1

THIS pop quiz is intended to gauge your basic appreciation of PPPs. Kindly rate yourself “excellent” if you get 13 to 15 numbers correctly; “very good” if you score 10 to 12; “good” if 7 to 9; and “not-so-good” if below 7. But re-gardless of your rating and score, we must all be conscientious, vigilant and active stakeholders in PPPs.

True or False. 1 point each. Good luck.1. PPP is anchored on the 1987 Constitution.2. PPP is the only solution to the infrastructure deficit.3. The build-operate-transfer (BOT) law is the only PPP law in the Phil-ippines.

4. The definitions of PPP by the Na-tional Economic and Development Authority (Neda) and PPP Center are the same.5. Revenue generation is not the only value driver for PPPs.6. Only national government agen-cies (NGAs) can pursue PPPs.7. It is possible to have one PPP proj-ect on water supply, hydropower and septage.8. For joint ventures (JVs), the BOT law must be followed.9. “Successor Risk” or changes in policies, law and interpretations by the next set of officials is a se-rious risk.10. The highest revenues to govern-ment is the only winning financial parameter.

PPP in Philippines pop quiz: How much do you really know?

HOM

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First of two parts

IT is quite a famous line in the accounting industry that the then chairman of the International Accounting Standards Board (IASB), Sir David Tweedie, usually joked about

wanting to see the aircraft he’s riding on the balance sheet, and now, here it is. The new lease standard issued in January provides a new wave of interest for accounting professionals not certain of the impact of the new accounting standard.

To lease or not to lease?

International Financial Re-porting Standards (IFR S) 16 “Leases” is the new lease stand-ard replacing International Ac-counting Standards (I AS) 17 “Leases” among others. The new lease standard is not getting the spotlight needed since most of the companies are still focused on understanding the implica-tions of IFRS 15 “Revenue from contracts with customers” and probably IFRS 9 “Financial in-struments.” Although news arti-cles accompanying the release of IFRS 16 is often marred by the huge amount expected to be put on balance sheet when the new lease standard kicks in on Janu-ary 1, 2019, probably, it is more of a matter of understanding what

the financial effects will be than being shocked with big numbers reported.

This article will not focus on the technical requirements of the new lease standard. Rather, this article will be focused on the financial implication of the new lease standard. Also, just to high-light, the focus of this article will just be on the impact on lessee ac-counting for operating leases since accounting for finance leases (or capital leases) and lessor account-ing remains similar, albeit with some clarifications but are mostly nitty-gritty.

The new lease standard requires operating leases to be reflected in the balance sheet as both an asset and a liability. Under IAS

17, operating leases are recog-nized using the straight-l ine lease recognition principle in which lease ex penses, other than contingent rent, are rec-ognized evenly throughout the lease-term (in contrast to the requirement under UK GAAP to consider the first break-clause) with the difference between ac-tual lease payment and straight-l ine lease e x pense ta ken to balance sheet.

On initial recognition the as-set (i.e., right of use asset) and the lease obligation will be rec-

ognized at present value using the incremental borrowing rate if the rate implicit in the lease is not readily determinable (in practice, the rate implicit in the lease in an operating lease is usually not read-ily determinable in contrast to a finance lease). For business read-ers, the rate implicit in the lease is basically the effective discount rate (or internal rate of return for simplicity) if cash payment will be made for the leased asset (which is usually indicated as the cash purchase value in a finance lease), while the incremental borrowing rate is the market interest rate if the company is to obtain financing to acquire the leased asset.

Sounds complicated? This cor-ner will present an illustrative example to hopefully simplify the new rules for accounting of leases in the next week’s column.

Filbert Tsai is a Filipino financial accounting advisory services executive in the UK with specialization in transaction accounting in the power and utilities sector.  He had provided accounting advice to a significant number of government and financial institutions investing or providing financing structures in the renewables sector in Europe and in developing countries.This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general.  These can be e-mailed to [email protected].

Trump’s path gets a lot rockier

B J B |Bloomberg View

COLORADO Republicans are busy this weekend, making it harder for Donald Trump to get 1,237 bound and committed delegates by June 7, when the final primaries are held.

Colorado’s initial caucuses were held on March 1, but only now has a state party convention gathered to  choose its 37 delegates  for the national convention in July. Those delegates will be bound to a candidate if they announce their support before the final vote. If not, they’ll be free to choose whom to support. And with a huge gap between the organizational incompetence of the Trump cam-paign and the solid Ted Cruz effort, Cruz is dominating.

Of the 37 delegates, 21 are be-ing selected from Colorado’s seven congressional districts (three each), with the remaining 16 chosen state-wide.  Cruz-backed slates have al-ready swept several congressional-district votes, and by all accounts he’ll win the rest.

Colorado was expected to be good for Cruz, but not quite this good. The expert panel put togeth-er by FiveThirtyEight projected Trump to win seven delegates in the state. If he’s shut out, as ap-pears likely, he’ll fall further be-hind the pace he needs to wrap up the nomination. That would put him on a path to reach only 1,175 delegates—62 shy of a majority

for the nomination.Even if he hits the winner-take-

all targets in the primaries he is ex-pected to win—in New York (which votes on April 19) and in Connecticut, Delaware, Maryland, Pennsylvania and Rhode Island (April 26)—he could at best beat projections by about 40 delegates.

And the only other states where he has a reasonable chance of exceed-ing expectations are Indiana and delegate-rich California. 

So while Trump can still win by June 7 (as Nate Cohn argued at the Upshot), he’s run out of a margin of error. He has to maximize victo-ries on April 19 and April 26 in the Northeast; win in Indiana on May 3, and win big on June 7 in California. 

If he doesn’t win by then, he’ll go into the preconvention period need-ing to make up the difference. That’s possible if the party chooses to close ranks around him—especially if the party can push either Marco Rubio or John Kasich to urge their delegates to switch to Trump. But if the party, instead, continues to oppose him, he’ll be fighting an uphill battle to get more than a handful of the 150 or so unbound delegates.

DEBIT CREDITFilbert Tsai

B M L Bloomberg View

ONE thing that makes banking regulation hard is that it’s impossible to know how big a bank is. There are lots of regulatory reasons you might want to know that—is it too

big to fail? Too big relative to its capital?—but you just can never quite measure it. You get out your giant tape measure and you try to wrap it around the bank, but the bank squirms and oozes and you can never quite see all of it at once.

This shimmering evanescent quality is, to the connoisseur, part of what makes banks so beautiful. But not everyone is a connoisseur. Some people find banks ugly, and the bigger, the uglier. But these people, too, run into the measure-ment problem: How can you know how mad to be at a bank, if you can’t tell how big it is?

The Wall Street Journal had a  fun story on  Thursday  about “footnote 151.” This is at its heart a story about how to measure bank bigness. But since you get—or get rid of—what you measure, it is also a story about how regulation can make banks simultaneously less risky, but also more creative.

But first, measurement. Back in the olden days, before the fi-nancial crisis, bank regulation was mostly a matter for con-noisseurs. Bank regulators knew that it was impossible to measure banks, but they also knew that the doomed, but noble, strug-gle against that impossibility was enough to give a life mean-ing. They developed something called “risk-based capital regula-tion.” The idea here, as the name implied, was to measure banks based on the riskiness of their as-sets. A bank that had $1 billion of corporate loans was, the regula-tors decided, twice as risky as a bank that had $1 billion of mort-gage loans, and five times as risky as a bank that had $1 billion of mortgage-backed securities. And this risk-based measure became, for regulatory purposes, the main way of determining a bank’s size, the denominator for its capital ratios: The corporate bank would have $1 billion of “risk-weighted assets,” the mortgage bank $500 million, the mortgage-backed-securities bank $200 million. For regulatory purposes, the corpo-rate bank was twice as big as the mortgage bank, and needed to

have twice as much capital.This is just the tip of the ice-

berg; you could devote your whole life to understanding the nuances of risk-based capital, and lots of people did.

But then the crisis happened, and it rather discredited risk-based capital. There are two rea-sons for this.

First, risk-based capital regu-lation seems to have contributed to the crisis. If mortgages require more capita l than  mortgage-backed securities, and if capital is expensive for banks, then banks will want to turn their mortgages into mortgage-backed securities. So they did. You know the rest of the story. It turns out that regula-tors are not perfect at measuring risk. And by enshrining their risk measures in capital regulation, they created regulatory arbitrag-es: If you can make something look less risky for capital regulation, without actually making it less risky, you will be tempted to do so. And that will make the system more risky.

Second, though, the crisis took bank regulation out of the hands of the connoisseurs and made it a matter of general public interest. Since 2008, bank regulation over-all has been considerably less ap-preciative of the aesthetic quali-ties of big complex banks. A lot of people think those banks should be smaller and less complex, and are not so interested in devoting their lives to nuances of bank risk and measurement. And now those people have some inf lu-ence over bank regulation. One upshot of that has been a focus on the leverage ratio, which was intended to be sort of like risk-based capital, but without the nuance. Instead of lovingly as-signing an individual risk weight to every sort of asset that a bank might own, the leverage ratio tries

to take a straight-ahead approach to measuring how big a bank is. Regulators just add up all the as-sets the bank has, without weight-ing, and then the bank has to have some minimum amount of capital as a percentage of those assets.

Critics of bank complexity like this approach because it seems simple. There is no need for regu-lators to estimate the risk of as-sets. The banks just have to have enough capital, relative to their size, to weather those risks. You don’t need to know how risky the assets will be; all you need to know is how big the bank is.

But remember:  It is impos-sible to know how big a bank is! Banks have assets that you can measure relatively easily, like bonds and loans. But they also have other things that are harder to measure, like derivatives and loan commitments. A $100-mil-lion interest-rate swap isn’t quite the same thing as a $100-mil-lion bond, either in terms of its risks or in terms of its treatment under US generally accepted ac-counting principles. And yet, that $100-million interest-rate swap isn’t  nothing, either. It does feel like it should be mea-sured somehow for capital and leverage purposes.

And so it is. The general idea of the leverage ratio appeals to nonconnoisseurs, but the details of its implementation were left to the same sorts of people who built r isk-based capital regulation, and they went and built a surpris-ingly elaborate system  for mea-suring derivatives exposures for purposes of the simple leverage ratio. So, for instance, that $100 million interest-rate swap counts as $1.5 million of assets, if it has a maturity of  more than five years, or $500,000, if it’s one to five years, or nothing if it’s less than a year. Why those numbers? I don’t know. To reintroduce some mystery to bank capital regula-tion, maybe.

Footnote 151 is, as its name implies, a footnote to all of this. Here is what it says:

For a derivative contract that is structured such that on speci-fied dates any outstanding expo-sure is settled and the terms are reset so that the market value of the contract is zero, the remain-

ing maturity equals the time un-til the next reset date.

For an interest rate derivative contract with a remaining matu-rity of greater than one year that meets these criteria, the mini-mum conversion factor is 0.005.

And here is what it means:Instead of selling a 10-year

swap to hedge oil or interest rates, for example, banks are now proposing to structure such deals as a series of swaps that settle every day for 10 years. The im-pact on the capital banks have to set aside is significant: A cleared 10-year interest-rate swap ties up three times as much equity as a one-day contract.

If you and I do a 10-year swap, and interest rates move in my fa-vor, then you owe me money. In a sense you owe me the money in 10 years, when the swap expires, but the way things normal ly work, you post collateral  to me pretty regularly, so I don’t have to spend 10 years wondering if you’re good for the money. Still, collateral isn’t a perfect solu-tion: There can be delays in col-lecting it, and if you default, we can have days of gamesmanship and years of litigation to figure

out how much of the collateral I get to keep. If we replace the idea of “collateral” with the idea of “we close out the contract at fair value, and then immediate-ly open a brand-new one at fair value,” then some—some—of those issues go away. Now there’s no question that I get to keep the collateral, because it isn’t collateral; it’s a payment that is mine for all purposes forever. And the amount of collateral, sitting in an account somewhere to secure the contract, can never get all that big: Once you pay me the money, I can use it, instead of keeping it in a collateral ac-count and fretting about it. (On the other hand, if you default, we stil l need to figure out what the last settlement payment is, which can stil l lead to games-manship and litigation.)

More importantly, from a bank’s perspective, recharacterizing the t ransact ion t h is way lets it look  smaller for leverage-ratio purposes and, thus, require  less capital.  Not much has changed economica l ly—the bank st i l l has the same 10-year exposure to interest rates—but now it needs  less capital. It is, dare I  say it, a regulatory arbitrage. This guy dares:

“This is classic regulatory ar-bitrage,” said Marcus Stanley, policy director for public-interest group Americans for Financial Reform, which advocates for tougher financial regulations. “The risk is identical.”

And Thomas Hoenig of the Federal Deposit Insurance Corp. agrees: “If banks are shrinking their capita l buffers without equally reducing risk, he said, ‘I call that gaming the system.’”

Substantively, I suspect  this is partly true and partly false. It is true in the sense that the in-terest-rate risk in the two con-tracts is identical. To the extent that the higher capital require-ments for a 10-year swap than a one-day swap are based on the higher interest-rate risk in the 10-year swap,  structuring that 10-year swap with daily settle-ment doesn’t change the risk, and shouldn’t get you a lower capital requirement. It is false, though, in the sense that  the d a i l y - s e t t l e m e n t c o n t r a c t

probably does avoid some un-pleasant risks, like the risk of ballooning both  of our balance sheets as  the swap gets bigger, you post more collateral to me, and we become more and more intertwined financially.

Settling up and reducing con-tracts to zero every night  “will reduce risk across the financial system,” says the associate gen-eral counsel of the Securities Industr y and Financia l Mar-kets Association, and  that is probably right.

But whatever you think of that substantive debate, the thing to remember is that  the rule explicitly  says that banks can do this. 

The banks are not exploiting a typo or a mistake: There is a specific footnote advising them to settle up their contracts fre-quently, so that’s what they’re doing. “Reg u l ators, t hrough rulemaking, have indicated a preferred legal method,” says the Sifma lawyer, and “ banks are conforming their practices.” Presumably the regulators pre-fer frequent settlement because they think it makes the banking system safer, which is at least a plausible belief, and they’ve decided to encourage it by giv-ing the banks a break on capital for doing it. This isn’t a story of banks gaming a regulatory sys-tem. This is a story of regula-tors holding game night at their house and inviting the banks to come play. 

But at a deeper level, it is a story about how and why you measure banks. Even what is sup-posed to be the simple measure-ment of bank size, the leverage ratio, is not a simple or objective matter. It has a political and risk-management purpose, and so, it is influenced by political and risk-management arguments. Regula-tors manipulate it to encourage the banks to be safer, and banks manipulate it to make themselves more profitable.

The old concerns—regulators trying to anticipate risks and build them into the measure-ment, bankers trying to arbi-trage those measurements for profit—continue in a new regime.  

The banks, their size and their risks remain elusive.

Big banks use a footnote to look smaller

The new lease standard requires operating leases to be reflected in the balance sheet as both an asset and a liability. Under IAS 17, operating leases are recognized using the straight-line lease recognition principle in which lease expenses, other than contingent rent, are recognized evenly throughout the lease-term (in contrast to the requirement under UK GAAP to consider the first break-clause) with the difference between actual lease payment and straight-line lease expense taken to balance sheet.

It is impossible to know how big a bank is! Banks have assets that you can measure relatively easily, like bonds and loans. But they also have other things that are harder to measure, like derivatives and loan commitments. A $100-million interest-rate swap isn’t quite the same thing as a $100-million bond, either in terms of its risks or in terms of its treatment under US generally accepted accounting principles. And yet, that $100-million interest-rate swap isn’t nothing, either. It does feel like it should be measured somehow for capital and leverage purposes.